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CompUSA’s Mondry’s Goals And Opinions On CE Market

Colorado Springs, Colo.  — In an entertaining and informative one-on-one interview with CEA’s president/CEO Gary Shapiro, Larry Mondry, CEO of CompUSA, reviewed his deep roots in CE and PC retailing, spoke about the development of CompUSA, and discussed current industry issues at the recent CEA CEO Summit, here.

Shapiro got the interview started by tracing Mondry’s long roots in this business. “I was a 12-year-old stock boy for Highland Superstores, but I was actually directing traffic at parking lot for $1.45 an hour.”

Mondry finally worked his way onto the selling floor the next year. “I sold my first CE product in 1973 when I was 13. I sold coffee pots, curling irons in different colors, but my first big sales were Texas Instruments’ calculators, the SR10 that had four functions, for $99. The SR11 had square-root function and that sold real well. I got a spiff too.”

When Mondry left the Detroit area to go to Boston University he eventually worked for Lechmere, which has departed the retail scene just like Highland, and he quipped, “Maybe I’m the curse.”

While he was attending college, intending to be a lawyer, Highland, which was being run by members of his family, suggested he become a computer buyer during the days of Sinclair, TI, Commodore and Atari. “Well, I missed the computer generation,” Mondry said, passing on that opportunity to stay in school in Boston and continue dating his wife.

But Highland was relentless. “Six months later I became a buyer for something new: video cassette recorders. And now I’m running a computer company.”

He noted that during his time at Highland, “I bought movies for movie clubs and then bought RTA furniture, VCRs and other video products. When I joined Highland they had 16 stores. When I left seven years later it was a 95-store chain.”

At that point Mondry got a call from “a headhunter for Software House, which became CompUSA.” Explaining “I never had a job interview in my career,” Mondry flew to Texas to meet with the chain’s founder and then head merchant Earl Jacobson just for “practice, in case I ever needed to go on a job interview.”

Meeting Jacobsen, Mondry immediately began to talk about business and, “It turned out to be a non-interview. Earl liked me and I called my wife from the airport and said, ‘Remember my old cowboy boots in the closet? You’d better get them out.’”

He joined Software House in 1990 and it became CompUSA in 1992.

Concerning CompUSA today, Mondry said, “Our name doesn’t convey all of what we do. It has a good history, with plenty of name brand recognition and hundreds of millions invested in the name. But computers are not over 50 percent of our business. Computer related products, yes, but not strictly computers.”

Mondry got back into the mainstream CE business when his company bought Good Guys in December 2003. “However you define convergence, we needed to play in the [CE] market,” he said. While Mondry’s roots are in CE, “I wasn’t in the business for 13 years.”

Between the expertise of Good Guys’ managers “and relationships we could foster, we have been able to capitalize on Good Guys’ great reputation in the business. And consumers look at Good Guys as a great place to buy stuff.”

Mondry said that up until last Christmas “things were going well,” but that the opening of the joint CompUSA Good Guys Megastores that opened in June have been “a spectacular success.” However, he cautioned from years of being in CE retail, “It’s easy to have a great opening, but tougher to have a sustainable business.”

He described the new Megastores as carrying “more CompUSA products, 70 percent IT and IT-related products. We sell MP3 players and digital cameras. We have separate sales forces, a store-within-a-store concept to try to cross sell lucrative consumers that have annual incomes of over $100,000 that allow us to be profitable.”

When asked by Shapiro how CompUSA measures success, he cracked, “We measure success by sales, how many people come to our stores. This is retail. We don’t measure success by feeling good. There is no other way to measure it but sales.”

Mondry also noted that in terms of product mix, notebook computers “are the star on the CompUSA side. For Good Guys, it’s HDTV, the bigger the better, and satellite radio. On either side, connectivity is a star.”

Installation has become important to CompUSA and Good Guys like the rest of the industry. Mondry explained, “We have people who work for us or we outsource installation. We have design teams nationally, do business with the builder community, and get involved with basic wiring and the like. Most installs are contracted out now, but not all of it. It really depends on locale and scheduling.”

When asked what his major challenge will be in the next several months Mondry said, “The Good Guys test with the Megastores’ growth strategy over the long term keeps me up at night. And the macro economy makes me very nervous.”

He noted that CompUSA has had “A great year and great comp sales for the past six or seven years. The last few months choppier, so we promote more. Oil pricing is scary.” Mondry theorizes that oil price hikes are taking “$500 more out of [consumers’] pockets annually.” While that might not affect typical CompUSA or Good Guys customers, it will affect many consumers “because they won’t have that extra $500 to pay for purchases in stores like ours. Consumer confidence will be hurt and it will end up hurting business.”

And he added, “I may be nervous, but that’s my business. What gets me excited are P&L reports that are green instead of red.”

When Shapiro asked what Mondry’s stores will look like in five years, he noted, “I have hopes, but in a perfect world our product selection will be blurred between CE and IT products. We will be selling more lifestyle solutions. I hope we will be better at selling products and become less of a ‘clerker’ of products.” What the industry doesn’t have “is great solution sellers and that hurts us all.”

Towards the end of the one-on-one session, Mondry illustrated his realism about technology retailing and his love of the business with one strictly tongue-in-cheek comment and another that was philosophical. “Hey, we sell brand new PCs every day, and we make a great six points on each of them. That’s great! There are no profits, but we employ a lot of people, help the public and move a lot of [money] around. We don’t make money, but we have fun!”

He added, “To do this job you look at the numbers in the middle of the night and plan strategies on how to run your business. Someone who isn’t like that shouldn’t be in this business. Those that do work like this, get it. In this business on the worst day I have the best time and can’t think of doing anything else.”