Big apple gets chomped by national CE big boys - consumer electronics stores in New York, NY

Discount Store News, Jan 2, 1995 by Teresa Andreoli

NEW YORK -- National consumer electronics stores and computer products chains will soon take a bite out of the Big Apple. Their entry will set off another retail upheaval in metro New York.

As regional and national discounters such as Bradlees and Kmart spring up in the crowded neighborhoods of New York, big box electronics retailers have begun to pay a great deal of attention to the well-populated area.

And with good reason: the market is second only to Los Angeles in the sales of CE product, according to the Electronic Industries Association. In 1993, more than 1,100 outlets in metro New York rang up sales of nearly $2.7 billion, excluding sales of appliances.

CompUSA, the Dallas-based 80-unit computer superstore, was the first national computer chain to drive a stake into Manhattan. The retailer opened a 26,100-sq.-ft. unit in May and still remains the only national computer seller on the island.

The chain's Manhattan and White Plains (in suburban Westchester County) stores have exceeded sales expectations, said CompUSA spokeswoman Laurie Levy. "New York has been a very good market. We will announce another New York location shortly after the first of the year."

Other national chains have followed suit, or at least hinted that they'd be in New York a lot sooner than planned.

Tandy's Computer City barreled into nearby towns in New Jersey and Nassau County (Long Island) this past November. On top of the three Computer City units opened last fall, two more are scheduled to open early this year: in the Woodbridge Mall in Woodbridge, N.J., and in the Walt Whitman Mall, Huntington, Long Island.

Tandy promises to build The Incredible Universe unit at Roosevelt Center (formerly the Roosevelt Racetrack) in Nassau County well before next winter.

Rumors abound regarding Best Buy's entry into the market. About 40 or 50 new units will open this year, but spokeswoman Laurie Bauer said the Eden Prairie, Minn.-based chain has "no immediate plans for New York."

Best Buy will probably save its New York entry for 1996 or '97, said Saul Yaari, a managing director for Piper Jaffray, Minneapolis.

Johnson Rice & Company analyst David Childe, however, said Best Buy's ability to move quickly into new markets, keeps it a contender.

"Best Buy is a highly opportunistic company when it comes to real estate, and its ability to move quickly allows it to retain significant flexibility regarding market entrances," Childe said, noting the chain's recent entry into Phoenix and Los Angeles were decided upon only six months prior to opening.

The acquisition of a regional player may prove a logical way for Best Buy to move in. Although Tops, Edison, N.J., a strong nine-unit CE/computer retailer is not currently for sale, its store size and location would make an easy match.

Richmond, Va.-based Circuit City has also hinted about interest in the region but claims no immediate plans to enter the area.

"We'll concentrate on opening 60 stores per year for the next two years," said Paul Rakov, Circuit City's media coordinator, "which will put us in every major market in the country, except New York." The nearest that the chain has come to New York is Philadelphia.

Even without the nationals, regional and local sellers are as integral to the New York scene as the corner hot dog vendor; and they have begun to react to the incursions and to fight back.

Nobody Beats the Wiz, Carteret, N.J., adopted an EDLP strategy in '94 and added a camera and photography accessories department.

P.C. Richard & Sons, the 85-year-old electronics and appliances retailer, has pumped up its advertising and marketing efforts. And Trader Horn, Hasbrouck Heights, N.J., fell victim to the market contractions and filed Chapter 11 two months ago.