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. 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.