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CompUSA Outlines New Vision

Rapid expansion and shrinking PC margins force CompUSA to rethink its corporate strategy.

By Christian McIntosh, PCWorld   

CompUSA on Thursday unveiled plans for a sweeping reorganization prompted by years of rapid growth and shrinking PC margins. The retail giant hopes to diversify its product focus to include more high-margin digital devices such as cameras, media players, and game consoles.

After relaunching CompUSA NET.com, acquiring Computer City, and starting a business-to-consumer auction site, company officials decided to huddle and rethink corporate strategy.

"We are fundamentally redefining CompUSA's entire business concept," says James F. Halpin, the company's president and chief executive. Apparently, the company's redefined concept includes up to 1500 layoffs and possible store closures, according to Thursday's announcement. CompUSA also will close its distribution center in Grapevine, Texas.

Halpin hopes to redesign CompUSA's training and technical service businesses, outsource product fulfillment for direct sales customers, and emphasize digital consumer technologies such as DVD rather than desktop PCs.

But a closer look reveals another restructuring goal: more revenue, specifically increased gross margins, reduced operating costs, and expanded strategic growth. Under the plan, CompUSA also will endeavor to improve customer service.

Less PCs, More Peripherals

Responding to the demonstrated success of Web-based vendors such as Dell Computer, CompUSA will experiment with build-to-order PC systems. In addition, CompUSA will push its gaming and imaging departments. The reorganization plan also calls for an emphasis on mobile computing products.

Other targeted product categories include handheld devices, digital cameras and camcorders, interactive computer toys, and portable MP3 players. CompUSA hopes to redirect its core business from low-margin desktop PC sales to higher-margin digital peripherals.

Plus, CompUSA will realign its wholly-owned subsidiary CompUSA NET.com into an Internet-only company. CompUSA hopes to phase out third-party fulfillment activities and sign several online strategic partnerships within the next six months.