Subject: Sep-Oct 2004 VMS3.info: Fry's Electronics Analyzed
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the years, Fry's has done the following things right:
On the other hand, Fry's has also:
Fry's has evolved from being a small, low cost single outlet to a large box store with many outlets. While prices remain low, Fry's has increased the number of items, and the range of the product line.
As Fry's grows, it is expanding it's reach throughout California, both in and outside of technology hubs. In other states, Fry's is building a very limited number of stores, usually in technology hubs. These newer branches represent a key way for Fry's to grow outside saturated California, but the geographically dispersed strategy is inefficient in distribution, creating great distances between central warehouses and stores.
This strategy has spread the Fry's brand thinly over a wide geography, unlike more well known Circuit City. Most stores are in California, and are targeted in technically savvy markets. There is potential for additional discovery.
Fry's has built a reputation for having poor customer service, from few educated staff to help with complicated technology choices to long lines for returns. While this is accepted by the technologically savvy who can, and often want to make choices on their own, it is an alienating strategy towards most consumers.
Fry's has also deployed an e-commerce strategy by buying Outpost.com, a popular but limited customer base electronics e-commerce website. Up until recently, Fry's did not have a web presence whatsoever, and customers could do no research on products, specials, locations or customer service. Now, there is a webpage with basic information, and a link to Outpost.com for online ordering. This site does not mirror the brick and motar Fry's, and appears to the consumer as an entirely separate business and brand.
While store development strategy is fairly ad hoc, Fry's has maintained a very consistent strategy of providing a wide range of goods in it's stores, and all stores are developed with a unique flavor and feel. With a consistent product line strategy and the creation of unique stores-a branding characteristic of the chain-Fry's has promulgated a very consistent, winning branding strategy over the years.
Fry's has done little to obtain feedback or modify strategy based on customer feedback. The company has a word-of-mouth reputation for having very bad customer service, and Fry's gives the impression of not caring about feedback from it's consumers. Failing to provide better customer service can curb Fry's growth with customers who are less technically savvy than the current customer base.
Fry's is creating a new business, Fry's ISP. Fry's has operated a very traditional bricks and motar company until now, and is known for retail, and certainly not for providing services, a recurring revenue stream. This is also a national business, unlike Fry's stores. It is unclear what the strategy is here, and how it fits with long term goals. It is a distraction to the brand and a potential drain of resources, and it is not clear Fry's has any of the core competencies needed to succeed in this business, including strong customer service.
Fry's online presence seems an afterthought, and is not strongly branded or linked to the successful bricks and mortar retail chain. Fry's website (not store, which is run through Outpost.com) provides the most minimal information, and fails to provide a customer support function.
If Fry's wishes to have a more national awareness like Circuit City, or attract less technically savvy customers, it needs to improve customer service by adding helpful and knowledgeable sales associates. While laptops and DVD players might seem like second nature impulse buys to engineers in Silicon Valley, most consumers need knowledgeable sales support to help them in the decision making process
Fry's should avoid entering new businesses outside of the competencies, period. If in the future Fry's believes it can leverage a core competency, AND it has achieved a stable growth strategy, than other businesses should be explored.
Fry's should improve their customer service if the company wishes to expand to geographic or demographically different markets not as technically savvy as existing ones. Expanding customer service will most likely improve sales in current stores, encouraging less savvy customers to go to Fry'.
Fry's should continue to develop ways of growing recurring revenue streams. Pushing service contracts after people have bought a product is an idea. Offering corporate accounts to local businesses, with discounts and service contracts, is a way to ensure business customer loyalty and recurring transactions. Fry's can also provide more and better post-sale services, such as better repair, easier returns, and even more complex services like assistance with setting up SOHO networks.
needs to strengthen the brand of it's online presence, and tie it more closely
to the brick and mortar experience. Customer loyalty can be enhanced by sending
out targeted specials based on past purchases, and promotions can be sent to be
used in a physical store. Creating an online presence that more clearly targets
the needs of business customers and consumers would also build a better online
About the Authors:
Surya Jonnavithula held Engineering Manager positions in multiple companies in the Valley . After completing masters from IIT Kanpur, India. in 1987, Surya has delivered many products in the areas of Workstations, Storage and Networking. He was the co-founder of Allegro Systems and was part of OnStream Networks. His interests include playing Badminton and community services.
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