Computer City
| Company type | Subsidiary |
|---|---|
| Industry | Retail (computer hardware and software) |
| Founded | 1981 in Costa Mesa, California, United States |
| Founder | Leonard Simon, Myrna Simon |
| Fate | Acquired by CompUSA in 1998; brand discontinued |
| Headquarters | Costa Mesa , United States |
Area served | United States, Europe |
Key people | Alan Bush (president under Tandy Corporation), Leonard Simon, Myrna Simon, Rick and Joe Inatome, Jim Hamilton (Vice President GMM) |
| Products | Computers (brand-name and private label), software, technology products |
Computer City was a chain of computer superstores based in the United States, managed by Tandy Corporation. In 1998, it was acquired by CompUSA and integrated into their business operations.
The chain offered both well-known brand-name and private label computers, software, and related technology products. At its height, Computer City operated more than 101 outlets across the U.S. along with five additional locations in Europe.
History
Established in 1981 by Leonard and Myrna Simon in Costa Mesa, California, Computer City rapidly grew to include several California stores in cities such as Brea, Pasadena, San Diego, Beverly Hills, Encino, Cerritos, and Torrance. Leonard Simon contributed as a member of the original Apple Retail Council while Myrna Simon oversaw human resources. The chain was among the earliest independent retailers in Los Angeles to stock the IBM 5150 PC, alongside Sears and ComputerLand.
In 1983, ownership shifted to Rick and Joe Inatome who rebranded the company as Inacomp. During their tenure, it rose to become the second-largest computer retailer in the U.S., with annual revenues surpassing $500 million when adjusted for inflation.
By 1985, as profit margins began to shrink due to a maturing market, the Inatome brothers implemented a new strategy. They launched the first big-box retail format for computers under the original Computer City name, supported by investment from Mitsubishi. Capitalizing on strong vendor partnerships with IBM, Apple, and Compaq, they introduced a privately held large-format store concept that revolutionized computer retailing.
Innovative retail practices
Computer City pioneered several retail innovations now standard in the industry. Beginning at the Costa Mesa Incomp location, it featured The Graphic Zone—a professional service bureau catering to the emerging desktop publishing sector. The store also housed a café designed to encourage longer customer visits and included a product training center equipped with an Electrosonic Video Wall comprising 16 monitors used for digital signage outside of training hours. Additionally, Computer City implemented vendor-managed inventory systems, vendor-branded shops, and CO-OP funded displays—methods that have since become widespread in retail environments.
Acquisition by Tandy
Tandy purchased Computer City in 1991 and expanded its footprint nationwide alongside its Incredible Universe stores. Alan Bush, formerly an executive at Radio Shack, was appointed president. While Computer City stores resembled CompUSA’s supercenter format, they did not possess comparable financial backing. Ultimately, CompUSA acquired Computer City to consolidate market share and remove competition.
Computer City operated two distinct store formats: larger full-service outlets featuring onsite Tandy Repair Centers with dedicated business sales teams and software training sessions (covering programs like Microsoft Excel, Word, and PowerPoint), as well as smaller Computer City Express stores without repair or training services. Some of the full-size stores were comparable in scale to Best Buy locations.
The company earned recognition as the second fastest retailer to achieve $1 billion in sales (1995) and $2 billion (1996), trailing only Sam’s Club. This rapid expansion was driven by leadership from Alan Bush and Jim Hamilton—Vice President GMM—who was regarded as the "Father of Computer Retailing."
In competitive regions such as Westbury/Garden City, NY, and King of Prussia, PA, Computer City directly contended with nearby CompUSA stores. Both Computer City and Tandy’s Incredible Universe faced financial difficulties; eventually, Incredible Universe’s computer departments were merged into Computer City outlets. The close proximity of these divisions may have weakened their overall market effectiveness.
Adopting a grocery-style business model enabled customers to browse products freely without requiring assistance from sales personnel. Until mid-1996, employees had no sales quotas or commission structures but received bonuses for selling extended warranties (CCSP) or conducting training classes. However, this approach ultimately became a competitive liability due to limited sales expertise among staff and elevated product return rates. Consequently, in late 1996, Computer City announced plans to close 21 stores.
CompUSA Acquisition
On June 22, 1998, CompUSA revealed its plan to purchase the Computer City chain for $275 million. After finalizing the deal in September 1998, CompUSA shut down fifty-one outlets and rebranded the remaining locations as CompUSA stores. Warranty services for products bought at Computer City were managed by either CompUSA or Radio Shack, depending on the specific state.
In the Canadian market, CompUSA divested its Computer City stores to Future Shop, which eventually closed all Canadian branches.
Current Usage of the Name
A separate retailer named Computer City operated in Bermuda from 2000 until it ceased operations in 2012. Until approximately 2015, outlets in Denmark and Sweden continued using the original Computer City logo. Additionally, other international retailers continue to use the Computer City brand name.