Computer City investing $100 mil in brand overhaul

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Computer City, preparing to do battle in the growing direct PC market, is investing an estimated $100 million in a marketing makeover.

The retailer, with 100 stores in 50 markets and annual sales of $2 billion, is working with Publicis/Bloom, Dallas, on revamping its brand identity. The agency's assignment includes a major new strategic TV effort, expected to break as early as this spring.

SOME STAYS IN-HOUSE

Computer City's 60-person in-house ad agency will continue to work on collateral, newspaper and local-market media, and the retailer may hire additional talent to help with the repositioning, said Joel Carter, VP-marketing of the retailer.

The company said ad spending last year was $45 million, but "our intent is to ramp it up significantly," said Mr. Carter, indicating that spending could approach $100 million for 1998.

AGGRESSIVE PLANS

Computer City "has some very aggressive plans to impact the marketplace this year," said Steve Price, co-CEO of Publicis/Bloom. Those plans include a redesign of the company's stores.

The retailer's move to compete against direct-sellers Dell Computer Corp. and Gateway 2000 is an attempt to tap that strong segment of the computer market. Computer City's move follows the announcement last summer by larger rival CompUSA that it will sell built-to-order PCs via the Internet, phone and a corporate sales operation, as well as in its stores.

Numerous retailers have struggled to make money in the low-margin PC market, with some chains exiting altogether or filing for bankruptcy reorganization.

SHRINKING SELECTION

Other electronics retailers, such as Best Buy Co. and Circuit City Stores, Mr. Carter said, are managing computer inventory so as not to place themselves at financial risk. He believes these constrictions leave consumers with a shrinking selection of computers.

"There will be renewed focus on computer superstores as a reliable source for computers," he said.

Contributing: Bradley Johnson

Copyright February 1998, Crain Communications Inc.

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