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    "Walking into a Fry’s Electronics nowadays is nothing like it was during its heyday in the 1980s and ’90s. There are no long lines at the cash registers. The cafes sit mostly empty, like the store shelves and parking lots.  
    There are also fewer employees to serve people who still patronize the iconic electronics chain, which was born in Silicon Valley in 1985. Fry’s quirky themed stores, ranging from Western to Mayan, were stocked with just about anything electronic from routers and motherboards to coffeemakers and computers — plus refrigerators, office furniture, perfume, candy bars, “As Seen on TV” merchandise and so much more. The stores quickly became a techie haven and hangout.  
    For months, customers have been questioning the future of Fry’s, posting photos of empty shelves on social media as employees and experts chime in, blaming everything from the rise of smartphones and competition from Amazon to changing customer demand. Though the company is closing its Palo Alto store, it insists it has no plans to quit the business or close its remaining 33 stores in nine states.  
    But in recent postings on job sites like Glassdoor, dozens of Fry’s employees have been complaining about the company, with several saying their hours have been cut and that many are now working part time. Because of that, they say many employees have left or are actively looking for other jobs.  
    Fry’s spokesman Manuel Valerio, who recently said the company is switching most of its suppliers to consignment but is not liquidating or closing stores, did not respond to repeated requests for comment.  
    Switching to a consignment model means suppliers would get paid for their goods only after Fry’s sells them at its stores.  
    “It’s often a sign of difficulty,” said Neil Saunders, managing director of analytics company GlobalData’s retail division. “If a retailer cannot afford to pay for product, then there’s a real necessity to go on to a consignment model because it frees up capital.”  
    Saunders said suppliers might not agree to such an arrangement because they assume all the risk. It is more common for retailers to try to help their cash flow by dragging out their payment periods to suppliers, he said.  
    Ingram Micro, a known delivery partner of Fry’s, at least at one time, declined to comment, and efforts to reach other suppliers were unsuccessful.  
    An employee of one company that has done business with Fry’s, who asked to remain anonymous, said that while some manufacturers might be willing to offer their products on consignment, it would depend on how confident they feel in that retailer’s business. In Fry’s case, he said, he would be worried that stores might shut down one day and he wouldn’t be able to reclaim his merchandise.  
    Mark Cohen, director of retail studies at Columbia University, said the consignment model has traditionally been used for high-margin, slow-turning merchandise like fine jewelry and furs. Consumer electronics is a thin-margin business but is risky, he said.  
    “Electronics has an obsolescence factor,” Cohen said. Vendors are “probably loath to supply (Fry’s) with goods because they’re worried” about the chain’s future, he added.  
    The company has said its shelves will soon be restocked and that it is preparing for the holiday season. But it’s hard for current and former employees, customers — and experts — to believe.  
    Fry’s, whose first store was in Sunnyvale, now has eight stores in Northern California and nine in Southern California, plus eight stores in Texas and two stores each in Arizona and Georgia, and one store each in Illinois, Indiana, Nevada, Oregon and Washington. The company says its Palo Alto location will close in January because its lease is expiring. But it says it plans to keep its other cavernous stores open.  
    Bryan Boone, who left Fry’s a couple of years ago after nearly 20 years with the company, says he bets “they’re going to go out of business.” But the former facilities manager and construction supervisor thinks the owners of the secretive and privately owned company — the Fry’s family — are trying to keep the stores open as long as possible to avoid paying the costs associated with winding down the business.  
    John Fry, co-founder and CEO of the company, did not return emails requesting comment.  
    As customers, employees and fans of Fry’s lament the chain’s current state, many are blaming the rise of online retail giant Amazon — and changing times.  
    Earlier this month, Jean-Louis Gassée wrote in his popular blog Monday Note that “Fry’s stores have become sad, pale shadows of their glorious past.”  
    The former Apple executive, who worked briefly at Fry’s as a cashier after being forced out of Apple, said in a phone interview from France that there seem to be fewer people who want to build their own computers in the age of smartphones.  
    “A large segment of the population has shifted,” Gassée said. “I remember (Netscape co-founder and venture capitalist) Marc Andreessen saying that software is eating the world. A lot of things that were done by hardware modules that people assembled themselves are now integrated into smartphones.”  
    He added that some people still want to buy electronic modules or appliances from Fry’s. “But the dimensions of the stores and the market need are probably out of sync,” he said.  
    Longtime Silicon Valley observer and forecaster Paul Saffo agreed.  
    “Maker Faire is shutting down,” he said. “Fry’s was a watering hole in the middle of the desert. Now (tech) is so mainstream. … Both models are victims of their own success.”"
  2.  permalink
    This is a pretty interesting story. I do agree with the conclusion that the shift in demand has made the dimensions of the stores difficult. The huge amount of sq feet increasingly is the opposite problem that Radio Shack had of stores that were too small to compete with bigger stores like Best Buy. Many categories that once used to produce profits either don't exist anymore (e.g. pretty much the entire software dept) or produce a much leaner margin. Not only are there fewer people building white box computers, but the few that are increasingly buy their components online. Fry's has struggled to keep enough relevant inventory in stock that you would actually struggle to do a computer build at Fry's even if you wanted.  
    I would like to believe that they could survive one final holiday season, but I would be surprised if virtually any of the stores saw another anniversary for the chain. I think that the linked blog post by Gasse really hits the head on the nail of how much things have gone downhill. Maybe they survive into next year, but I don't see them lasting much beyond that. They probably won't even make it to the next recession nevermind survive the next recession.