Sales strategy of personal computer makers now encompasses 'superstores'


July 29, 1991|By Marianne Taylor | Marianne Taylor,Chicago Tribune

Chicago - The same forces that created the nation's Wal-Marts, K marts and discount drug emporiums are at work in the computer industry, spawning a new breed of warehouse-size forums for the sale of personal computers.

So far, only a handful of such outlets exist nationwide. But for the once-elite personal computer market, mass merchandising appears to be the password for the 1990s.

For instance, Tandy Corp. recently announced plans to phase out 200 of its Radio Shack Computer Center stores in favor of six larger Computer City Supercenters this year. Each will have about 25,000 square feet of selling space.

Tandy plans to open 100 of these warehouse-size outlets in the next two years to sell basic models of Apple, IBM, Compaq, Tandy and other personal computers.

Computerland Corp. has similar plans to convert many of its small stores to a grander scale.

A Chicago-area firm, Elek-tek Inc. -- whose chairman, Mort Goldman, claims to have invented the computer superstore concept with his first store in 1979 -- will open its largest store, at 33,000 square feet, July 10 in Rolling Meadows, Ill.

And Sears, Roebuck and Co., one of the original mass merchants and a leader in appliance sales, plans to move quickly this fall to open 50 new Office Centers as Sears departments after tests in 22 Sears stores. These 2,000-square-foot departments, though hardly superstore size, nevertheless will display most top computer brands and be backed by Sears' vast distribution network and buying power.

The largest existing warehouse-style computer retailer, CompUSA, has expanded its reach to 20 stores on the strength of selling so-called IBM clones -- personal computers made by different manufacturers but compatible with the more expensive IBM models.

CompUSA, which has a store in Rockville, also plans to expand rapidly, and its merchandise assortment is likely to widen. After an agreement this month with Apple, CompUSA will begin selling basic Macintosh models, said Nathan Morton, president of CompUSA, who added that he "wouldn't rule out the possibility" of a similar agreement to sell IBM products.

What's at work in the computer industry is similar to what has already happened in the merchandising of more mundane consumer goods.

Intense price competition among manufacturers has created a need for them to find new, lower-cost retail outlets, while consumers have grown increasingly informed and bargain-conscious, so that they need less help than before in picking out the hard disk drive, keyboard or monitor for their in-home offices or businesses.

Tandy, in particular, has taken its cue from the discount trade. Officials at the Fort Worth, Texas-based firm anticipate that lower rent, lower overhead and higher per-store sales volume in the new Computer City stores will enable them to keep prices lower than those of traditional PC "boutique" stores.

"There will be sales support there for customers who need it, but it's going to be primarily a very broad assortment of product for the knowledgeable consumer to come in and select from," said Philip Bradtmiller, a spokesman for Tandy. "There will be a lot of self-service."

What Mr. Bradtmiller and others are really saying is that basic desktop computers have become a commodity item, which, like shampoo, can be readily sold in a bare-bones format.

"More and more customers are second-time buyers and upgrade buyers," said Tandy's Mr. Bradtmiller. "The buyer has a much higher level of knowledge on computer products and is increasingly comfortable making his selection without a lot of sales assistance."

Figures from Dataquest Inc., a computer industry research firm, demonstrate the changing knowledge base: In 1983, 80 percent of personal computers were sold to first-time buyers, but by last year only 39 percent of PCs sold were to first-timers. By 1993, that proportion will shrink to 24 percent.

As consumers have become more sophisticated, manufacturers have sought better access to the growing trade in the lower-end models that appeal to home-office users and small businesses. These models -- laptops, notebooks and basic PCs -- make up about 82 percent of all personal computer sales, Dataquest estimates.

"For the longest time, computer manufacturers have complained they couldn't get to individual consumers and the small business consumers," said Doug Kass, a Dataquest analyst. "The only thing superstores are is a way for manufacturers to reach individual customers and small- to medium-size businesses, who are more concerned with price and value than maybe a [corporate information systems] director has been."

"What's happened is that the commercial marketplace has dried up with the economic environment being the way it is and capital spending being the way it is," said William Lenahan, president of Sears Business Centers and who is heading Sears' home-office expansion effort.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.