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Halpin, James

HALPIN, JAMES


James F. Halpin (1951) led computer superstore CompUSA, Inc. out of the financial troubles it found itself in at the beginning of the 1990s. After a period of dramatic growth during the 1980s, CompUSA began to lag in the marketplace. The multi-billion dollar retailer known as "America's Computer Superstore" was lethargic and its bloated bureaucracy brought it to the brink of declaring Chapter 11 bankruptcy. When CompUSA's chief executive officer (CEO) resigned in the last few weeks of 1993, James Halpin was left with the daunting task of turning the company's fortunes around. His efforts helped turn CompUSA into a strong competitor that, in the late 1990s, dominated the fast-paced world of computer retailing.

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; he instead went directly to work after graduating from high school.

At age twenty-one Halpin got a job unloading trucks for the Boston-based retailer Zayre Corporation for $2.60 an hour. He quickly showed initiative and his hard working style quickly caught the notice of 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 the attention of others, and in 1988 Halpin left Zayre to become the president of BJ's Wholesale Club. Two years later, in 1990, Halpin moved BJ's Wholesale Club to head Waban Inc. In 1991, he left the presidency at Waban for the same position at Home Base, a home improvement retail chain based in Irvine, California.

Meanwhile CompUSA, the company Halpin would lead out of hardship, 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 to the home computer and peripherals market (the "superstore" idea was pioneered by companies such as Office Depot). 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's control the company grew rapidly. 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. Despite its strong growth during the 1980s, the first quarter of 1993 reported a loss of nearly $1 million for the company. Although this was not an enormous amount in proportion to the company's volume, Morton resigned, paving the way for Halpin to come in and face the challenge of turning CompUSA around.

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

Like his predecessor Nathan Morton, Halpin came to CompUSA from a hardware superstore company. He decided to apply a different strategy and he got vastly different results. While competitors such as Best Buy, Neostar, Wal-Mart, and the Tandy Corporation experienced shrinking profit margins, CompUSA grew steadily under Halpin's leadership. Whereas in 1994 CompUSA 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.

One of Halpin's first actions as president of CompUSA was to end the company's racing car sponsorship and sell its cable television show. He next fired 2000 of the company's store managers, replacing them with more experienced employees from other successful chain stores. This move raised the average age of a CompUSA store managers from twenty-six to thirty-seven, an oddity in the young computer industry. Halpin's new managers did well. Halpin also initiated an incentives system that enabled some of his store managers to earn in excess of $100,000 a year.

By 1994 Halpin had turned over the assembly of CompUSA's Compudyne brand computers to an outside contractor and was promoted to CEO of the company. He replaced seventeen of the twenty top management positions in the company and eliminated some of the sideline businesses, such as software publishing, that the previous CEO had established. Only once these actions were done and the company had stabilized did Halpin consider opening more stores.

He revamped the new CompUSA stores, redesigning the layout and requiring an increase in the level of employees' technical education. His goal was to create an exciting and interactive stores that would appeal to consumers.

In October 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 specializing in security applications, file servers, and data storage solutions for businesses that use large computer networks. 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.

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 for a reasonable rate according to customer specifications. Halpin hoped this system would allow CompUSA to tap into the 25 percent of the market then firmly controlled by independent vendors who built customized computers. Halpin called these vendors "the wicked screwdriver guys," and he introduced his company's build-to-order service in late 1997. This service allowed customers to order a computer over the telephone according to their specifications and pick it up or have it delivered to them within a few days.

Halpin's custom-design innovation was a success. Instead of building the computers itself, CompUSA subcontracted the task to independent contractors, who delivered the finished product to a CompUSA store for installation or delivery. This method cut down on CompUSA's costs and increased its profit margin dramatically over companies such as Dell who built custom-made computers itself.

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. CompUSA appeared at number 329 on Fortune magazine's list of the top 500 companies in the United States for 1998.

By the late 1990s all CompUSA stores contained a computer repair shop and computer training classrooms for customers who had problems learning how to operate their computers. The company also offered a delivery service that included a crew to install computer service. Along with a direct sales force soliciting corporate, government, and educational customers directly, these improvements made CompUSA an industry leader in computer sales and dramatically increased computer literacy rates throughout the nation.

Halpin has become one of corporate America's most powerful people. In 1997 he appeared at number seventeen on Forbes magazine's list of the top corporate executives in the retailing industry. His annual salary was over $2 million. Halpin's efforts to create a focused, consumer-oriented, interactive store were successful. His vision and leadership has lead "America's Computer Superstore" through the twentieth century.


FURTHER READING

International Directory of Company Histories, Volume 10. Detroit: St. James Press, 1995, s.v. "CompUSA."

"CompUSA Seeks Profit Boost." Business Marketing, January, 1994.

"Executives Step Up To Meet Tough Challenges In 1994." Computer Reseller News, January 3, 1994.

"Getting the Bugs Out." Business Week, July 22, 1996.

"James Halpin." Computer Reseller News, November 18, 1996.

Who's Who In America 1997. New Providence, NJ: Marquis, 1996, s.v. "Halpin, James."

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Supermarkets and Superstores

SUPERMARKETS AND SUPERSTORES

SUPERMARKETS AND SUPERSTORES. SeeRetailing Industry .

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