Fry’s Electronics has finally shut down. At the stroke of midnight on Wednesday, February 24, 2021, the website made it official with a front-page memo. After 36 years in business, Fry’s Electronics ceased operations for 31 stores in nine states. Management blamed online shopping and COVID-19 for this sudden but not unexpected shutdown.
But online shopping and COVID-19 didn’t kill this zombie retailer.
An earlier announcement took place the day before. Planning documents filed with the city would turn the San Jose headquarters store into a tech campus. If you watched my previous videos, real estate deals resulted in store closures in the last 18 months. This real estate deal was so big that it shut down the entire company.
The Future Tech Campus
Bay West Development filed a preliminary proposal for the North San Jose headquarters in April 2020. Seven eight-story buildings and two garage buildings on a 20-acres lot on East Brokaw Road near the 880. Two million square feet of office space could accommodate 10,000 workers.
Ten months later, the developer followed up the preliminary proposal with planning documents. The Fry’s Electronics store, headquarters and warehouse will get torn down. No timeline specified for city council approval, when construction will start, and how long it will take. That’s a dramatic change for an underused parking lot.
Follow The Money
The San Jose Mercury News listed the property ownership for all the stores in the San Francisco Bay Area. The founders owned not only owned the North San Jose property but also the Fremont property. The assessed values are worth $20 million USD and $24 million, respectively.
On a related note, Bay West Development has an ownership stake in the San Jose property. They also own the property for the Renton, WA, store that will become a 1,000-unit apartment complex.
The Fremont property has an ordinary tech building that wasn’t custom built for a store theme. The founders could clear out the store, slap on some paint, and lease out the building to a tech company. A quick turnaround to generate income until a developer expresses interest.
The owners for all the other properties were either individuals or development companies.
Online shopping killed off many brick-and-mortar stores over the years. That might not be the case for Fry’s Electronics. The founders were looking for an exit strategy after 36 years in business. Being bought out by another retail chain and/or private equity firm wasn’t an option.
COVID-19 pushed many retail stores over the edge from county- and state-mandated shutdowns. But not for Fry’s Electronics. The founders were able to:
- Reduce the number of employees
- Unload major household appliances that tied up cash
- Take advantage of smaller real estate deals
Since COVID-19 affected all retailers, empty stores and store closures got less media attention than it should have.
Fry’s Electronics was a zombie retailer for two years. The same amount of time to prepare a preliminary proposal and planning documents. With the North San Jose property slated for redevelopment, the founders finally pulled the plug on the business.