By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Macy's East is hoping that the third time will be a charm for consumer electronics at its flagship Herald Square store.
For the past three years the Federated Department Store division had been searching for a means to re-enter the category in a major way but with limited downside exposure to the industry's slim margins, falling price points and brutal competition. Employing an underutilized area within the store's vaunted housewares destination, Macy's Cellar, the retailer opened a leased CE boutique in 2003 called The Experience that carried major A/V brands but no inventory.
The shop, operated by former CE industry rep Ken Sternfeld for Atrium Enterprises, drew much praise but little traffic due to its out-of-the-way location. It was soon supplanted by an equally short-lived Sharper Image outpost, and since then served as a gift store.
Enter J&R Music and Computer World. For 35 years the legendary downtown Manhattan dealer has been located between City Hall and the site of the World Trade Center, where it has thrived amid retail consolidation and survived 9/11. And president/co-CEO Rachelle Friedman, the “R” in J&R, had no plans to change that.
“We felt we could do everything we needed from here,” she told TWICE. “We have 300,000 square feet of space [along three city blocks], pride ourselves on customer service, do live in-store music events, and have our Internet and mail order businesses. It's hard to duplicate it elsewhere, and when dealers expand, they lose control.”
What changed her mind was a Macy's executive who shared a seat with Friedman on a corporate board. The exec had long been impressed by the business, and became even more so after J&R helped her save $12,000 on a home theater system. “She said, 'I wish you could open a store here,' “ Friedman recalled.
Some 18 months later, after reviewing the space and hammering out the details, J&R Express was born.
The 3,500-square-foot satellite store, which soft-opened last week and officially debuts on Wednesday, with New York Mayor Mike Bloomberg expected to attend, features a tightly edited assortment of J&R's best-selling items, including A/V, digital imaging, GPS devices, MP3 players, accessories, and music and gaming software. The shop also features two Internet kiosks linked to the company's Web site and, unlike earlier tenants, maintains its own on-site inventory.
The shop's airy, upscale look is “a little more high-end” than J&R's downtown aesthetic, Friedman said, and makes use of fine woods and decorative transparencies. But J&R's presence expands beyond the boutique: The company will be represented in Macy's wedding registry and in small displays and cross merchandising promotions throughout the department store, while extensive in-store signage will point customers toward the Cellar's new CE shop. J&R Express will also accept the Macy's private label credit card, and the store will be touted in local advertising by both retailers.
J&R managers run the shop, although sales staffers, trained by Macy's, J&R and vendors, are jointly employed by both stores. The shop is also the exclusive CE vehicle for Macy's Herald Square, which will not carry the iPod dispensing Zoom vending machines that are rolling out to 180 other Macy's locations this fall. Friedman was mum on other details of her arrangement with Macy's, but said sales during the week of the soft opening had already exceeded expectations.
Going forward, J&R will continually tweak its Express assortment as demand and seasons change, said Friedman, who wouldn't rule out the possibility of expanding the J&R franchise to other Macy's stores in New York or beyond.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.