Computer Superstores' Sales Soar
Rapid expansion and low-price approach have smaller chains on the run
WHEN Micro Center opened Cincinnati's first computer superstore last November, systems analyst David Buyer endured a 20-minute checkout line to buy a shopping cart full of discounted disks, a $500 laser printer, sundry books, and programs.
m out for bargains," he explains. "Other stores have a mystique, sure, but, who cares?"
Some observers think this rapidly growing breed of giant stores, which boast huge display spaces (20,000 square feet or more), breadth (more than 5,000 products in each store), and thin markups (10 to 15 percent), is rescuing computer retailing.
"Superstores are the salvation of the computer industry," says Roger Lanctot, research director for Personal Technologies Research in Boston.
Statistics support his claim. Two years ago 35 computer superstores broke the $1 billion barrier nationwide. Last year they racked up an estimated $2.3 billion in total sales.
Seymour Merrin, president of Merrin Information Services in Palo Alto, Calif., predicts that this figure will climb to $5 billion generated by 135 stores by the end of 1992.
This growth is all the more impressive because "for years, pundits have been bemoaning the death of the PC retailers, and wondering in print what could possibly come along to serve buyers who want to touch goods before they pay for them," points out Jim Seymour, a columnist with PC Week.
What came along are regional stores, such as FastMicro in Phoenix, and national giants, such as CompUSA and CompuAdd. They went head-to-head with the discount prices found in the somewhat obscure direct-marketing catalogs. Quick turnovers, high volume, low overhead - in a nutshell that's the formula superstores borrowed from catalogs.
Catalog operations, meanwhile, are expected to experience stunted growth. Dataquest estimates that their market share of the home-computer market will hover around 19 percent for the next three years. Other superstore rivals - the small chains and mom-and-pop stores - are expected to be decimated.
"Personalized attention in the computer retail industry is waning," says Russell Bozian, president of Final Design Computer Systems in Cincinnati. "These superstores don't allow customers to sit down for two or three hours at a time and walk you through 15 or 20 applications. We're losing that."
Terri Parker-Halpin, president of Committed To Results, a rival consulting firm in Cincinnati, complains that superstore salesmen were "selling refrigerators in their last job and shoes at their next job."
"Not everyone is happy with the idea that superstores will dominate this field," Mr. Merrin concedes. "But the fact is that customers have matured. They no longer want someone to hold their hand. They don't want to pay high prices."
Although consultants bemoan the vulgarization of their industry, manufacturers are actively courting the superstores. Dell computer, one of the original mail-order manufacturers, broke new ground in September 1990, when it signed a distribution contract with CompUSA. All the major manufacturers, including Apple and IBM, now sell through superstores.
Superstores meanwhile are trying to upgrade their image within the computer community. CompUSA, for example, offers applications software classes at almost one-half of its stores. Many superstores now advertise in computer industry publications.
Other retailers are also cutting into the computer world's turf. Electronics superstores such as Circuit City and McDuff Electronics and Appliances, are selling computers alongside of video equipment and refrigerators. "It will be hard for many people to differentiate these stores from true computer superstores," Merrin says.
Still, most experts expect that computer superstores will continue to blossom. They will become more aggressive in their sales efforts. FastMicro sells its products internationally through catalogs, for example.
"In a year there will be a superstore in every major market, and within four years they'll be in every market of any size," Merrin predicts.