TANDY PUTS MAGIC INTO ELECTRONICS RETAILING

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It's the big bang approach to retailing. Tandy Corp.'s Incredible Universe stores are as big as 77 of Tandy's Radio Shacks, or six rival Circuit City superstores.

In the low-margin business of TVs, refrigerators and computers, Incredible Universe spends money to stage an on-site show of sumo wrestlers, trapeze acts and bungee jumpers.

In part, the concept seems to work financially because of efficient customer service, including a system using bar coding and free customer membership cards that Tandy has patented.

But Rich Hollander, VP-general manager of the Tandy division, said Incredible Universe spends a lower percentage of revenues on advertising than rivals and does less price-and-item advertising. About 60% of the ad budget goes for print ads, the rest, TV and radio.

In 1993, with three stores open, the division spent $6.2 million in measured media. Advertising for Incredible Universe is handled in-house and by Publicis/Bloom, Dallas.

Lower ad spending frees up money to pay for the entertainment. Mr. Hollander draws a parallel with Disney, which draws customers to theme parks partly by advertising but mostly by offering the magic of the happiest place on earth.

The chain refuses to promote or stock traffic builders like low-price, off-brand TVs, and it violates another rule of electronics retailing by not offering a low-price guarantee. In a category where incessant advertising is the rule, the retailer allocates a lower percentage of revenues to advertising than competitors.

In short, there are numerous reasons why Incredible Universe could be a huge failure. Yet the chain, which will have nine stores open across the U.S. at year end, will break even in 1994, its second full year of operation, said Mr. Hollander.

The chain plans to open eight stores next year, when Mr. Hollander projects division sales of $1 billion. By the end of the decade, he envisions more than 50 stores in 35 markets. The basis for the concept, Mr. Hollander said, comes from listening to customers rather than trying to mimic a rival's successful formula.

"If you're the same as everyone else, then you've got to scream the loudest," Mr. Hollander said. "If you have something that's unique and delivers what the customers really want, then they'll find you and beat a path to your door."

Incredible Universe tries to fill four customer wants: Price, selection, service and fun.

The chain wants to be perceived as the "low-price retailer," Mr. Hollander said, which might be translated to mean prices aren't much different from other chains'. Selection is unparalleled: 342 TVs, 181 refrigerators, 47,000 music and movie titles.

Service? The non-commissioned staff mixes Walt Disney Co.'s formula of taking care of "guests" with extensive product training.

"Our goal is to deliver to the guests a great shopping experience," Mr. Hollander said.

Now the fun begins.

When Incredible Universe comes to town, it's an event. The opening in Sacramento, Calif., this month, for example, was a benefit for charities, including the local symphony. The symphony tie-in made sense; Incredible Universe tends to attract upscale customers given to buying upscale products.

Long after the ribbon cutting, the retailer works hard to keep the magic show going. There is constant entertainment in an 8,000-square-foot rotunda, ranging from dancing, singing, clowns and jugglers to sumo wrestling and turkey bowling.

"What we tried to do is put fun in retailing," Mr. Hollander said. "Once people have been in there once, they'll want to come back and they'll want to tell their friends."

Retailing as theater is as American as R.H. Macy & Co. or Mall of America. Tandy simply moved the stage to TVs and washing machines.

So far the novelty is not wearing off. Sales at the first store, in suburban Portland, Ore., reached $78.3 million in its second year, an increase of more than 30% over the first year.

"Our idea is to deliver the goods at a very low cost," Mr. Hollander said. "Putting theater into retailing is less expensive than recurring advertising costs."

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