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Tuesday, Sep 26, 2023

A Retail Short Circuit

For shoppers, a trip to Fry’s Electronics was a mix of commerce and amusement-park fun.But the electronics parts retail chain, which had a San Fernando Valley footprint with locations in Burbank and Woodland Hills, has officially closed.“It is hoped that undertaking the wind-down through this orderly process will reduce costs, avoid additional liabilities, minimize the impact on our customers, vendors, landlords and associates, and maximize the value of the company’s assets for its creditors and other stakeholders,” said a statement from the company’s San Jose headquarters.Known for its colorful storewide themes, Fry’s Electronics had two outposts in the Valley. The Warner Center store at 6100 N. Canoga Ave. in Woodland Hills had an Alice in Wonderland theme, while the Burbank location at 2300 N. Hollywood Way focused on science-fiction B-movies, complete with a crashed alien spaceship to greet customers at the store’s entrance.Themes for other Fry’s locations included ancient Roman ruins in Fountain Valley, the 1849 Gold Rush in Sacramento and a giant slot machine in Las Vegas.From a customer standpoint, it may be these kitschy environments which people will remember more than what was sold at Fry’s. Stepping into the Fry’s at Warner Center, shoppers were greeted by the Mad Hatter before passing into a Wonderland worthy of Lewis Carroll’s 1871 source novel, with all of the cartoon color of Walt Disney Co.’s 1951 animated adaptation. A bewildered Alice awaited front and center while looming in the middle of the store was a giant statue of the White Rabbit, late for his very important date. Overhead hanging from the 55-foot ceiling was the Queen of Heart’s playing card army. Elsewhere in the store stood the Queen herself with Tweedledee and Tweedledum. Nearby, Humpty Dumpty sat on the south side of the store, and the Chesire Cat lounged in a tree at the back of the store.In Burbank, once shoppers walked past the aforementioned crashed alien spacecraft out front, they were transported to a world of those retro sci-fi movies lampooned by the 1996 Warner Bros. movie “Mars Attacks!” created by Burbank native Tim Burton. Customers took photos next to an oversized ant and a giant octopus straight out of the 1955 epic “It Came From Beneath the Sea.”Despite the experiential decor, the Valley Fry’s seemed tottering on the edge of closure well before the COVID-19 outbreak hit last March. Understocked shelves abounded at the Warner Center store in 2019 while numerous reports online that year speculated the company might be in trouble or on the verge of closure.Retail lessonsThe eye-grabbing interior design didn’t save Fry’s, offering some lessons about contemporary retail.Unlike Fry’s – a regional chain with stores in Western states – Best Buy, a national chain with locations internationally, has been better equipped than Fry’s to stay in business, according to Matthew May, president of May Realty Advisors in Sherman Oaks.May, who had transacted the Best Buy property in Sherman Oaks, said that Best Buy was able to outlast such now-defunct competition such as Circuit City and Pacific Stereo because it did not employ the same system of commissioned sales clerks and it had a more educated pool of salespeople.“They’re basically micro-showrooms,” May said regarding Best Buy’s floor, to which they brought in such brands as Apple and Microsoft. “They’ve re-designed the store based by product type.”The other thing Best Buy did correctly over Fry’s and its ilk, according to May, is symbolized by Geek Squad, the chain’s tech support teams which will install products at homes even when a customer did not purchase the product at Best Buy.“They became a holistic electronics store,” May said.Most critically, May said, Best Buy has learned how to monetize the internet. In fact, reports in February said that Best Buy had been reorganizing its infrastructure and shutting down physical sites but not from lack of business but because of the dramatic shift to online sales.Fry’s did not have the same level of service, according to May. “Best Buy was for more affluent shoppers than Fry’s…I think of Fry’s if I need parts, not the whole (product),” he said.What people will miss most about Fry’s, May said, is its “cool environment.”However, “in order to evolve and to succeed in the post-pandemic (world), you need a lot of capital,” May said. “They didn’t have the money to put back into technology.” Yet despite its failings as a retail company, May points out that Fry’s did one thing right: “They owned the real estate.”The commercial real estate buzzards have been hovering around the company’s big parcels for years, May said, on the logic that “the parts are worth more than the whole.” Future property plansBoth the Woodland Hills and Burbank properties appear destined for major redevelopment.Last year, plans emerged regarding the 336,000-square-foot Woodland Hills property, which Houston-based multifamily developer Kaplan Management Co. had purchased in February for $48 million.Sept. 15 filings with the city of Los Angeles had shed light on Kaplan’s intentions: to build a mixed-use project at the Warner Center location.According to the filing, the proposed project will include two buildings – one with apartments and the other a hotel on the parcel’s 8.8 acres. The multifamily component will bring 880 residential units to Warner Center.In Burbank, the 180,000-square-foot Fry’s at Hollywood Way and Vanowen, which opened to major fanfare and customer traffic in 1995, had for years been a big source of tax revenue for the city. Burbank had incentivized the big box store to open there by offering a 10-year loan. A decade after opening, the $3.2 million loan to Fry’s was forgiven in full in the form of sales tax.LaTerra Development, the real estate firm currently working on Burbank’s ambitious 777 N. Front St. project, has filed for a conditional use permit to develop the property. La Terra is toying with a couple of mixed-use ideas for the site, per plans filed with the city in July.

Michael Aushenker
Michael Aushenker
A graduate of Cornell University, Michael covers commercial real estate for the San Fernando Valley Business Journal. Prior to the Business Journal, Michael covered the community and entertainment beats as a staff writer for various newspapers, including the Jewish Journal of Greater Los Angeles, The Palisadian-Post, The Argonaut and Acorn Newspapers. He has also freelanced for the Santa Barbara Independent, VC Reporter, Malibu Times and Los Feliz Ledger.

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