A chat with Fry's Electronics co-founder Kathy Kolder
By Patrick May
Mercury News
Posted: 05/13/2010 01:04:55 PM PDT
Updated: 05/14/2010 07:35:57 AM PDT
Opening the first Fry's Electronics store 25 years ago this month in Sunnyvale was a no-brainer.
"This location was the center of a huge hub of computer engineers,'' said Kathy Kolder, the 52-year-old co-founder and executive vice president of the chain that went on to launch a million computing dreams. "There were literally thousands of engineers in every direction.''
Opening up the first Fry's Electronics store with only 20,000 square feet, however, was less of a no-brainer. As a steady conga line of geeks pushed shopping carts full of memory chips and cooling fans out the door, the operation literally burst at the seams moving first to a 50,000-square-foot building, then to the 144,000-square-foot warehouse that now sits off Lawrence Expressway, perhaps the most supersized retail totem for Silicon Valley ever created.
"Back then, people couldn't just walk up and buy computer components to build a motherboard,'' Kolder said this week during a rare interview and tour of the chain's flagship store. "So we thought we'd be the retail zone for that, offering all the parts and pieces that any computer engineer would ever need.''
"We,'' of course, would be Kolder and Bay Area supermarket impresario Charles Fry's three sons John, Randy and David. And from the moment they opened their Sunnyvale store on May 17, 1985, the geek fest that has flourished across outposts from San Jose to Atlanta to their online site has never stopped. It was gee-whiz computing meets streamlined retail, trying to sell printers and modems just as the elder Fry had sold cereal and bread. Today, Fry's employs nearly 15,000 people in 34 stores in nine states, offering not just computer components anymore, but an ocean of products from cameras to chewing gum to colored TVs.
Kolder was selling personal computers when she first met the Fry family, and soon she and the brothers were brainstorming their way into a new retail model that would cater to the often nerdy impulses of the circuitry crowd. One of their first product rollouts was a parallel-printer cable that was retailing elsewhere for up to $200. Kolder said they priced it at $19.95 and the roof nearly blew off the store "We sold all 500 that day.''
This week, as the privately owned and closely held company prepares to celebrate a quarter-century anniversary, Kolder shared her thoughts with the Mercury News. The interview has been edited for length and clarity.
Q How does 25 feel?
A It feels wonderful. I never envisioned we'd be here 25 years later. We thought we'd be around 10 years and then maybe do another startup. But we've found that retail is constantly renewing itself, especially with electronics. It's been a constant challenge to stay ahead of the curve and whatever we were being thrown.
Q What inspired the Fry's concept?
A After groceries, the Fry brothers were looking for the next thing to do. I felt my own life needed a change, too. We kept talking about how nice it would be for engineers to have a cart and be able to go down the aisle and throw things into it. Before, to buy components to build your own computer you had to go to hobbyist stores for electronics. Those places weren't meant to be retail, so we thought we had come up with a wonderful idea.
Q Fry's has been criticized in the past for lousy customer service. How have you tried to improve it?
A One reason we got bad press was because there wasn't a customer-service desk in the stores. Or people would call in for help but couldn't find anyone to talk to. So about 15 years ago, we put a customer-relations department in each store and set up phones for customers' questions. And with that we were able to give customers a voice.
Q From the beginning, Fry's has been tight-lipped and almost secretive about its business. Why won't you talk to us more?
A This has been such a competitive environment since the day we opened, and most of the time we've been the small fry in the game. So to keep our competitive advantage, we've had to be more secretive about our business strategy. I think it's worked, too, because we're still here 25 years, bigger than ever.''
Q Who are your customers these days?
A Over the past 25 years, computers and electronics have become more mainstream, part of the norm and much more user-friendly. So the high-tech user is very different today from the engineer of 25 years ago. Our customers have become less technical, less focused on math and science. The liberal-arts crowd has arrived!
Q How has the recession affected you?
A We've been very lucky. Our traffic has stayed very close to flat through the recession. And instead of people coming in, say, to buy a 50-inch TV and then buying a 60-inch instead, they'll now come in and maybe buy a 40-inch. Consumers are right-sizing, buying to fit their restrained budgets. But we've seen light at the end of the tunnel and over the past few months we've seen an increase in sales.
Q Talk a little about Fry's future. Do you plan to expand even more?
A We have 34 brick-and-mortar stores and an online store. The six Incredible Universe stores we bought took us out of the state, then we started adding stores in those markets because that cut the cost of advertising for us. In the Dallas area, for example, we now have four stores. We've got a lot of irons in the fire and we want to expand. We're just hoping that the real estate is priced so that we can profitably operate any new stores.
