Anderson's TV Closes
By Alan Wolf -- TWICE, 7/2/2009
Redwood, Calif. - Anderson's TV, the Silicon Valley specialty chain, closed its doors last month after more than 32 years in business.
The self-described "Big Screen Specialist" succumbed to plummeting flat-panel prices, compressed margins and the weak economy, principal Dave Malloy told TWICE.
Malloy had been funding the company with outside resources for the past 18 months, and earlier this year closed two of its four stores and sold off its service operation.
"I was trying to find a way to be profitable, but after 16 months we had a very large cash bleed," he said.
Malloy found it impossible to compete on price with mass merchants, who now offer a full array of tier-one products, and still provide a full suite of delivery, installation and repair services, he said.
Anderson's comp sales were up 80 percent in units, but gross dollars and gross profits were both down. "Sixty-five-inch plasma was $6,999 before Christmas - now it's $2,999. I couldn't generate enough volume to stymie the price declines, and it's hard to make it work on sub-10-point margins," he said.
Compounding the problem was the ailing economy, which is more acute in California; higher finance charges amid the credit crunch; and competition from Web-based retailers, which have an immediate 10 percent price advantage by not collecting sales tax, Malloy explained.
"It was a wicked combination of events," he said.
Anderson's started as a local gas station/garage in 1934. Malloy purchased the business in 1978 and built it into a $44 million, full-service chain with a focus on big screen TVs. The PRO Group dealer's assortment also included audio, furniture and other home-theater products. Anderson's TV was No. 87 on the TWICE Top 100 CE Retailers rankings released in May.
Malloy opted to close shop via an Assignment For Benefit of Creditors (ABC) rather than Chapter 7 to ensure that his employees, taxes, fees and creditors would be paid. An assignee, Mountain View, Calif.-based Sherwood Partners, is presently monetizing the company's assets.
Anderson's closure dovetails with the shuttering of a more recent competitor, San Carlos, Calif.-based UV Discount, which operated four stores throughout the San Francisco area.
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I purchased a warrenty thru Anderson's TV and my big screen broke! Does this mean that I paid for something that is no longer valid due to Anderson's closing down?
Nickole - 2009-10-11 21:05:15 EST -
Certainly tax differences are a factor, but in reality I think the other issues mentioned - the need to support a retail storefront staffed with knowledgeable staff as well as provide after sale help (installation, repair service, etc) is a much larger issue.
The article mentions that Dave sold off his service operation (to me, TechExpert Express!) as one part of reducing that overhead. My experience in the past running service operations for other retailers (Magnolia Hi-Fi, Tweeter...) tells me it's much more difficult for a retailer to do repair service profitably than it is for an independent.
The service operation for a self-servicing retailer is simply the tail of the dog, often given limited resources and sometimes levels of support that don't match their spoken committment to quality service. As an independent of course we ARE the dog, so we can tailor everything we do to making that work.
Anderson's was a good operation with top notch management, their service was run better than many, but they were still challenged and felt it better to outsource. From what I've seen, many retailers still trying to run service businesses should follow Dave's lead. Service is not a retailer's core competency, better to divest it and focus on what they do well.
Todd Maddison - 2009-11-7 23:54:29 EDT -
Amazon's and others' tax free status harms brick & mortar retailers. The Supreme Court has ruled complying with complex state sales tax is too great a burden for online sellers.
So how about a statewide flat rate residential destination delivery tax? Couriers would add the charge based on declared value unless the shipper has filed with the courier a destination state provided exemption certificate--meaning the seller collects and remits sales taxes and agrees to being audited. Such a tax in California of 5-7% would repatriate sales and level the playing field to support local business like Anderson's.
Dennis Smith - 2009-6-7 20:21:41 EDT
Anderson's TV Closes
07/06/20092007 TWICE Top 100 CE Retailers
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