TigerDirect Exec: CompUSA Brand Will Live On

Calling it "the deal of the century" Gilbert Fiorentino, CEO of TigerDirect, said the 16 CompUSA stores his company purchased will remain in place and 14 TigerDirect-branded retail locations, 11 current and three opening this quarter, will be rebranded as CompUSA stores.

Systemax also bought CompUSA's brand and e-commerce business in a deal expected to fetch up to $30 million.

The decision to keep the CompUSA brand was an easy one, Fiorentino said. "Look, it's a 20-year-old brand. They were once bigger than Best Buy and at their peak was almost $5 billion. It was almost household brand-name status. That's a huge brand," he said.

Systemax will retain both the TigerDirect and CompUSA brands because the two sites serve different customers, Fiorentino said. "The TigerDirect brand is well known for the do-it-yourself enthusiasts. CompUSA is more mainstream customers," he said. The two sites only have 7 percent customer overlap, he said, but they will carry the same product lists and the same pricing.

Systemax expects to reinvigorate the CompUSA brand -- and make money -- by sticking to its own model and saving back-office costs. "On the corporate side, we don't have to hire purchasing, marketing, advertising people. We're absorbing 16 stores without hiring those people," Fiorentino said "[CompUSA] was a very large company that had a lot in IT, administration. No matter how good your store is, it's going to be hard to make money in a highly competitive environment. We can add a tremendous amount of revenue without a lot of overhead."

However, Systemax doesn't plan to follow CompUSA's competitors with a field services team such as Best Buy's Geek Squad or Circuit City's Firedog initiative.

"We're much more into using third parties do to that work for us. We currently have relationships with Warranty Corporation of America and other service providers. We'd rather sell the service, make money, and have someone else do it," Fiorentino said "It's difficult to send service people into someone's home. It's not what we do. We're good at buying things, pricing them right with compelling offers and selling them."

Last month, CompUSA said it would close all its 103 stores after the holidays as part of its sale of some assets to Gordon Brothers Group, a restructuring firm. At the time, it was reported that Gordon Brothers would look to sell individual stores and close those that it could not sell. Fiorentino envisions re-establishing a CompUSA presence in some of those markets.

"The goal right now is incorporate 16 stores plus open three new ones. We're picking up some good people and we'll be in a position to aggressively expand the business into the second half of the year," he said. "The biggest problem in expanding retail is it's people intensive. You can expand a Web site without a lot of people," he said. "Our biggest challenge is to find store managers, district mangers. The CompUSA deal brings us people with 10 to 15 years experience. Just because CompUSA was losing money, that doesn't mean they were bad people. We're very excited the quality and experience of people coming into the fold of the company."

TigerDirect is close to adding some vendor authorizations of "one or two significant" vendors because of the CompUSA deal, but he wouldn't identify the companies. He added that TigerDirect has been working to increase its own vendor line card anyway, recently adding Toshiba, Mitsubishi, Bose and Garmin among others.