CE or PC? Adray's says the choice is yours - consumer electronics

Discount Store News, Jan 2, 1995

VAN NUYS, CALIF. -- Adray's, the regional consumer electronics chain here, is offering its shoppers the choice of two stores in one.

Adray's Van Nuys, Calif.

Total sales '93:                        $120 million
Proj. sales '94:                        $140 million
Fiscal year ended:                            10/2/94
Stores:                        10, located in Calif.
Store size (avg. in sq. ft.):                 25,000

Source: Adray's

Each Friday, when the electronics chain's weekly circular hits, Adray's is pretty much a typical CE megastore, pushing home electronics and billing itself as the "TV/Video Headquarters."

But come Saturday mornings, Adray's converts to a computer superstore--which began this past fall--running small business-oriented strip ads in local sports sections playing up its selection of powerful, number-crunching computers, heavy duty printers and other business machines.

According to gmm Jim Nakamura, the dual identity is a major component of Adray's plan to reinvent itself and to remain a major player against increasing competition in the nation's largest electronics market.

Other components include a new superstore prototype, increased service levels, a blended commission/hourly workforce, and clear division of Adray's former "carnival" merchandising into four discrete businesses--home/office electronics, TV/video, white goods/housewares and audio/personal electronics, each with its own gmm reprting to vp of marketing and merchandising Ed McKeaney.

"Adray's has always been known for dominant assortments and low prices," Nakamura said. "But now we're going to improve our service as well."

With a strong franchise in traditional consumer electronics, appliances and housewares, the chain is attempting to grow its year-old computer and high-tech businesses. In the new superstore, which is one of the best-looking CE prototypes in the industry, computers and business machines are the first items that customers see at the entrance.

Even more important, the company has an overwhelming selection. Its CPU assortment runs to about 35 machines, roughly the same as Best Buy and considerably more than at office superstores, and its 25 notebook computers, 39 fax machines, and equally dominant selections of printers, copiers and other machines out-assorts anyone else in the market.

The selection is vital, Nakamura said, because Adray's is attempting to appeal to a much broader market than most of its competitors. "Everyone's after the home consumer," he noted, "and so are we. But we're really after the guy who works out of his home and the small business owner." Those two segments are the same ones targeted by the office superstores, leading to Adray's dual advertising strategy.

On Fridays, the chain might feature a Packard Bell DX2 multimedia computer at $1,599; the next day, the feature piece could be a Pentium 90MHz workhorse at $2,599. Similarly, the advertising might feature nonintegrated telecom products on Fridays and fully integrated products perfect for a small office on Saturdays. "Right now, we're not getting the business customer ... but we will," Nakamura said.

While Adray's carries all the top brands, it concentrates on a wide assortment of quality clones to deliver more power and more features at a low price. On the consumer side, that might mean including a four-spin CD-ROM unit and upgraded speakers, or bundling net access; on the business side, that would generally mean a much larger hard drive, more RAM and a faster clock speed. For instance, consumers were recently offered the choice between a PB 486 DX266 with 8 megs of RAM, a 420 mb hard drive, and double speed CD-ROM drive or an Amerigo clone with a DX3/75MHz chip, an IBM Blue Light-ening motherboard, and 31 CD titles, each for $1,599, without monitor.

"Because we're still relatively small (10 stores), we're a lot more flexible than our competitors," Nakamura noted. "If you put all your money on SX50 for Christmas, you might find that DX50 is the same price by then. We can get in and get out, so we're not stuck pushing obsolete inventory. We can get the hot configurations; all the big guys can do is reduce prices."

The computer business will continue to favor the nimble, he added. "Two years ago, the standard was a 386SX with 1 mb of RAM and a 100-mb hard drive, and it wasn't even upgradeable," Nakamura said. "Today, it's a fully expandable 486 DX50 with 4 megs of RAM and a 420 mb hard drive. By the first quarter, a DX66 will be standard, with 8 megs of RAM, at about $1,799 or less. After that, Pentium might be the opening price point."

The same thing is happening in laptops, with sound, color, PCMCIA slots and telecom ports turning them into full-featured computers (including CD-ROM, for those with a healthy budget). "If you just have four skus, you're not even in the business anymore," Nakamura said. He expects to see affordable Pentium models, larger screens ("you can't give small screens away anymore") and up to 16 mb of RAM in the near future.