Mondry On HDTV, Rebates, Returns

COLORADO SPRINGS, COLO. — Under questioning from CEA's Gary Shapiro, fellow CEO Larry Mondry, of CompUSA, also commented on a variety of industry issues that are a concern to both retailers and manufacturers.

Product Returns: “While this is a tough issue for everyone, I focus internally. The financial reality is that you can't take anything back because the vendor doesn't take it back. Most returns are 'buyer's remorse' of 70 or 80 percent. There are few product defects. The products didn't meet their needs. The question for us is, 'Did we do a bad job when we sold the product?' In visiting our stores many have defects in the ESO category — Equipment Superior to Operator. And of course there have been cases in the summer time of 'renting' digital cameras and camcorders, and business people doing the same with notebooks. Still, our returns are lower.”

Rebate Problems: “Seven or eight years ago, someone in the industry who should have known better decided to put their own rebates on products. I'm the guy who did it. Initially, it was like taking drugs for the first time. It was a huge error in judgment on my part. All our competitors followed us. Vendors did the same. We would love to see the rebate business go away, but it just doesn't seem to happen.”

HDTV and the Analog Cutoff Date: “In the short run, from a self-serving point of view, whatever date gets set there will be an incredible increase in business. But how will consumers' react? 'Joe Six-pack' can get screwed in the process. Government dictates like on fuel economy in the car business changes the landscape, but in reality things were changed by OPEC. So, for the short term, customers who have cash to pay for HDTV, it will be great. In the real world, with those consumers who don't, this cutoff date is not the nicest thing in the world.”

Is mobile electronics a tough 'sell-in'? “To some degree it is. I was in mobile a long time ago, and it used to be that everyone would have its head unit pulled out. You added new speakers. There were opportunities because people wanted great new technology. Do we still have opportunities? Yes, we still do. It is harder? Yes. But our business is harder across the board over the past 10 years. Satellite radio is one of those new technologies where you have opportunities.”

How do you characterize CompUSA's business? “I tend to look at our merchandising as a 'sunrise' business where we get a disproportionate share. Originally in digital cameras we had a ridiculously large share, but with more guys in the business — drug stores and the like — we go the other way. We differentiate ourselves by offering service capabilities. We sell plenty of MP3 players, but we sell plenty of accessories with those players. The same thing with notebook PCs, we sell accessories that provide users with more mobility.”