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Terrorist Attacks Change Several CE Events, Affect Some Retailers

New York – The immediate impact on the CE and computer industries from last week’s terrorist attacks included store destruction at the World Trade Center, store closings the day after the attack by some retailers nationwide, and cancellation of industry-related events and legislative sessions.

And while national CE retailers said sales activity returned to normal in the days following the catastrophes, some observers wondered whether consumer confidence and CE demand would continue in the weeks and months to come as world events unfold.

Among those withstanding store losses last Tuesday was Best Buy, which operated a Sam Goody unit within the retail concourse of the Trade Center’s north tower, and RadioShack, which also maintained an outlet there. A Best Buy spokeswoman said the Goody store’s four employees safely evacuated the building. Calls to RadioShack were not returned.

Still standing are a Staples unit located a block away from the towers and local retailer J&R Music World, which operates a block-long complex of specialty stores nearby. A Staples spokesman said the store’s employees were safe, although the condition of the unit was unknown at press time, due to a police lockdown of the area.

Phil Tudanger, marketing director of J&R Music World, said the company’s stores were not damaged, although their exteriors and interiors were coated with dust and ash. The complex, located within a ‘no movement zone’ near New York’s City Hall and adjacent to a makeshift triage center, remained closed at press time. Tudanger said corporate operations were moved to the company’s warehouse in Queens, N.Y., where the staff continues to fulfill Web, phone and mail orders, and Tudanger himself has been ‘calling manufacturers to assure them that we’re still in business.’

Zenith’s parent company, LG, had offices in the World Trade Center. ‘Most employees are alive and well,’ Zenith said, although an employee of the LG Insurance division is missing. Zenith also reported that in light of the tragedy, Zenith suspended its light-hearted advertising, taking its ads off of cable and broadcast TV channels.

Several planned industry events in New York and Washington, D.C. were canceled in the wake of the disasters. Among the events affected were:

· XM Satellite Radio postponed the launch of its service. (See story on p. 28.)

· SBCA SkyFORUM conference that was to be held in Manhattan last Friday was cancelled. There is no plan to reschedule the event.

· The House of Representatives canceled last Wednesday’s scheduled DTV hearings, although the Federal Communications Commission is active and conducting meetings.

· The AES Convention, slated for Manhattan’s Jacob K. Javits Convention Center next week, was postponed until Nov. 30-Dec. 3.

In a prepared statement, CEA president Gary Shapiro reported that none of the organization’s staff had a direct familial link to anyone hurt by the terrorists. CEA headquarters is located in Arlington, VA., only a few miles from the Pentagon.

Shapiro said that the attack is ‘already affecting our job representing the industry.’ Shapiro was supposed to testify at the HDTV hearing, which was cancelled, and the NARM convention Shapiro was to keynote was cancelled, he said. This week the L.A. Digital Hollywood conference, which is partially owned by CEA, will be postponed, he said.

In other cancellations, Tweeter dropped its Road Thunder Sound Challenge car show that it was to sponsor near San Diego last weekend ‘out of respect,’ a spokeswoman said.

National retail chains said stores in metro New York and Washington, D.C., were closed the day of the disaster, as were mall-based units around the country whose shopping center operators ordered facilities shut. Additional store closings at chains including Best Buy and Tweeter Home Entertainment were left to the discretion of store managers.

Although publicly held chains were reluctant to comment on the impact of the tragedy on store sales in advance of this month’s earnings reports, business for the most part appeared normal. ‘People are still shopping,’ said the Best Buy spokeswoman. ‘There’s no significant indicator that sales are up or down, or that any particular product category is spiking.’

Echoed a Sears spokesman, ‘Customers are shopping, and sales patterns seem to be typical storewide.’ He added that sales were strong in CE and majaps, particularly in TVs and VCRs due to a current zero-percent financing promotion.

Circuit City declined to comment on store traffic or sales. ‘It’s not the right thing to do at this time,’ a spokesman said. ‘We shouldn’t be the story.’

A Tweeter spokeswoman said ‘it was too early’ to gauge the impact of the crisis on store sales, and wouldn’t speculate on the future. ‘We can’t estimate what’s going to happen. It’s all new terrain,’ she said.

But based on feedback from independent dealers, Bob Lawrence, executive director of the Brand Source/AVB buying group, wasn’t optimistic. ‘I’ve talked to people from all over, and customers are not out at all,’ he said. ‘I hope they come back, because consumer spending was the only thing that kept us from plunging into a recession.’

Moreover, the total ban on air travel instituted in the wake of the disaster struck online businesses a blow as deliveries were limited to ground carriers.

To help government and relief groups aid those hurt in the New York and Pentagon attacks, Microsoft donated $5 million in cash and another $5 million in software to the rescue efforts. General Electric said it would donate $10 million for the families of New York City firefighters, police officers and rescue workers killed at the World Trade Center. Cisco Systems gave $6 million to the Red Cross and other relief groups. Sprint gave $500,000 to the Red Cross and donated 2,300 cellular phones for disaster workers.

Suppliers were not alone in their generosity. Sears donated $1 million to the rescue effort, and is accepting donations at its stores and Web site. Best Buy gave $100,000 to the Red Cross and is accepting cash contributions for the organization at its stores, where community-based blood drives are also being held.

In his statement Shapiro said, ‘I am confident that the character of our staff and leaders, the value and creativity of our industry and the strength of our nation, will soon move us past the searing harshness of the emotion of this unfortunate week. By looking ahead we will overcome this devastating week and not only survive, but strengthen.’