J&R Electronics Inc. History

Address:

23 Park Row
New York, New York 10038
U.S.A.

Telephone: (212) 938-2000
Toll Free: 800-221-8180
Fax: (212) 238-9191

Private Company
Incorporated: 1971
Employees: 600
Sales: $283 million (1997 est.)
SICs: 5731 Radio, Television & Consumer Electronics Stores; 5734 Computer & Computer Software Stores

Company History:

J&R Electronics Inc. is the largest home entertainment/computer superstore completely based in New York City. This privately owned company includes J&R Computer World and J&R Music World. J&R's retail outlets are all located on one short street in downtown Manhattan.

From Audio to Office Products and Computers: 1971-89

The business was founded as an audio equipment store in 1971 by Joe Friedman, an electrical engineer, and his wife Rachelle, a chemistry student at Brooklyn's Polytechnic Institute of New York, who later described herself and her husband as "two newlyweds who really knew little about business." Founding the company with money they received as wedding gifts, they located it in a 500-square-foot storefront at 33 Park Row, on the northern edge of Manhattan's financial district and just to the south of City Hall Park. "I would set up experiments, come down to the store for two hours, stay there alone, then rush back, and finish my experiments," Rachelle Friedman reminisced in 1995. "My husband used to come down on his lunch hour. If we both weren't there, the store was closed."

The Friedmans soon learned that their audio customers also were seeking phonograph records. They rented a space in the basement of the building and began taking orders, quickly developing a reputation as a source for hard-to-find classical and jazz records. Whether selling audio equipment or records, it was not uncommon in J&R's early days for either husband or wife to hop in their car and drive to a distributor to pick up a single item for a single customer. They spent their first Christmas Eve in the business gift-wrapping items people had placed on hold or purchased with a small deposit.

Rachelle Friedman started J&R's catalog business in 1974, and it soon proved a big success. Meanwhile, Joe Friedman was stocking the store with more equipment, which in turn required more space. In 1979 the couple acquired 23 Park Row, moved their operations to the new location, and opened what would become a consumer electronics superstore. In 1980 they added game-oriented, low-end computers to their stock, and in 1984 they filled a small section of the store with telephones, telephone answering devices, and key business systems. J&R's inventory of office business products quickly expanded with the addition of fax machines, cellular phones, and word processors. In time, this department also added specialty phones, typewriters, calculators, and copiers.

Further Expansion: 1989-95

Eventually the Friedmans came to feel that they would not succeed in the computer field unless they moved computers into a separate environment with separate salespeople. Accordingly, in 1989 J&R moved its computers and videos from the lower level of the main store to 15,000 square feet in 15 Park Row, a stationery supply building two doors distant. This space included a showroom in the back corner featuring 40 ergonomically designed workstations with full computer/printer setups, a mezzanine devoted to software, books, and magazines, and a "tech room" staffed by five computer specialists offering advice on troubleshooting and networking. The decor was an arrangement of gray carpet, shiny steel surfaces, and low-level lighting designed for a comfortable environment. The grand opening of what was named J&R Computer World was held in 1990.

Another section of the main floor of the new building was devoted to J&R's office equipment, including a select line of home-office furniture and office stationery supplies (the latter dropped in 1991). There also was an ample stock of fax machines, telephones, answering machines, copiers, computer printers, word processors and a few electronic typewriters, electronic organizers, and calculators. The relocation included a freestanding security system that eliminated the need to place models in display cases where shoppers were unable to touch and test them. The spacious basement of the new location was earmarked for inventory.

At some point in the early 1980s, inspired by the breakup of AT&T Corp., J&R opened a "phone outlet" next to the main store, so with the addition of Computer World the enterprise now consisted of three buildings with some 85,000 square feet of retail space divided into special stores for audio and video hardware, portable electronics products, car stereos, telephones, home-office equipment, computers, popular music, jazz, and classical music. "The record companies are always telling us to open other stores, but we have a different philosophy than other retailers," Rachelle Friedman told a reporter. "We want to be the best we can be by staying on the block rather than becoming a chain. This way we maintain control, which the chain stores lose. ... When we used to visit chain stores, we felt that the boss doesn't work there, and it showed."

By the end of the 1980s J&R's mail-order service had grown to require 40 salespeople handling toll-free telephone-number inquiries and orders. To serve these customers, J&R had added a 75,000-square-foot warehouse across the street from its original 50,000-square-foot facility in Maspeth, Queens. The company was distributing one million catalogs every three months, plus variations that were being issued every six weeks.

J&R celebrated its 20th anniversary in 1991 with a two-day cruise that brought all of the company's 400-odd employees together. The Friedmans disclosed that the main store would be gutted and expanded, resulting in a 45,000-square-foot music superstore with such amenities as listening posts and a stage for in-store performances.

From her fourth floor office, Rachelle Friedman could hear every announcement made over the loudspeaker; she also walked around, checking on operations and greeting customers. Her husband was even more peripatetic, maintaining no office and making the rounds of the entire complex. Billboard estimated J&R's music revenues in 1990 at $20 million, with 75 percent generated from the store and the other 25 percent from mail-order, which included a wholesale division. Although compact discs were the main recorded-music item, J&R also at this time maintained a large budget section for vinyl LPs and 45s, cassettes, and videos.

J&R Computer World was proving to be a success, with Wall Street brokers and investment bankers crowding into the store at midday to get time on one of the 40 state-of-the-art PC workstations. Chrome-appointed columns, glass brick, and neon were being employed to impart an upscale, high-tech ambience, and promotional films ran on video monitors suspended overhead. "Everything is shown, everything is user-friendly, everything is touchable from the hardware to the software," said the company's marketing manager.

Monitors were connected to a common system, showing the same image for comparison. Nearly 50 salespeople were working on commission. Three technicians were available to configure systems and offer follow-up support. Through a service firm, J&R also offered home repair and maintenance. The store was a factory-authorized dealer for most leading computer brands. The mezzanine carried 5,000 software titles. J&R Computer World also leased equipment and had a corporate sales department, with conference rooms off the main sales floor.

By 1993 J&R had moved into a fourth building on Park Row, with a total of 100,000 square feet of selling area divided into four music software outlets, a main electronics outlet, a video outlet, a portable electronics outlet, the computer store, and a home-office store. The mail-order business now was shipping about 1.5 million catalogs every six weeks. The Friedmans, while not disclosing figures, acknowledged that sales and profits had grown in every year of the business's operation, despite the 1987 Wall Street crash and the 1980-82 and 1990-91 recessions.

To publicize its wares through print advertisements, J&R was employing a targeted rather than scattershot approach. Music offerings, for example, appeared on the back page of the New York Times Sunday arts and entertainment section, and computers and related equipment took up most of the back page of the Tuesday science and Friday business sections of the Times. On weekends, J&R's reputation for rock-bottom prices drew a different crowd in sneakers and jeans. Speaking of lower Manhattan, Joe Friedman said, "This area is totally dead on Saturday and Sunday, but those are our busiest days because people come from other areas of the city. It shows we are a destination store." By 1995 the National Association of Record Merchandisers twice had given J&R its Retailer of the Year award.

In the Sunday Times Styles section, Liz Logan reported in 1993 that she visited J&R Office World--the home-office store--looking for a telephone answering machine. She found the gray-carpeted, gray-walled interior "curiously soothing" and was pleasantly surprised to encounter salespeople who were "neither elusive nor pushy--just there, waiting to help. ... When, after preliminary browsing, I was ready to be helped, a salesman answered my questions and volunteered useful information without a trace of hucksterism." She concluded, "The thing that I'm still amazed about is this: Nobody at J&R tried to sell me a warranty extension."

In 1992 J&R purchased another building on Park Row to convert into a separate audiovisual store, housing about 25,000 square feet of hardware. With the opening at Christmas 1993, the existing audio store was converted to a single 45,000-square-foot audio and video software store--the largest in New York, according to Rachelle Friedman. The new store enabled J&R to demonstrate high-end audio entertainment and home theater in floor displays and to include more audio and video soundrooms.

A cosponsor of the 1995 world chess championship in New York City, J&R reported strong demand and increased sales in products directly connected to the event, including all chess software, CD-ROM software, and self-standing chess games. The competition was held at the observation deck of the World Trade Center, only a short walk from Park Row. J&R banners were prominent at the match site, even inside the soundproof glass-walled room where champion Garry Kasparov dueled challenger Viswanathan Anand. A booth on the southern side of the floor featured mail-order catalogs, product literature, and a Sony Magic Link desktop communicator/organizer demonstration unit.

Spreading Out Still Further, 1997-98

In 1997 J&R enlarged the main music store from two floors to five and built an addition to the computer/home-office store. This brought the retailer's floor area to 300,000 square feet. Also that year, J&R demolished the nine-story Clark Building at the corner of Park Row and Ann Street, just west of 15 Park Row, to make way for a new building to house a major expansion of its computer and home-office holdings. The destruction of the ornate, 103-year-old building provoked anger among preservationists, who had urged the Friedmans, in vain, to try to preserve the building's facade and renovate the interior for the new store.

J&R's plan called for a six- or seven-story building with 50,000 square feet of space, to be constructed in its place and to open in 1999. The building, which was to house products geared to the small-office/home-office consumer, initially was to be called Office World, but J&R came to believe Computer World better encompassed the wide variety of products found in both areas, including multifunction units, copiers, and video-conferencing equipment, as well as PCs and accessories. J&R also was planning to harmonize its music stores in a new, high-tech design.

J&R's warehouses also were expanded in the 1990s, reaching 210,000 square feet of space for mail-order and shipping operations. Aside from the original one-story building and the five-story loft-building addition, the company in 1997 bought 80,000 square feet in a one-story building adjoining the original one. High ceilings, convenient loading docks, and adequate parking were the main attractions of the new site.

In the fall of 1998 J&R's retail outlets were situated in eight buildings that occupied most of Park Row. On the eastern end, 33 Park Row housed classical music offerings, including compact and laser discs, cassettes, and video. The store at 31 Park Row held video and audio, including television sets and videocassette recorders, camcorders, and both video and audio furniture and accessories. The space at 27 Park Row stocked small appliances, personal care, and home security items, exercise equipment, watches, and keyboards. Jazz compact discs and cassettes were located at 25 Park Row. The main music store, at 23 Park Row, contained popular music compact discs, cassettes, and videotapes. The home-office store, 17 Park Row, housed telephones, answering machines, beepers, word processors, fax machines, calculators, copiers, databases, and pens. The computer store, 15 Park Row, held hardware, software, and multimedia.

J&R Electronics Inc. History

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