COMPUSA BITES INTO BIG APPLE- COMPETITION, THIN MARGINS AND ALL

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The computer and software retailing wars are escalating with last month's arrival in New York of Comp-USA's first-ever downtown store, a two-story behemoth on Fifth Avenue in Midtown.

The day before CompUSA opened the first computer superstore in Manhattan, Nobody Beats the Wiz ran an ad that said it would beat any competitors price by 10%.

"We're not looking to get into a price war, but we will if we need to," says Ronald J. Gilmore, CompUSA's senior VP-advertising and marketing.

CompUSA's superstore formula-huge selling space, deep-discount prices and broad selection-works at some 73 other stores in suburban areas nationwide.

But none of those stores have the overhead of the Manhattan superstore, or do business in such a cut-throat market. Margins in New York are razor-thin and software and hardware prices are the lowest in the country.

CompUSA is gambling its first urban store will attract far more corporate and retail sales than its suburban counterparts.

And local retailers are certain the superstore will take away customers. But they also know CompUSA faces its biggest challenges ever.

In the short term, says Michael Schlesinger, district manager in Manhattan for Software Etc., there may be a few months of a novelty effect as people visit the CompUSA store. But then, the effect will stop.

"New Yorkers go to the store nearest them. They walk three to five blocks on their lunch hour. That's it," he says.

"The New York market is crazy. How do you get the product home? Superstores depend on parking," says Seymour Merrin, a computer retailing consultant.

CompUSA expects 75% of its sales initially will be to consumers. Eventually, corporate sales could rise to 50%. Based on estimates, CompUSA anticipates $30 million in corporate sales.

But the competition says CompUSA never will take that much business from local resellers.

"The corporate market in New York is a lot of small and medium-sized businesses. They need sales service, on-site service and consulting," says William Keogh, president of reseller Novaworks Computer Systems.

CompUSA isn't intimidated. "We bring so much advertising to the market, we make the market bigger," says Lawrence Mondry, senior VP-general merchandise manager. "Mom and pops hone in on a niche."

Last year, CompUSA spent $56 million in advertising nationally, according to Competitive Media Reporting. The Wiz, CMR reports, spent $64.8 million.

With both companies putting the majority of their measured media dollars in newspapers, the computer store battle also could spill into the press.

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