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Halpin, James - Overview, Personal Life, Career Details, Chronology: James Halpin, Social and Economic Impact

compusa computer company computers

(1951-)
CompUSA, Inc.

Overview

James F. Halpin led computer superstore CompUSA, Inc. out of the financial troubles that it found itself in at the beginning of the 1990s. After experiencing dramatic growth in the 1980s, CompUSA had begun to lag. The multi-billion dollar retailer known as ’America’s Computer Superstore’ had become lethargic, and its bloated bureaucracy had brought it to the brink of declaring Chapter 11 bankruptcy. After CompUSA’s chief executive officer (CEO) resigned in the last few weeks of 1993, Halpin was left with the daunting task of turning around the company’s fortunes. Halpin’s strategy soon paid off. He turned CompUSA into an agile competitor that now dominates the fast-paced world of computer retailing.

Personal Life

James F. Halpin was born in 1951 in Chicago, Illinois to Irish Catholic parents with a strong blue-collar background. Because of the family’s lack of money, Halpin never attended college, but instead went directly to work after he graduated from high school.

In 1997, Halpin became one of corporate America’s most powerful people when he appeared at number 17 on Forbes magazine’s list of the top corporate executives in the retailing industry, with an annual salary of over $2 million. CompUSA also appeared at number 329 on Fortune magazine’s list of the top 500 companies in the United States for 1998.

Career Details

At the age of 21, Halpin got a job unloading trucks for the Boston-based retailer Zayre Corporation for $2.60 an hour. Halpin quickly showed initiative and his hard working style endeared him to his employers. He did not stay on the loading dock for very long, but began moving up through the ranks of the company.

By 1984, Halpin had been promoted to the position of vice-president and senior merchandising manager for the Zayre department store chain. His leadership at Zayre soon attracted others, and in 1988 Halpin left Zayre and became the president of BJ’s Wholesale Club.

In 1990, Halpin left BJ’s Wholesale Club to briefly head Waban Inc. He left Waban in 1991 to become president of Home Base, a home improvement retail chain based in Irvine, California.

Meanwhile CompUSA, the company Halpin was destined to head, was establishing itself as a leader in its industry. Founded as Soft Warehouse in Dallas, Texas in 1984, CompUSA was the first to adapt the “superstore” idea, pioneered by companies such as Office Depot, to the home computer and peripherals market. In January of 1989, a group of investors acquired CompUSA and placed the company under the leadership of former Home Depot executive Nathan Morton. Under Morton, the company grew even more rapidly than it already had up to that point. In just two years, from 1988 to 1990, sales increased from $66 million to $600 million. In December 1991, the company began selling stock to the public.

But there were signs of stress on the horizon. The company may have already been growing a little too quickly for its own good. In the first quarter of 1993, the company reported losses of nearly $1 million. Although this was not much in proportion to the company’s volume, Morton resigned, thus paving the way for Halpin to come in and face the challenge of turning CompUSA around.

From Home Base, Halpin was recruited to become president of CompUSA in May of 1993. He immediately made much needed changes at the company. Halpin felt that CompUSA was focusing too much of its corporate energy on pomp and advertising and not enough on the bottom line.

Halpin first got rid of CompUSA’s racing car sponsorship, then sold the company’s cable television show. He next fired 2,000 of the company’s store managers and replaced them with more experienced employees from other successful chain stores. This move raised the average age of a CompUSA store manager from 26 to 37 years old, an oddity in the young computer industry. But his new managers did well. Halpin initiated an incentives system that enabled some of his store managers to earn in excess of $100,000 a year.

By 1994, Halpin had been promoted to CEO of CompUSA and had turned over the assembly of CompUSA’s Compudyne brand computers to an outside contractor. He replaced 17 of the 20 top management positions and eliminated some of the sideline businesses, such as software publishing, that the previous CEO had established. Only after he had done this and the company had stabilized did he begin to open more stores.

Halpin revamped the new CompUSA stores. He redesigned the layout, and required an increase in the level of employees’ technical education. “CompUSA used to look like an old, tired record store,” Halpin told Business Week. “We’ve made it an exciting, interactive place to shop.”

Halpin works closely with his chief operating officer (COO) Harold Compton, whom he recruited from Home Base. Another top CompUSA executive has said of the two men: “Jim [Halpin] is the visionary who can tell what changes need to be made” whereas “Hal [Compton] makes sure [things] get done.” Halpin is a strong negotiator but is very plain-spoken in motivating his management team.

In October of 1995, Halpin took a seat on the board of directors at Invincible Technologies Corporation with the title of Outside Director. Invincible is a Massachusetts-based computer company that specializes in security applications, file servers, and data storage solutions for businesses that use large networks of computers. Halpin’s knowledge of both business and the computer industry helped Invincible rise to the top quickly as growing numbers of businesses sought to make their computer networks safe, fast and efficient.

Chronology: James Halpin

1951: Born.

1971: Began working for Zayre Corporation.

1984: Appointed vice-president of Zayre Corporation.

1988: Became president of BJ’s Wholesale Club.

1990: Headed Waban Inc.

1991: Became president of Home Base.

1993: Took over presidency of CompUSA, Inc.

1994: Promoted to CEO of CompUSA.

Like his predecessor Morton, Halpin came to CompUSA from a hardware superstore company. But he decided to apply a strategy different from his predecessor’s, and he got different results. Because of Halpin, while competitors such as Best Buy, Neostar, Wal-Mart, and the Tandy Corporation experienced shrinking profit margins, CompUSA continued to grow. Whereas in 1994 CompUSA had posted a $16.8 million loss on $2.1 billion in sales, by 1996 it had an estimated $56 million profit from $3.8 billion in sales.

By 1997, CompUSA had 134 stores nationwide and its net income rose 57 percent to $93.9 million and net sales had topped $4.6 billion. In the late 1990s, every CompUSA store generated sales of $1,388 per square foot of floor, two or three times more than other consumer electronics and office supply chains. This allowed CompUSA to employ a further 5,000 employees than before Halpin’s cuts and restructuring.

Facing pressure from other computer chain stores, such as Dell Computer Corporation, Halpin introduced a system of direct marketing. CompUSA began selling custom-designed computers at a reasonable rate to a customer’s own specifications. This system, Halpin hoped, would allow CompUSA to tap into the 25 percent of the market that was controlled by independent vendors who build customized computers. Halpin called these vendors “the wicked screwdriver guys,” and introduced his company’s build-to-order service in late 1997. This service allowed customers to order a computer over the telephone to their own specifications and pick it up or have it delivered to them within a few days.

“We are not a retailer. We are a computer conglomerate,” Halpin said of CompUSA’s move into offering its build-to-order service. To this end, CompUSA was not solely responsible for the computers that were built. Instead, CompUSA subcontracted the building of the computers to three independent contractors and then these finished computers were delivered to a CompUSA store for installation or delivery. This system cut down on CompUSA’s costs and increased its profit margin dramatically over other companies, such as Dell, that offered the same service but built the computer themselves.

Social and Economic Impact

Halpin’s vision helped rescue a floundering chain store giant and turn it into one of America’s premiere companies. He not only improved the way computers were sold, but he worked to make computers more accessible and understandable. CompUSA launched a highly profitable venture into customer training by offering computer classes at CompUSA stores. Although Halpin himself did not institute the program, he appears to have a desire to capitalize on this promising market. Speaking of his company’s future, he has placed an emphasis on the increasingly lucrative full-service area of computer sales; “When we deliver, install, and teach you how to use your computer, once it’s sold, it stays sold.”

All CompUSA stores now contain a computer repair shop and computer training classrooms for customers who have problems learning how to operate their computers. The company also offers a delivery service that includes a crew to install computer service. This, along with a direct sales force that solicits corporate, government, and educational customers directly, makes CompUSA an industry leader in computer sales and dramatically increases computer literacy rates throughout the nation.

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