Consumer Electronics Takes Hit As CompUSA Closes Stores

By Spencer D. Chin

TMCnet Web Editor

 

Although consumer electronics has been credited for improving the fortunes of many high-technology communications and electronics companies, the fiercer than ever competition is taking its toll on the brick-and-mortar retailers which sell the wares.

 

The latest casualty is computer and home electronics giant CompUSA, which said Friday in a number of online reports it would close a number of stores throughout North America, laying off hundreds of workers.

 

According to reports, the stores selected to be shuttered are poorer-performing locations throughout the U.S. Ironically, a number of them are in California-- the state most identified with the high technology boom over the past few decades.

 

A Chicago Tribune report noted 21 of 29 of CompUSA’s California stores were closing. This included all of its stores in Los Angeles and neighboring counties.

 

CompUSA has struggled to be profitable amidst fierce price competition and thinning margins. But it is not the only consumer electronics retailer in trouble.

 

Circuit City said last month it would close dozens of stores and cut a number of jobs, in response to sinking profits on flat-panel TVs and PCs.  The company’s chief financial officer, Brad Foss, resigned to take a similar post at pet supply retailer Petco.

 

Both CompUSA and Circuit City have struggled amidst competition not only from BestBuy, but also increasingly from discount retailers such as Wal-Mart. And, the companies’ brick-and-mortar outlets have likely lost sales to their own online sites as well as those of direct retailers such as Dell (News - Alert).