Is Fry’s Electronics Really Going Out of Business?

A friend mentioned several weeks ago that Fry’s Electronics was closing the Palo Alto store after the holidays. We jumped into the car and went over to the Campbell store. The parking lot empty, the shelves barren, the customers few, and the salesclerks unhelpful as always. After I posted my montage video, I’ve gotten comments that other stores around the country were in better or worse shape than the Campbell store. Fry’s Electronics put out a statement that they weren’t going out of business, are in the middle of changing vendors, and plan to stock the shelves for the holiday season.

For those of you who are not familiar with Fry’s Electronics, here’s a brief overview. Fry’s Electronics started in 1985 as a warehouse store with electronic parts and testing gear, consumer electronics, household appliances and convenience food under one roof. An early marketing slogan, “picking up chips with your chips,” made Fry’s a popular place for techies to buy silicon chips, potato chips and soda at the same time. Fry’s expanded to 34 stores in the last 34 years throughout the San Francisco Bay Area, California and nationwide.

Here are three things that are going on with Fry’s Electronics.

The Palo Alto Store Is Closing

Fry’s Electronics confirmed that the Palo Alto store will be closing after the holidays. That announcement started the recent rumors that the remaining semi-empty stores would also close after the holidays. People showed up at their local store to record and post videos of the empty shelves on YouTube. At the City of Industry store, Jeff of Dead Malls recorded himself being escorted out by the store manager for refusing to stop recording video.

This could be just one manager or the corporate office trying to crack down on people recording videos of the empty shelves inside the stores. I had no problem recording my montage video at the Campbell store with my iPhone 6s at the time. If I had my Panasonic HC-V180 camcorder in hand, I might have been told to stop recording video and escorted out of the store.

The Palo Alto store occupies the warehouse of a former cannery founded in 1918 that is now a designated historical landmark. The property owner has declined to renew Fry’s lease and the store must vacate the premises at the end of January 2020.The city plans to rezone the property and surrounding neighborhood for mixed development. Ironically, Fry’s was kick to the curb in the name of progress.

The Vendors Are A-Changing

Fry’s Electronics explained that they were changing vendors that provides all the products for the stores. A vendor transition should have happened without customers ever noticing that it was taking place. Semi-empty stores are a strong indication that something went terribly wrong with the vendor transition. The appearance of “going out of business” can become a self-filling prophecy in the age of the retail apocalypse.

If you’re not familiar with the term “retail apocalypse,” it refers to the large number of retail stores and malls closing throughout the United States since the Great Recession ended ten years ago. A lot of people love to blame Amazon and Wal-Mart. I personally think that private equity firms are the blame for buying up profitable retail chains, cashing out the good assets, and disposing the bad assets in bankruptcy court.

Since Fry’s Electronics has always been a privately held company, the blame for its decline can be corporate mismanagement and/or market forces. Several salesclerks have reportedly told customers that the recent US tariffs on Chinese products was the main reason for the lack of products on the shelves. With every product bearing a “Made in China” sticker, tariffs would jack up the prices to the point that consumers just won’t buy. Fry’s could have reduced the available inventory to avoid getting stuck with overpriced inventory that won’t sell.

Stocking Up For The Holidays

Fry’s Electronics announced that will be stocking up for the holidays. They better since retailers make two-thirds of their annual profits during the holiday season. Black Friday, the day after Thanksgiving, get its name for retailers going from the red (not making money) to the black (making money) on the first day of holiday shopping. Black Friday will be a key test on whether Fry’s will stay open after the holidays.

I don’t expect Black Friday at Fry’s to return to the craziness of the 1990’s when my parents and I stood in line for two hours. If they did have a two-hour line, it would be a very good sign that business is returning to normal. I don’t expect that to happen. The most likely scenario is that I will go in and get out in ten minutes for recording video inside the store.

If the parking lot remains empty, the shelves barren, the customers few , and the salesclerks are unhelpful as they have always been, expect Fry’s Electronics to join the ranks of CompUSA, Circuit City and Radio Shack in 2020.

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