The monstrous gains racked up by computer products retailers in 1998 have continued through the first half of 1999, and the trend is expected to last for the remainder of the year.
While rock-bottom prices on PCs drove sales last year and during the first six months of 1999, the impact that the slew of $400 mail-in rebates being offered by Internet service providers (ISPs) will have on the latter half of the year cannot be judged.
The top 10 finishers on the TWICE 1998 PC Registry did not change from 1997, though eight did manage to post double-digit gains.
CompUSA retained the number-one spot on the list, with $5.81 billion in sales in 1998, up 14.5% from the $5.07 billion posted the previous year.
The Dallas-based chain has suffered some setbacks in 1999 and recently decided to broaden its merchandise mix to include more consumer electronics products and to de-emphasize computers. In addition, the chain’s ambitious store-opening rate, which saw 81 stores opened between 1997 and 1998, was cut back dramatically.
Best Buy managed to keep pace in 1998 and preserve its lead over third-place Office Depot in computer product sales. Best Buy posted sales of $3.63 billion in 1998, up 13% from 1997, compared to Office Depot’s $2.60 billion, up 15.6%.
Office Depot’s 90 new stores added during this period, for a total of 702, far outstripped the 27 stores opened by Best Buy (311 total stores).
The consumer electronics and office-supply format also battled for supremacy for fourth and fifth place on the list. Circuit City, with $2.23 billion in sales, managed to fend off a quick-rising Staples, ($1.54 billion) and hold onto fourth place.
Staples’ 37% year-over-year percentage gain, however, was the best of the top 10 retailers. The Framingham, Mass.-based chain added 127 new stores, compared to just 31 added by Circuit City.
Micro Center turned in the best per store performance on the PC Registry by pulling in $1.23 billion in sales with just 13 stores. The 1998 sales figure was 9.8% higher than 1997’s. Micro Center has since opened an additional store on Long Island.
Seventh-place OfficeMax, meanwhile, went on a new store campaign in 1997 and 1998, opening 119 locations. In the process it increased sales by 10.9% to $1.14 billion.
This year OfficeMax is experimenting with its PC retail strategy. Tired of playing in the entry-level portion of the market, the chain has opened IBM stores in 30 OfficeMax locations around the country. These stores are geared to attract business customers, who are more likely to buy higher-margin products, and they will only carry IBM computers, along with select peripherals and software.
Sears, and direct-sellers PC Connection and Creative Computer round out the top 10 retailers.
Sears managed to boost sales 6.5% to $750 million for the period and opened a modest 10 new stores during 1998. However, this year it became the second national retailer allowed to carry the hot Apple iMac computer, which could give a strong boost to Sears’ sales next year.
Direct dealer PC Connection made impressive sales gains, boosting its revenue level 33% to $732 million.
Creative Computer took home $690 million, up 26.4%, but closed its four brick-and-mortar locations to become an online-only retailer in 1999.