Customer disservice

By Simon Firth
Published April 30, 1998 7:00PM (EDT)

Step inside the vast new Fry's Electronics superstore in Sunnyvale, Calif., and you enter an enormous warehouse, bizarrely decorated to look like a museum, stacked to the rafters with a mind-bogglingly huge inventory of consumer electronics and staffed by some of most loathed salespeople in the world. You're also walking into the latest incarnation of a Silicon Valley legend.

Fry's five local stores have such a firm place in Valley mythology that tourists visit them by the busload. An entire Yahoo category is now devoted to Web sites that satirize the chain. It's even been immortalized in fiction.

When Daniel Underwood, the bug-checking hero of Douglas Coupland's Silicon Valley novel "Microserfs," needs to buy a strip of EPROM memory, he heads, of course, to his local Fry's. Once there, Daniel and his friends marvel at "the pyramids of Hostess products, the miles of computing magazines, the cascade of nerdiana lifestyle accessories: telecom wiring supplies, clips, pornography, razors, Doritos, chemicals for etching boards." Then Daniel runs into a boy who's the spitting image of his dead brother and freaks out in the aisle.

As locals will tell you, stuff like that happens at Fry's all the time.

Soon, people across the country may have the chance to experience their own moments of Fry's-style weirdness. A U.S. News and World Report article last year heralded the Fry's retail model as "the future of computer retailing." And in the last few years the company has expanded beyond its Valley home into Southern California and, more recently, Texas and Arizona.

The chain certainly seems to be doing well. According to Computer Retail Week, Fry's, with just 16 stores, was last year the 13th largest retailer of computer merchandise in the United States, outselling considerably bigger chains like Radio Shack and PC Warehouse. Forbes estimated that Fry's grossed an average of $85 million per store last year, "among the highest in the industry." By comparison, the 272 Best Buy stores only averaged $28 million per store.

What's made Fry's such a phenomenon isn't just the kookiness of some of its customers and the way its inventory makes it a technophile nirvana. On a deeper level, Fry's is flouting one of the most basic rules of retailing -- the one that says you should treat your customers nicely or they'll take their business elsewhere. That raises a tough question for the company's future: As Fry's tries to extend its reach beyond its Silicon Valley birthplace and across the United States, can its blend of superstore selection, low prices and benign (or malign) neglect of shoppers retain its appeal?

Looking for a provisional answer, I recently visited the company's new Sunnyvale store.

You notice the most obvious element of the Fry's formula before you even enter the store: Each outlet is decorated according to a unique theme. While other Fry's stores are designed to look like a Mayan temple, a Wild Western saloon or a UFO crash site, in Sunnyvale the standard superstore frontage is interrupted by a portico with a giant metallic "pulse" tracking across it. The theme here, it turns out, is "The History of Electronics and of Silicon Valley."

Inside, another huge wave undulates around the perimeter walls of the vast interior. Near an enormous bank of checkouts, blown-up vintage photos of engineer celebrities from the Valley's early days loom over you. And among the acres of PCs, hard drives, CDs, magazines, telescopes, junk food and pharmaceuticals that make up the eclectic, engineer-friendly inventory, pyramidal glass cases display iconic examples of vintage electronic machinery (a transistor! an early Apple!) invented by the people the store presumes are heroes to its customers.

The design, though, is strictly a veneer. Wandering the vast aisles, you can't miss that you're in an enormous supermarket. Stacks of discounted software beckon at the end of every aisle. Eye-level shelves are filled with high-profit items, often from cheap but little-known brands. The Fry's strategy, it seems, boils down to its own version of "pile 'em high, sell 'em low."

But just by walking into the store I got an immediate taste of another, less commonplace, but apparently no less essential aspect of Fry's' retail strategy. I entered with a backpack on my shoulder; this quickly triggered the approach of a polite man who spoke little English but made it clear he suspected I might be a criminal. He pointed me to another guard who offered to take the bag off me but offered no tag, number or peg in return. He planned, it seemed, to store my unmarked bag under an exposed podium right by the exit. With so many criminals like me about? No way! I took the bag back to my car.

On my second attempt, I made it inside. I even met several sales assistants who offered both help and advice. It says a lot about Fry's reputation that this came as a surprise.

"It's a nightmare," Valley-born novelist Sylvia Brownrigg had told me before I went. She tried to buy a new computer at the Palo Alto Fry's a couple of months ago and came out shaking: "It's great if you know what you want, otherwise you feel underinformed, ignorant and lost."

She's not alone. According to many customers and observers who fault Fry's staffing practices and service standards, the store's "pile 'em high, sell 'em low" formula has a third element: "Treat 'em rough."

Is this how Fry's would describe their strategy? It's hard to tell. Another basic rule of conventional retailing the firm flouts is the one that says a store should carefully tend its public image and its relations with the media.

Fry's is an almost pathologically private company. It won't tell you how it's doing or what its plans are, and it won't discuss with anyone the secrets of its success. Fry's press liaison, Sonya, won't even give out her last name. For a profile of the company last November (headline: "The customer is always right? Not at Fry's"), two reporters from Forbes magazine staked out the lobby of Fry's San Jose headquarters for two days, waiting to talk to John Fry, the company president and brother of two of its four co-founders. All they got out of him when they finally spied him was a single word: "Hi."

But if Fry's owners don't want to talk about their retail style, their customers sure do. Bad experiences at Fry's, coupled with the company's habit of not responding to complaints, have spawned a host of horror stories about the firm. And those tales have roosted across that great repository of resentment and revenge, the Internet.

Dave Schultheis began his "Experiences at Fry's Electronics" page in the summer of 1996 after a couple of hugely frustrating visits to Fry's. Ever since, people have been sending him Fry's stories, fair and foul (but mostly foul). The site now runs to 10 long pages of them. "I'm approximately 11 months behind on posting messages that people have sent me," he says -- there are too many to keep up.

At the end of last year, Steve Thomas, a Fry's customer in Los Angeles, came across Schultheis' site and "was inspired" to create a Fry's bulletin board. He'd had some "interesting" experiences with Fry's, and figured that "there had to be others that shared the same views. Apparently I was right."

Both sites are full of tales of false arrests, ignorant staff with no command of the English language and complaints about advertising campaigns that seem to employ bait-and-switch tactics. You can find similar reports in newsgroups of the alt.consumer.experiences variety and a host of other former customers' joke and complaint pages.

And the horror stories are not just anecdotal. Most of Fry's Silicon Valley stores have "unsatisfactory" records with the Santa Clara Better Business Bureau for not responding to complaints -- although they do appear to resolve complaints reported to the Santa Clara County district attorney.

Thomas' site also gets posts from Fry's staff. They sometimes paint a picture of a virtual police state, where the non-unionized staff is under as much suspicion as the customers, and where anyone who gets any good at their job gets out.

To be fair, a recent visit by Computer Retail Week's Secret Shopper to the Fry's in Fountain Valley, Calif., gave the store a rare four stars and a very positive write-up. And Fry's may have reason to be paranoid, since staff theft is typically a more costly problem for retailers than customer theft (as customers who post to the Fry's Experiences forum point out when they complain about the store's infantilizing examine-your-receipt-before-you-leave policy).

Also in Fry's defense, it's worth noting that the entire electronics retail industry has a bad reputation for customer service. After shopping in six other major computer retail stores, PC World journalists recently concluded that "in most cases, we knew far more than the staff did about the computers they were selling."

Still, despite its adoption of the wildly misleading -- or hopelessly optimistic -- slogan "Home of fast, friendly, courteous service," Fry's has a way to go before it becomes one of the industry's less egregious offenders.

The marvel is that Fry's' generally sullen treatment of its staff and customers doesn't seem to have harmed its business at all. From the "they had me again" flavor of the typical outraged posting at Thomas' forum, you get the sense that these outraged people are regular customers. "In fact, I went to Fry's two days ago for some memory," says Thomas.

There's a straightforward explanation for this: price. As "Experiences at Fry's" host Schultheis puts it: "The simple answer is that the aggressive pricing policies at Fry's have a strong effect on people; they want to save money and they are willing to put up with some of the stupid things Fry's does in order to save money."

But if price is the main reason people persist in shopping at Fry's, the company should be worried. Fortune's Winter 1998 "where to shop" PC buyers guide found that direct sellers like Dell and Gateway 2000 average 10 to 20 percent cheaper than the electronic retail chains.

Responding to this trend, other retailers have improved their service. Radio Shack, for example, says it now aims to spend an hour with each customer who purchases a new computer. But if Fry's is attempting similar improvements -- as, perhaps, my experience at the new Sunnyvale Fry's suggests -- they're certainly not announcing it to the world. And they have a long way to go.

Perhaps the biggest competition that low-price, low-service stores like Fry's face is from online retailing. The Department of Commerce report "The Emerging Digital Economy," released April 18, cited huge growth last year in online transactions by businesses and consumers. Dell, for example, saw Internet sales increase in 1997 from less than $1 million per day in January to up to $6 million per day in December.

In response to the online threat, competitors like CompUSA have opened up their own online sales channels. But Fry's, unsurprisingly, is following its own course. Having won a notorious fight with Frenchy Frys, a Seattle retailer of french fry vending machines, for the domain, it has since sat on the name.

Fry's won't, of course, reveal why, or what its online plans are. According to the mysterious Sonya, the official line is that the site is "in development." In the meantime, people searching for information about where or how to find a Fry's store find sites like Schultheis' instead.

Does Fry's just know something its competitors don't? Although it is impossible to verify, Fry's doesn't seem to be changing its strategy as it expands. Phoenix customer Martin Maxwell says, "I went there for the price. I will NEVER go back there for the service! Even a couple of their floor employees agreed with me ... they agree that the customer is not first."

But the new stores seem to be doing well. Fry's is one of the biggest outlets for Mixman Technologies, a young and growing Bay Area music software company. Eric Almgren, Mixman's CEO, says, "From what we hear, the new stores are doing gangbusters and the feeling is very positive."

"The thing about Fry's is that it's a giant toy store for computer geeks," says Thomas, the Fry's bulletin-board operator. Maybe Fry's success, beyond the low-price strategy, relies on something the company has no control over: the spread of the technophile culture that helped spawn it in the first place.

When U.S. News and World Report predicted that the Fry's model was the future of electronics retailing, it saw a future that was increasingly "computercentric," where shoppers would be highly techno-literate and demand far more technological choice than they have been offered in the past. It saw the "civilians who descend on Fry's" on weekends in Silicon Valley as an entirely separate species from the "technical staff" who populate the store during the week. But in suggesting that Fry's weekend crowds represent an expansion of the store's reach beyond the geek ghetto,
U.S. News may have gotten the story wrong.

Ask Jan English-Lueck, an anthropologist at San Jose State who has made the people of Silicon Valley her object of study. She'll tell you that the "civilians" who go to Fry's on weekends are the same people who were there during the week -- only this time they are bringing their families. "It's a family theme park," she says. The engineer mother can buy some software, Dad the research scientist can get his new telescope and the kids can try out new games.

English-Lueck also identifies a key reason why Fry's does well in the Valley but might not fare so well elsewhere. It isn't so much that Fry's customers love the place, she says, but instead that they take a "pride in their dislike" of it: "Glorying in its awfulness," they rather like the idea Fry's "could only happen in a place where you bring your own expertise."

That's a quintessential Silicon Valley attitude. But it's not a good omen for a store that has ambitions to expand into Middle America. It suggests that Fry's strategy will work only where there's a critical mass of people similar to those who inhabit Silicon Valley -- people who are proud of their expertise and don't expect to be helped.

It seems that Fry's owners are aware of this themselves. When they expanded, they bought only six stores of the 17 that made up Tandy's Incredible Universe chain -- all in markets (like Phoenix and Dallas) with strong and expanding high-tech sectors.

But the Fry's recipe is unlikely to succeed in standard-issue malls nationwide. And in a way, that's too bad. For all its bullying, its paranoia and the frustrations it causes its customers and staff, Fry's is a store of distinct character and individuality. It's perversely wonderful to see a company succeed while brazenly dismissing conventional marketing wisdom.

Why should Fry's have to talk to people about what it does, or care what anyone says about it? And if customers like it, as large enough numbers of people clearly seem to, what's wrong with their being hooked on a shopping experience that treats 'em rough? Perhaps they just find it refreshingly different to have a relationship with a retailer that has a little bit of S&M about it.

Simon Firth

Simon Firth is a writer who lives in the San Francisco area.

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