Fry’s Electronics, a retail fixture in Southern California selling everything from laptop computers to Segways, is shedding stores again.
The San Jose-based company insists the downsizing is not a death knell for Fry’s as some have speculated. Spokesman Manuel Valerio said Wednesday the electronics chain is changing its business model and downsizing its footprint where needed.
“You may be aware from earlier reports that Fry’s is in the process of transitioning to a vendor/consignment model,” Valerio said via email. “We now have over 300 vendors with whom we have consignment contracts, and we’re diligently working to enlist more in the next several weeks. We appreciate our customers’ patience as this is a continuing work in progress.”
Under the consignment model, a vendor is paid only when an item it provides to the store sells, and Fry’s retains a portion of the sale.
Anaheim store closing
On Tuesday, Fry’s posted a message on Facebook alerting customers that its Anaheim store at 3370 E. La Palma Ave. will be closing Monday, March 2. Late last year, CBRE brokered the sale of the 144,000-square-foot building to logistics real estate firm Prologis for undisclosed terms.
Valerio said the privately-held Fry’s is looking to reduce merchandise redundancies.
“It was determined that we were over-stored in the Orange County area, and closing Anaheim allows us the opportunity to address that situation and still serve our customers’ electronics needs via our Fountain Valley store,” Valerio said. “Products in our Anaheim store will be transferred to Fountain Valley.”
Woodland Hills property sold
Fry’s property at 6100 Canoga Ave. in Woodland Hills has also been sold, Valerio said, although the store is still open and there are no immediate plans for closure.
Kaplan Companies, a Houston-based real estate development firm, plans to develop the 8-acre property, according to a report from Berkadia.
Emanuel Gonzales, 40, said he has avoided shopping online after becoming a victim of identity theft. He moved to Winnetka about 10 years ago and has been visiting the Woodland Hills store ever since.
He said he’ll miss the store if it closes.
“I’m old-school and like to come here and talk to people,” Gonzales said. “Many similar stores in the area have closed and Fry’s is the only one that has been the same. I’d rather come here than shop online.”
Walking into Fry’s Electronics in Woodland Hills is like stepping into an electronics wonderland. The shop’s design is inspired by Lewis Carroll’s Alice in Wonderland story. Its entrance is decorated as the rabbit hole, and towering figures of the Cheshire cat, Walrus and a caterpillar on his mushroom are tucked throughout the store.
Other closures
Fry’s closed its Palo Alto store in January because it lost its lease on the property, the company said, and another store in Duluth, Ga., was shuttered in December when the retailer determined it was “over-stored” in the Atlanta area as well.
“No other stores are planned for closure at this time,” Valerio said.
Some customers aren’t so sure. Michael Smith offered his thoughts in a Facebook post after learning of the pending closure in Anaheim.
“So it has started,” he wrote. “The beginning of the end seen with empty stores and online ‘out-of-stock.’ And now the last phase with the closing of the stores. The end is near, what a sad, slow ending it has been.”
A Fry’s representative responded to Smith’s post by saying the transition to a vendor/consignment model has reduced product inventory in the stores.
“During the transition, we have to temporarily stop ordering product as we put new consignment agreements in place,” the representative wrote. “Although we are making great progress, we still have a lot of work to do to get our stores fully stocked again.”
Another Facebook user took aim at Fry’s last-minute announcement of the Anaheim closure.
“When most stores are closing they announce it months in advance and have clearance sales,” he said. “You announced it six days before it’s closing. No closing signs or anything at the store. Not a good way to treat customers.”
Inventory turnaround
Burt Flickinger III, managing director for the retail consulting firm Strategic Resource Group, said Fry’s move to a consignment model makes “perfect commercial sense.” Since vendors are only paid for items that sell, they will be less likely to flood Fry’s with too much merchandise.
“One of the biggest capital commitments for any retailer is the cost of inventory,” he said. “It can sometimes take 100 to 350 days for an item to sell. This will allow them to move to the Asian model of just-in-time delivery.”
Flickinger said Fry’s has a solid management team and is well-positioned, particularly with the U.S./China trade war fueling a shortage of consumer electronics.
Increased online competition
Founded in 1985 in Sunnyvale, Calif., Fry’s has been a go-to electronics destination for decades, but it faces increased competition from Amazon and other retailers that offer many of the same products.
“Given the challenges of today’s retail competition — which all brick and mortar retailers are facing — Fry’s management determined that the best strategy for success was to transition to the consignment model,” Valerio said. “More retailers are going to the consignment model.”
Fry’s website lists a total of 30 stores, including nine in Southern California. Local stores include Anaheim, Burbank, City of Industry, Woodland Hills, Fountain Valley, Manhattan Beach, Oxnard, San Diego and San Marcos.
The company operates additional locations in Georgia, Illinois, Indiana, Nevada, Oregon, Texas and Washington.
