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J&R Restructures Brick-and-Mortar Business

New York — Specialty CE retailer J&R Music & Computer World has consolidated its stores, SKUs and staff to cut costs, recalibrate the business and improve the shopping experience.

As part of the restructuring, the iconic New York dealer has condensed its block-long row of storefronts in lower Manhattan into two buildings with a single entrance at 1 Park Row.

The new J&R Superstore is four stories high, with two additional levels planned. The new configuration features improved product adjacencies and a single checkout area on the ground floor, which allows shoppers to fill their baskets without visiting separate showrooms and waiting on multiple checkout lines.

The vertical arrangement also allowed the company to cull cashiers, sales and security staff, and the separate warehousing and management groups that had been dedicated to each showroom. A small number of buyers have also been let go as assortments were tightened and merchants assumed responsibility for overlapping categories.

According to J&R general manager Michael Eid, the changes were prompted by the convergence of CE and IT, which required new ways to present their interoperability; by industrywide price and margin declines that made the company’s broad assortments and sprawling real estate unsustainable; and by the impact of 9/11, from which downtown businesses never fully recovered.

“Before, each building represented a category and we had a SKU for every segment,” Eid told TWICE. “We were the Amazon of brick-and-mortar. But today, with single-digit margins and vendors’ reduced SKU counts, some categories don’t support a separate building.”

Eid said the idea for the new department store approach was sparked by a consumer focus group study conducted 14 months ago, and that the actual changeover was completed last month in less than 30 days. Under the new planogram, all mobile and computer products are located on the main floor; CE, including headphones, docks, digital imaging, video, movies, and home and pro audio, are grouped on the second floor, along with a café; and CDs and vinyl, which are a key part of the company’s heritage, and video gaming occupy the third and fourth floors.

Temporarily suspended from the mix are small appliances and baby and children’s products, which had previously been merchandised within a 15,000-square-foot J&R Jr. boutique on the second floor. The company plans to re-introduce those categories after it opens the two additional levels, and all edited SKUs remain available online.

The vacated real estate, which is owned by J&R founders and principals Joe and Rachelle Friedman, will be repurposed through a third-party alliance that is expected to be announced in the coming weeks.

Eid said the company is currently conducting tours of the remodeled space and is presenting its new business plan to vendors. “This is a big investment on our part,” Eid said. “We want to show the vendor community that we have a plan in place and are committed to continuing the business.”

 Eid acknowledged that storefront traffic and sales never returned to pre-9/11 levels for J&R, which was one block away from the World Trade Center, and that its online operation has helped keep the company afloat. Now, however, the 42-year-old retailer and ProSource buying group member is looking forward to a rebirth of the downtown area as the Freedom Tower nears completion and new residential construction mushrooms.

“There are 65,000 residents south of Canal Street and that number’s growing,” he said. “So now we are catering to tourists and residents.”