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The Honolulu Advertiser
Posted on: Sunday, June 8, 2008

Honolulu just isn't same without CompUSA

By Jay Fidell

Hawaii news photo - The Honolulu Advertiser

Jay Fidell looks at tech and business opportunities in Hawai'i. Read his comments and post your own at honoluluadvertiser.com/blogs and check out our other bloggers.

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We thought it would last forever, but CompUSA is gone, without a fare-thee-well. The grass is growing in the parking lot, and what was our tech mecca is now "The Last Picture Show." I'm sad when I drive by. They should put a fence there so we don't have to look at the ruins.

WHAT HAPPENED, ANYWAY?

In 2006, CompUSA closed 15 stores. Roman Ross became CEO and went to home entertainment, probably too late. CompUSA's parent, Grupo Carso, owned by Mexican billionaire Carlos Slim Helu, wanted to sell.

In 2007, the company announced it would liquidate 126 "low-performance or nonstrategic" stores in a "corporate restructuring." That December, it sold out to Gordon Brothers, liquidators. The end was near.

This January, Systemax, parent of Tiger Direct, bought the CompUSA brand, online business and 16 stores in the South. In March, AT&T bought CompUSA's TechPro repair service. Then the marked stores, including the one on Ala Moana and at Pearlridge, were painfully, publicly, liquidated.

CompUSA was not the only chain having trouble. Rival Circuit City closed eight stores and a distribution center in the U.S. and 62 in Canada. They blamed tight margins, particularly in flat-panel televisions. The only one doing well was Best Buy.

IT WAS GREAT WHILE IT LASTED

Customers came from all walks. It was the people's palace, a great leveler, like the computer itself, a toy store for all the ages.

Some criticized the guys in the red shirts, but I found them helpful. Some criticized the inventory, but I usually found what I wanted. Others, like the FTC, criticized the rebate practices, but I forgave them for that. And I found the repair guys competent and responsive, but maybe that's just me.

CompUSA had become an essential part of Honolulu's computer community. You could dash down there for some mission-critical thing, get some advice to find it and be home again in minutes, a huge convenience.

WHAT BROUGHT THE OLD GIRL DOWN

Was the market, the pricing or the margins getting soft, or was the competition stiffening? Had management lost its touch? Or was it the bricks-and-mortar model itself? Perhaps all of the above.

Things had changed. John Bingaman, CompUSA's guru and former district sales manager, notes that "when you sold a computer at $2,500 and made 8 percent, that's one thing, but when the price comes down to $400 and you make 5.5 percent, you have to sell five of them to make the same money."

One sea change is that bricks-and-mortar computer chains have to work harder, especially in Hawai'i, where freight charges impose additional burdens on maintaining current inventory. All the while, e-commerce has become more efficient.

CompUSA, under Tiger Direct, is still online at www.compusa.com, and has 23 stores in Florida, Texas, North Carolina and Illinois. Why didn't they keep Hawai'i? Ala Moana was one of the highest grossing anywhere. How could they do this to us?

Where are the customers now? Are they at Best Buy, Circuit City, Radio Shack, perhaps Office Max? I expected these stores would take up the slack and carry all of those supplies and gadgets, but if there's a place that's done that, I haven't found it.

All may not be lost. Bingaman is with Wareforce, bringing computers in for the corporate market. Ala Moana's last manager, Ken Elton, has opened a discount store in Kaimuki. Hopefully, their markets will find them.

COULD THERE BE A RESURRECTION HERE?

The rent at Ala Moana was formidable. At first, there were rumors that some of CompUSA's officers would do something there, but they haven't. Then there was discussion that local investors might do something, but they haven't, either. Maybe they couldn't get a lease from the landlord, Kamehameha Schools.

The months go by and there's no sign of hope on South Street, no news or notices in the media to suggest a resurrection, and frankly, it looks like we'll have to look elsewhere to find what we need.

HOW WILL WE FILL THE VOID?

I've always felt that beyond fast Internet, Hawai'i has had great bricks-and-mortar electronics, even from the days of Computer City. I've seen this as support for the growth and discovery of our tech sector. With CompUSA's passing, we lose some of that.

I'll keep checking the other stores to see if they've beefed up, although I'm not optimistic. For now, it's back to the future with mail order, online if possible, and keeping spares, just as we all did before.