Having created a major ruckus in the channel two years ago by launching direct retail stores, Compaq has realised the error of its ways and terminated the Connect stores, leaving 15 redundant staff in its wake.
The two remaining company-owned stores in Brisbane and Melbourne will close their doors this Thursday. Meanwhile, settlement has been reached with the sole franchisee - in Castle Hill, Sydney - they managed to attract, and it is believed that the store will revert to its former title of Nortec Computers.
The decision by Compaq to close its Connect stores - an exclusively Australian initiative - came as part of a larger global consolidation that sees the former Consumer and Commercial business groups merge into one unit which will now be known as Access Business Group.
The new group will
be headed up by former Commercial group director Tony Bill, with his Consumer group counterpart, Rob Balmer, amongst the personnel casualties from the rationalisation.
Four Connect store management staff have been redeployed within the new business unit, but all the sales and support staff are gone. According to Bill, there are a further 13 head office staff who have lost their jobs as a result of role duplications created by the merged business units. Most of the head office casualties were described as "either upper-middle management or administration staff".
Two channel marketing staff and one other marketing employee have also been axed.
Bill said the whole channel is having a hard time at the moment. Connect stores had not been exempt from that turbulence.
"We made the decision that the strategy wasn't right for a tough market," Bill said. "Revenues [at the Connect stores] had significantly reduced to the point where they were losing money. It was a tough call, but we had to make the decision based on the economic climate we are experiencing at the moment."
Bill also conceded that no other franchises had been sold and that the stores have been in decline for quite some time. He refused to be drawn on the cost damage that had been sustained by Compaq in Australia from the failed Connect investment.
Bill added that if Compaq learnt a lesson from the whole exercise it is that "channels are and will continue to be our best route to market".
Compaq originally opened eight Connect stores in Melbourne and Brisbane in 1999, with an original plan to roll out over 100 more franchised operations across Australia before the end of 2000. The initiative failed dismally with no new stores other than the Castle Hill effort eventuating, and six of the pilot stores closing last December.
These closures occurred despite outrageous claims by former Compaq management that the pilot stores were turning over an average of $1 million per month each.
Bill said the new Access Business Group will sell all of the old commercial and consumer product lines, but expects some rationalisation in the near future and notes that the separate products will no longer be targeted at disparate users