If you have been through a Fry’s Electronics location anytime recently, you might have noticed that their shelves look a bit barren. In fact, certain stores look nearly empty. You may also find fewer employees walking around. All of this giving you the idea that they might be shutting down.
It seems that might not be the case (at least not yet). Fry’s Electronics is apparently going through changes, specifically with their main business model. They are changing from their normal retail approach of buying stock and reselling it on their shelves, to a consignment approach similar to other big companies like Walmart and Best Buy.
This basically means that they are switching to a model that doesn’t require Fry’s to pay manufacturers for their products unless/until the products actually sell. Let’s say that they received stock of 10 Xbox One X consoles into a store. Normally, they would have ordered them from Microsoft at cost and paid from the start (then profit on whatever they sell it for beyond that price). However, this isn’t the case any longer.
Now, Microsoft sends 10 Xbox One X consoles to a Fry’s Electronics store, and Fry’s doesn’t pay a thing for that stock unless it sells. At least, that’s the idea. These companies behind the products that are sold in these stores are fully responsible for if the product does or does not sell. So if those Xbox One X’s don’t sell, then Fry’s can simply send them back to Microsoft without any risk on their part (and the manufacturer takes the loss).
This is what Walmart built itself upon and allowed them to blow up so quickly. No more field destroyed goods or “return to vendor” inventory that sometimes only resulted in partial credit for stores. They no longer have to worry about over-ordering products. I mean, what do they care if they don’t sell now? It’s no longer Fry’s problem.
That is of course if all of the companies agree to this new business model, which they haven’t yet (Microsoft was just used as a convenient example). There is no way of knowing how many companies might have jumped on board yet. But they (Fry’s Electronics) won’t order any new stock until *all* of the companies agree to their new demands. Judging by the fact that months have gone by resulting in barren shelves, I’d say they aren’t getting the response they were hoping for.
With the holidays coming up quickly, this isn’t a good thing for the retail chain. If they can’t the companies to agree to this, it could force Fry’s Electronics into closing stores or closing completely. Maybe they might shrink down into the footprint of a Radio Shack and eventually fade away over time. Or, maybe these companies will jump on board and Fry’s will be right back to what they were before all of this.
Clearly, Fry’s is trying to cut down on liability and overhead costs (which then cuts down on loss). This isn’t always good for the manufactures, but it is (in a way) fair when you consider who should be responsible if a product releases but fails miserably. The company that created the product, or the store trying to make a living reselling it.
At this time, Fry’s Electronics is not admitting to the chance of having to close any stores. They are telling their employees the same. One store within the chain is closing for sure, but this is only due to an expired lease and unrelated to the above news (per the retail company).
So with the holidays right on their tail, it will be interesting to see what happens.
Edited by ano, 24 November 2019 - 10:33 PM.