Fry's Electronics

History

In 1972, Charles Fry sold the Fry's Supermarkets chain based in California for US$14 million to Save Mart Supermarkets. He gave a portion of the proceeds, approximately $1 million, to each of his sons, John, W. Randolph (who goes by the nickname "Randy") and David, none of whom had much interest in grocery store retailing. Instead, in 1985, they joined together with a fourth partner, John's former girlfriend Kathryn Kolder, to open the first Fry's Electronics store at a 20,000 sq ft (1,900 m²) site in Sunnyvale, California. Today, Fry's Food and Drug stores are owned and operated by Kroger and are not affiliated with Fry's Electronics, although they share an almost identical logo.

The original Sunnyvale store (located near the intersection of Oakmead Parkway and Lakeside Drive) stocked numerous high-tech supplies such as integrated circuits, test and measurement equipment, and computer components, as well as software and various other types of consumer electronics. The store was and still is one of the few retail outlets in the country that sold off-the-shelf microprocessors such as the Intel 80286. The store also sold T-shirts, technical books, potato chips, and magazines, including Playboy. At first, approximately half the store was stocked with groceries including fresh produce, but the groceries section quickly diminished to displays of soft drinks and snack foods. The store billed itself as "The One-Stop Shop for the Silicon Valley Professional", as one could buy both electronics and groceries (computer chips and potato chips) at the same time.

As the business expanded, the original Sunnyvale store was closed, and a newer, larger store was opened across Lawrence Expressway on Kern Avenue. The second Sunnyvale store was designed to look like the interior of a giant computer; the walls were adorned with simulated circuit components, and the floor resembled a giant printed circuit board. The exterior was painted to mimic a huge DIP integrated circuit, and the door handles imitated the ENTER and ESC keys on a computer keyboard; as of 2007, this store is now a Sports Basement store (which still bears some of the door handle keys). Fry's moved again to its current Sunnyvale location on the corner of Arques and Santa Trinita Ave, the former site of a facility of the Link Flight Simulation Division of the Singer Corporation. Each of the Sunnyvale store locations has been located within one mile (1600 meters) of the others.

In 1996, for reasons that the Fry brothers have never publicly disclosed, they transferred all their shares of Fry's Electronics to a limited liability company called RDL, LLC, and a limited partnership called The Taw, L.P. (the latter also controls the former), and since then, they have controlled Fry's Electronics indirectly through those entities. Their existence became publicly known in January 2012 because Randy Fry's ex-wife, Laurie Hammer, had attempted to challenge a post-nuptial settlement agreement under which she agreed to accept "units" of The Taw in settlement of her claims against Randy. On January 23, 2012, the California Court of Appeal for the Sixth District upheld the trial court's dismissal of her lawsuit in an unpublished opinion.

Because Fry's stores are enormous, often stocking dozens of variations of a single type of product, they are popular with electronics and computer hobbyists. One of the few stores to challenge Fry's in all dimensions (production selection and store-wide themes) was Incredible Universe, a series of Tandy (Radio Shack) superstores, which were established in 1992 and absorbed into Fry's in 1996. Historically, Circuit City and CompUSA were major competitors in the computer space, but they collapsed during the late-2000s recession, leaving Best Buy as Fry's main competitor. Unlike Best Buy, Fry's sells not only fully assembled computers, but all the individual components which consumers need to build their own from scratch.

As of August 2014, Fry's Electronics operated 34 brick-and-mortar stores in nine U.S. states: California (17 stores); Texas (8); Arizona (2); Georgia (2); Illinois (1); Indiana (1); Nevada (1); Oregon (1); and Washington (1).

Store themes

Various Fry's locations are decorated in elaborate themes. For example, the Burbank store which opened in 1995 carries a theme of 1950s and 1970s science fiction movies, and features huge statues of popular characters such as the robot Gort from The Day the Earth Stood Still and Darth Vader from the Star Wars movie series. In addition, giant ants (from the movie Them!) hang from the ceiling, and the bodies of 1957 Chevys and Buicks serve as dining tables in the cafe. A flying saucer protrudes above the entrance.

Since Fry's acquired the Incredible Universe chain of stores, the company has reduced the elaborateness of its themes. With the opening of the store in Fishers, Indiana, Fry's made a "race track" theme with various hanging displays, including "stop" and "go" signs, as well as many early life photos of what life looked like in late 1800s and early 1900s in Indianapolis, Indiana.

Criticism

In 1997, Forbes reported on a series of issues about Fry's customer service and unorthodox business practices. Among the allegations was that the company had an internal policy, identified as "the double H" or "hoops and hurdles", to delay or prevent customers from obtaining refunds.

In 1998, USA Today reported that many customers had become frustrated with poor customer service at Fry's stores.

Fry's advertising methods have also gone under heavy fire. In 2003, actors Denzel Washington, Bruce Willis and California Governor Arnold Schwarzenegger sued Fry's for $10 million each for posting their images on television sets on their print ads and flyers without permission.

On Black Friday 2007, customers at the Renton, Washington, location complained that Fry's employees were offering to let people cut in front of a long line for a fee. After complaints in the media, Fry's management offered anyone who paid the fee their money back.

In 2008, Fry's vice president of merchandising and operations, Ausuf Umar Siddiqui, was charged by federal prosecutors in an illegal kickback scheme involving Fry's vendors. The alleged scheme was designed to defraud the company in order to cover Siddiqui's gambling expenses.

In September 2012, Fry's Electronics agreed to pay $2.3 million and to implement preventive measures to settle a sexual harassment and retaliation lawsuit brought by the U.S. Equal Employment Opportunity Commission. The settlement was in relation to allegations that an assistant store manager at the Renton store harassed a 20-year-old sales associate by frequently sending her sexually charged text messages and inviting her to his house to drink. After her direct supervisor reported the harassment to Fry's legal department, the company allegedly fired the female salesperson and fired her supervisor for standing up for her.

Online sales operation

Fry's Electronics was late in establishing an online sales presence. They began offering low-cost Internet access in 2000 through their original Web address "Frys.com". The company later bought e-commerce site Cyberian Outpost in November 2001 and started online sales with a different URL (Outpost.com), which confused customers who didn't associate the online name with the brick-and-mortar store. For a time in the mid-2000s the Web site identified itself as "Fry's Electronics Outpost.com", using dual branding in an attempt to create a connection in visitors' minds. In October 2006, a grand re-opening of Frys.com introduced the online store with the same name as the retail outlets. The outpost.com URL now redirects to the frys.com online store.

Domain name acquisitions

The domain name frys.com was owned in 1997 by David Peter, a.k.a. David Peter Burlini, who manufactured and sold French fry vending machines under the business name Frenchy Frys and who was also involved in another dispute over the domain newricochet.com with Ricochet Networks. David Burlini attended Santa Clara University around the same time that the Fry Brothers were attending. Fry's Electronics brought suit against him that year, alleging trademark infringement, and ultimately prevailed in a default judgment.

Since then, Fry's Electronics has aggressively tried to defend its trademark and domain names. In 2001, it successfully prosecuted a man who was posting its own print ads on the Web using the domain frysad.com. In 2007, Fry's Electronics lost a domain dispute against Prophet Partners Inc., an online advertising company with thousands of generic and descriptive domain names. The arbitrator dismissed the complaint, which requested transfer of the Frys.us domain, ruling that Fry's Electronics did not have any more right to use the "Fry's" mark than other entities with a similar surname or commercial use of the word.