CALIFORNIA STATE UNIVERSITY, NORTHRIDGE

THE RISE AND FALL OF COMPUTER RETAILING: A STUDY OF THE SAN FERNANDO VALLEY, 1976 THROUGH 1986

A thesis submitted in partial satisfaction of the requirements for the degree of Master of Arts in

Geography

by

Stanley Joseph Yucikas

May 1988 The Thesis of Stanley Joseph Yucikas is approved:

Warren Bland, Ph.D., Advisor

Robert Newcomb, Ph.D., Advisor

~nbeck, Ph.D., Chair

California State University, Northridge

,.. , ACKNOWLEDGMENT

A project of this nature, out of necessity, requires

the effort and support of many people. First, I wish to

acknowledge the patience and awareness of Clark Buch and

Mitchell Roth, two business men who had the very good sense

to hire me when they acquired the Moore Business Center. I

wish also to thank all the folks at Area Location Systems

for providing such excellent assistance in the preparation

of several maps that appear in this thesis. Last but by no

means least I wish to acknowledge, and dedicate this thesis

to, Annette Thaarup Nyberg, my wife. Without her tireless

efforts, understanding, support, and love, this paper would

never have been possible.

() TABLE OF CONTENTS

Page ACKNOWLEDGMENT iii LIST OF MAPS vi LIST OF GRAPHS viii

LIST OF TABLES AND ILLUSTRATIONS ix

ABSTRACT X Chapters

I. INTRODUCTION 1

Purpose and Justification 1

Scope 3

Sources of Information 6

Organization and Methods 8 II. THE MARKET, THE MERCHANDISE, THE MERCHANT 10 THE MARKET: The San Fernando Valley 10

Commerce and Industry 14

Transportation 15

Retailing 18

Professional Services 22

THE MERCHANDISE: The Micro Computer 23

THE MERCHANT: The SRCS 27

San Fernando Valley Computer Stores 31

Computer Store Trends 36

SRCS Trends 50

III. COMPU PLUS: A CASE STUDY 57

Location 57 The Physical Site 58

Accessibility 60

Utilities 62

Customers: Data Collection 63

Customer Analysis 65

Data Analysis 71

Mapping customer Data 77

Map Analysis 80

Demographics 85

Compu Plus Summary 86

IV. DISTRIBUTION OF SRCS 88

Site Survey 88

Eleven Year Inventory 88

Survey Trends 102

Analysis of Dispersion 103

Nearest Neighbor 103

Summary of Analysis 112

V. SRCS AND THE MARKET PLACE 115

Mapping Demographic Data 116

Map Analysis 117

VI. SUMMARY OF ANALYSIS AND CONCLUSION 139

Summary 139

Conclusion 142

BIBLIOGRAPHY 148

APPENDIX 151

A. NEAREST NEIGHBOR ANALYSIS 152 LIST OF MAPS

MAP PAGE

1. Los Angeles Area 11 2. San Fernando Valley Industry 17 3. san Fernando Valley Retailing 19 4. SRCSs 1976 - 1986 35 5. SRCSs 1976 53

6. Compu Plus customer Distribution 68 7. SRCSs 1981 69 8. SRCSs 1982 70 9. Customer Type: Business 81 10. Customer Type: Personal 82 11. Customer Type: Business and Personal 83 12. SRCSs 1977 90 13. SCRSs 1978 91 14. SRCSs 1979 92 15. SRCSs 1980 93 16. SRCSs 1983 96 17. SRCSs 1984 97 18. SRCSs 1985 99 19. SRCSs 1986 100

20. Shift in SRCS Distribution, 1976 - 1986 113 CENSUS DATA MAPS 21. Education: Percent of Population With 118 12 Years Only 22. Education: Percent of Population With 119 13-15 Years

vi 23. Education: Percent of Population With 120 More Than 16 Years · 24. 1980 Household Totals 121 25 .. 1986 Per Capita Income (Estimated) 123 26. Income: 1980 Household Average 124 27. Sales 1980 Total Retail 125 28. Occupation: Percent White Collar 126 29. Occupation: Percent Technical Support 128 30. Occupation: Percent Sales 129 31. Occupation: Percent Professional Specialty 130 32. Occupation: Percent Precision Craftsmen 131 33. Occupation: Percent Other Service 132 34. Occupation: Percent Machine Operators 133 35. Occupation; Percent Administration 134 36. Occupation: Percent Administration Support 136

vi i LIST OF GRAPHS

GRAPH PAGE 1. San Fernando Valley SRCSs: Number of Sites 37 2. San Fernando Valley SRCSs: Total Square Feet 38 3. Compu Plus customers: Mailing List 72 4. Compu Plus Customers: Invoices 74 5. San Fernando Valley SRCSs: 102 Average Square Feet 6. Nearest Neighbor Analysis 106

vi i i LIST OF TABLES AND ILLUSTRATIONS

TABLE PAGE

1. San Fernando Valley SRCSs 1976 - 1986 34

2. Compu Plus Mailing List: SFV Zip Codes 73

3. Compu Plus Sales Invoices: SFV Zip Codes 75

4. Compu Plus Customers: t-Test 76

5. Table of 'R' Values 105

ILLUSTRATION PAGE

1, ~fanufacturers Warranty Statements 30

2. Compu Plus Customer Symbol Scheme 79

;v ABSTRACT

THE RISE AND FALL OF COMPUTER RETAILING:

A STUDY OF THE SAN FERNANDO VALLEY, 1976 THROUGH 1986

by

Stanley Joseph Yucikas

Master of Arts in Geography

The evolution of computer retailing began with the introduction of the micro computer into traditional retail markets. At first, the stores that sold these new bits of technology did so as an adjunct to their existing businesses. Later on, when the industry started to rapidly expand, specialty retail computer stores began to open and to focus directly on the sales of micro computers that by this time had come to be known as the personal computer.

Within the confines of the San Fernando Valley, the rise of the specialty retail computer store materialized early in the study period. These stores grew in numbers until about 1985 and then the numbers started to fall off.

At the end of the study period the specialty retail computer industry stood at a crossroads trying to decide what form of sales mechanism would evolve from the fall of computer retailing. THE RISE AND FALL OF COMPUTER RETAILING: A study of the San Fernando Valley 1976 through 1986

CHAPTER I

INTRODUCTION

Over the course of eleven years, between 1976 and

1986, the complexion of computer retailing in the San

Fernando Valley changed. It was transformed from an area nearly void of computer stores into a mature retail market area. By the end of the time period covered in this study, the market area was facing a decline in the total number of sites selling micro computers through what this thesis will define as a specialty retail computer store (SRCS).

PURPOSE AND JUSTIFICATION

If in fact, the San Fernando Valley had experienced a growth and decline in the number of specialty computer retail stores it would then follow, that with this rise and fall a pattern or series of patterns would emerge relative to any number of variables relating to retail site location. Therefore, the purpose of this study is to present, examine, and evaluate the spatial distribution patterns manifested by the origin and maturation of the specialty retail computer stores (SRCS) located in the San

Fernando Valley. I will look at the "foot prints left in the mud" by the evolution of computer retailing from the

1 2 mid 1970's through the mid 1980's in the San Fernando

Valley.

Not only is this topic timely, important, and of interest to those involved in the study of economic or marketing geography, it is also substantially vital to computer retailers as well. After all, it is their industry that is faced, on an almost daily basis, with the ever changing technology related to the products they sell and the requirements of the market place they serve. This and other geographic studies in the field of marketing geography1 are, generally speaking, able to provide relevant and valuable insights to those specialty retail computer store owners and operators. As James so eloquently stated, "There are almost endless applications of the geographical point of view to the problems of the real world."2

Within the broad amorphous scope of economic geography it has always been a challenge to examine the impacts made by the introduction of new and innovative products on the economic landscape. This applies especially to the spatial patterns that emanate from the systems used to distribute

I Works by William Applebaum, Saul Cohen, Brian Berry, Jack Ransome, and a host of others have provided much valu­ able insight as to the various techniques and methods used in researching and analyzing the data presented in this study.

2 Preston James and Geoffrey Martin, All Possible Worlds: A History of Geographical Ideas, (John Wiley and Sons, New York 1981). 3

those new goods to the purchasing public. This not only touches to some extent on topics pertaining to the diffusion of innovation but that of spatial dispersion patterns of store locations that have materialized through inception and maturity as well. It follows therefore, that this study should provide useful insights and conclusions for others wishing to explore these topics further.

SCOPE

At a time when many think that the activity of computer sales has shifted from being primarily a retail acti"' _', ·t·l t:o one of direct sales, (where the computer s;:~tLE~sman visits the customer as opposed to the customer visiting a show room) the need to consider the locational factors of computer retailing is all the more critical to those engaged in the business of retail micro computer sales. Therefore, after fully defining a specialty retail computer store (SRCS) a case study of one such store will be presented. This will include such variables as store size, site location factors, including such variables as accessibility, and a number of other tested concepts following Scott's approach relating to retail markets and establishment sizes, retail trends and spatial competition. 3

Next, it is important to understand the nature of the product that has spawned the growth of an entirely new

3 Peter Scott, Geography and Retailing, (Hutchinson & Co. Ltd., London 1970). 4 enterprise within the sphere of retail sales. Accordingly, during the course of this study the history of the micro computer will be examined. This is necessary and of particular interest because prior to the early 1970's it was practically inconceivable that computers would become so innocuous and ordinary that they would come to be sold in department stores along side radios, televisions, and other common appliances. It will also be necessary to examine the nature of the micro computer, its form and function, in society. It is clearly indisputable that the micro computer has, in a very short span of time, become an increasingly indispensable tool of business, education, entertainment, the military, medicine, and, indeed, almost every facet of modern culture. Even this very study owes a debt of gratitude to the micro computer for its ability to

"crunch numbers", store information, draw maps and graphs, and for taking the place of a typewriter and typist.

Any examination of retail sites and the products they sell can best be presented for some fixed duration. This allows for a detailed analysis and examination of trends that only become apparent over time. In order to illustrate and examine the changes that took place in the

San Fernando Valley the period chosen for this study was the eleven years between 1976 and 1986 inclusively because it was felt that this span of time, from early in the evolution of both the micro computer and the specialty retail computer store to a time where the market had 5 seemingly shifted into maturity or even decline, would provide clear-cut evidence of the changes in the distribution patterns across the landscape of the San Fernando Valley. After considering the micro computer and its distribution methods, within the context of a set period of time, it was then necessary to examine the market place, the San Fernando Valley. This area was selected for a number of reasons. First, owing to its physical form as well as its political, economic, and cultural structures, it provides a useful, as well as, manageable area to examine. After all, it represents a large and varied population distributed, for the most part, across an uninterrupted landscape that is fairly well bounded on all sides by physical, and to some extent, physiological barriers. In addition, it is an area that contained some of the very first computer stores in the United States thereby providing a long and well documented history for examination.

w~en these various aspects were considered, some conclusions could then be drawn as to the future placement of not only specialty retail computer stores, but other specialty stores that would arise quite naturally with the introduction of additional new merchandise that fall into the same genre as that sold by the specialty retail computer stores. The information presented in this study can undoubtedly assist in answering many of the questions 6

of merchants attempting to bring new technology products to

the market place. For example: Where do customers come

from?; Who purchases computers and for what purpose?; Are

those who purchase computers doing so for their own

personal use or for use in business?; Have computers become

merely another commodity not requiring the specialty retail

computer store at all?; Has the death knell, as some would

say, sounded for the retail computer store?; Is the

computer store indeed being replaced by the direct sales

forces of companies like IBM, AT&T, Apple, and other

manufacturing and distributing companies? When these and

similar questions have been answered it is hoped that in

some small way this study will prove to be beneficial to

the entrepreneur seeking to sell new and innovative

products to the consuming public.

Sources of Information

The sources of information were many and varied. They

included site surveys, where the location of each of the 81

identified store sites was visited and the size of the

store was either measured or estimated. These sizes were

further corroborated by information provided in a telephone

survey, a visit to the Los Angeles County Assessors and a

review of some of their records, and in two instances

actual building blue prints where their areas were listed.

In addition, information was obtained via a library search

of newspaper, and telephone book yellow page

advertisements. This was necessary in order to compile as . 0 7

accurate an inventory as possible of the computer stores of the San Fernando Valley over an eleven year period.

A number of interviews were conducted during the site visit stage. A good number of knowledgeable people well acquainted with the retail sales of micro computer in the

San r·. ~~.nando Valley were more than willing to share their

ct:ise and recount the history of their own personal experiences. In addition they were, for the most part, more than willing to make known their personal outlook for the future of computer retailing.

One further bit of information that was required was the location of customers and their distribution patterns.

According to Applebaum and Cohen:

"The factor of population is paramount in evaluating store sites. Consideration is given to number, composition, density, growth, income, expenditures, and buying habits. These population characteristics, determined on the basis of census and surve~ data, can be translated into total market potential."

Therefore, it was necessary to gather customer information from one site and map it in order to determine their range and to illustrate any patterns of distribution relevant to their computer buying habits.

One final data source that proved to be most useful was that of the 1980 census. This information, available in a computer data base format by National Decision

Resources provided invaluable information on the population

4 William Applebaum and Saul B.Cohen, "Evaluating Store Sites and Determining Store Rents." Economic Geography, (1960) Vol. 36, No.1, p. 8. 8

of the San Fernando Valley. These data were used for the construction of a series of maps illustrating various demographic features.

ORGANIZATION AND METHODS

From the onset of this study it was clear that in addition to an examination of micro computer development and its specialty retailing, an inventory and analysis of stores in the San Fernando Valley would be required to obtain a geographic perspective on their spatial distribution. Next, other data were obtained as necessary in order to examine the site distribution pattern relative to that of other location patterns such as shopping malls, industrial and commercial centers, and various aspects of the resident population such as income, education, and employment. With this data gathered an analysis could then be presented on the historical locational trend of specialty retail computer stores of the San Fernando

Valley.

This study presents in the following chapters a detailed examination of those items that have been identified as being important for the understanding of specialty retail computer stores and their distribution in the San Fernando Valley. Chapter II deals primarily with presenting the following: first, a view of the San Fernando

Valley; second, the product directly responsible for the growth and development of the SRCS, the micro computer; and third, a definition and history of the SRCSs in the San 9

Fernando Valley. In Chapter III a case study of one site is presented focusing on many of the various aspects of analysis of a SRCS including site attributes and the composition and distribution of its customer base. Along with this particular site study special detail would be given to the market area of the San Fernando Valley and its unique character. Chapter IV, deals with the distribution pattern and presented an analysis of dispersion for all of the identified SRCSs in the San Fernando Valley for each of the eleven years of the study period as well as an analysis of a composite view composed of all store locations for total study period. This is followed in Chapter V by an examination of the general distribution of stores for the study period as compared to various census data presented.

These data are then presented by utilizing a series of census tracts maps of the study area illustrating site locations in relation to various demographic characteristics. Finally, Chapter VI summarizes the findings and conclusions presented throughout this study concerning The Rise and Fall of Computer Retailing in the

San Fernando Valley. CHAPTER II

THE MARKET, THE MERCHANDISE, THE MERCHANT

THE MARKET

The San Fernando Valley

The spatial area of examination for this study

consists of the Fernando Valley section of Los Angeles

County. This area is situated at the border of Los Angeles

and Ventura Counties. It is bounded on the north by the

Santa Susana and San Gabriel Mountains, on the east by the

Los Angeles River as it flows between the Verdugo Mountains

and the San Rafael Hills, and Griffith Park at the eastern

end of the Santa Monica Mountains which also marks the

southern border of the Valley, and finally, in the west, the Valley ends back at the Santa Susana Mountains and the

Simi Hills (map 1).

Roughly speaking, the Valley is about 24 miles long

(east-west) and 11 miles wide (north-south) and for the purpose of this study contained an area of 137 square miles. 5 It included the communities of Arleta, Burbank,

Canoga Park, Chatsworth, Encino, Granada Hills, Lake View

Terrace, North Hollywood, Northridge, Pacoima, Panorama

5 The area of the San Fernando Valley was determined by the utilization of a digitizer. A base map was scaled and the border of the study area was traced. The resulting size of 137 sq. miles was further corroborated by the mea­ sure of the same base map overlaid with a grid of one square miles.

1n b til ll )> !I l~liI• z Ill" Gl II :zt ljii rJT1 "IIp '" rn ll

11 12

city, Porter Ranch, Reseda, San Fernando, Sepulveda,

Sherman Oaks, studio City, Sun Valley, Sylmar, Tarzana,

Tujunga, Universal City, Van Nuys, Winnetka, and Woodland

Hills. 6 Of these, only Burbank, Universal City and San

Fernando are not part of the city of Los Angeles. Burbank and San Fernando are independent cities, while Universal

City is an unincorporated portion of Los Angeles county which functions almost entirely as a business and contains no permanent residential population.

This area of analysis, limited as it is to the San

Fernando Valley section of Los Angeles county, was chosen for a number of reasons:

1) In the approximately 137 sq. miles comprising the market area there is found a residential population in excess of 1.2 million inhabitants, which, if the area had been an independent city, would rank as the third largest city west of the Mississippi river.

2) The area encompassing the valley is, for the most part, a fairly uniform topographic area. It is, except for its perimeters, a rather uniformly flat alluvial plain, accentuated by only a few natural features such as the Los

Angeles River and the Tujunga Wash along with a couple of man made features like the Sepulveda Basin, Hansen Dam, various railroad tracks and right of ways, as well as

0 These data were extrapolated from a series of maps listing the community boundaries of the city of Los Angeles and the surrounding area. 13

several freeways acting as physical and mental obstacles to

the flow of shoppers.

3) Accessibility, with the freeways being something of

an anomaly due to the fact that in addition to acting as a

physical encumbrance to local neighborhoods, they are

invaluable urban conduits bringing shoppers from the

greater Los Angeles metropolitan area closer to the San

Fernando Valley, especially in terms of a "time versus

distance 11 measure. 7 In addition, because the study area is

a valley location and is, for the most part, surrounded on

all sides by mountains, it takes on what Lewis Mumford

would have best described as a "walled city" complexion. 8

What this means is that the trade area boundaries are

somewhat fixed at the limits of the Valley and that the

access corridors such as the Sepulveda and Cahuenga Passes

function as gateways leading both in and out of the Valley.

With these and other features considered, the San

Fernando Valley makes a very nice model area on which to

focus when its geographic features were coupled with its

social, political, cultural, and economic features. It is

an area consisting of a full range of social milieu. It

possesses housing that ranges from the million dollar owner

7 Mark La Gory and John Pipin, Urban Social Space, Wadsworth Publishing Company, Belmont, California, 1981, pp. 109-110.

8 Lewis Mumford, The city In History: Its origins, Transformations, and Its Prospects, (Harcort, Brace and World, New York, 1961) . . ' 14

occupied single family residence to barrio slum apartments, from yuppie condo complexes to government subsidized high rise apartments for the elderly. The San Fernando Valley includes income areas from the affluent to the poor. It has Hispanic neighborhoods, Jewish neighborhoods, middle class neighborhoods, and others that all combine to add pattern and texture to the landscape of the San Fernando

Valley.

Commerce and Industry

"With its strategic location at the hub of six important freeways, two of the nation's busiest general aviation airports and serviced by a major rail line, the San Fernando Valley has become a burgeoning center for major industry ... aerospace, electronics, data processing and entertainment."9

This glowing promotional description, along with the

San Fernando Valley's dense diverse population, and industrial market, suggest that this would be an ideal place for computer stores to grow and prosper. For example, in Burbank, the Lockheed Corporation develops and builds many types of highly advanced aviation equipment.

Towards the western end of the Valley, Rockwell

International's Rocketdyne division builds rocket engines for NASA and the military. Others like Tandon, located in

Chatsworth, build computers and disk drives as does

Micropolus, Prometheious, and Computer Memories. Data

9 Industry Guide: San Fernando Valley, (Project Development Company, Westlake Village, California, 1988), page 16. 15

Products, produces printers, Magnetic Technology assemble electric motors for disk drives in Woodland Hills and canoga Park, Thermal Management in Van Nuys manufactures specialized heaters for inertial guidance systems built by

Litton Industries, which has various locations through out the area, and in North Hollywood, Hewlett Packard has a sales and technical support office to service the needs of the area. This list could go on and on with all types of industries from auto assembly to well drilling represented within the confines of the study area.

:Finally, and putting the market potential of the

Valley into a bit of perspective, Jerry Kaner, president of

Data-Memory Corp. of Woodland Hills, stated "In terms of computer installation, Los Angeles ranks third behind New

York and Chicago, but in engineering it is well known that

L.A. leads the country, and the San Fernando Valley is a big portion of that".10

Transportation

The distribution of industrial areas in the San

Fernando Valley is greatly influenced by access to transportation. Industrial corridors roughly follow along those of the rail lines cutting across the valley. Along side San Fernando Road, crossing the Valley south east to north west, runs southern Pacific's main track from Los

IU "Computer Center, Major Computer Technology Firms Choose Valleys as Headquarters," The Daily News, 16, August 1987, Lifestyles '87, pp. 30-31. 16

Angeles north to Bakersfield, the San Joaquin Valley and on to Sacramento and the San Francisco Bay area. This line is intersected by two other lines in Burbank. The main line heads northwest through North Hollywood, past the General

Motors assembly plant in Van Nuys, and on through

Northridge to Chatsworth where it is joined by the other smaller more circuitous line that crosses west through the valley on a more southerly route until it reaches Canoga

Park where it turns directly north and on into Chatsworth where it meets up with the main line once again and from there heads through the santa Susana tunnel into Simi

Valley and on up to Oxnard, Ventura, Santa Barbara and along the coast eventually reaching San Francisco (map 2).

It is clearly evident from this map that industrial sites have been established relative to the rail lines and to a lesser extent the airports located in Burbank and Van

Nuys. 11

In contrast to the location of the industrial areas of the Valley, the financial and commercial segments of the area are more closely associated with the 100 plus miles of freeway and the major streets that, for the most part, run bastides like in a grid pattern crossing at right angles east west and north south. Two very important exceptions are Ventura Blvd, and San Fernando Blvd., both of which somewhat parallel the contour of the valley rim as shown on

II Industry Guide: San Fernando Valley, (Project Development Company, Westlake Village, California, 1988). SAN FERNANDO VALLEY

INDUSTRIAL SITES N~ I

FOOTHILL FREEWAY

3 5 Scale in Miles AREAS OF INDUSTRIAL CONCENTRATION

A/S NYKAS IND

(MAP 2)

1-' -..J 18

map 2. One other less important exception, Lankershim

Blvd., somewhat parallels the path of the Little Tujunga

Wash and provides access to the Cahuenga Pass and thence to

the Los Angeles Basin.

Retailing

Also located within the study area are eight major

shopping malls. 12 These are, Northridge Fashion Center,

Sherman Oaks Galleria, Topanga Plaza, Panorama Mall,

Woodland Hills Promenade, Laurel Plaza, Sherman Oaks

Fashion Square, and Fallbrook Mall (map 3). In addition to these malls, there were a number of other retailing areas

in the San Fernando Valley worthy of mention. Two of these are the Valley Plaza in North Hollywood and the Golden Mall

in Burbank. There is also a large group of stores located

in the area directly adjacent to the Northridge Fashion

Center. 13

These various shopping locations appeared to be, for the most part, dispersed uniformly across the valley.

There exist however, a significant grouping of three major shopping malls located at the south west end of the study area.

It is notable that five of the eight major malls are located within one mile of Ventura Blvd. and the Ventura freeway. The others were also located along major streets

I 2 "Competition Changes in Maturing Mall Market," The Daily News, 7 June 1987, business sec. pp. 1-2.

13 Ibid. SAN FERNANDO VALLEY RETAILING N~ I

FOOTHILL FREEWAY

$MAJOR CENTERS

OTHER CENTERS 0 2 3 5 Q Scale in Miles e SRCS

MALLS A/S NYKAS

(MAP 3)

1-' 1.0 20

and are also located relatively close to freeway access

(map 3). The trend of locating close to the Ventura

corridor also, as shown later, correlates closely to the

trend among specialty retail computer stores.

This corridor, consisting of Ventura Blvd. and the

Ventura freeway, stretches some 14 miles across the

southern side of the valley and was at the time of this

study one of the most important shopping strips in all of

southern California. In addition to its importance as a

shopping area it was also known for its prestige and the

associated high price that goes along with it. According

to a newspaper article published near the end of the study

period:

"Retail space on the Route 101 corridor--from Sherman Oaks to Ventura--ranks first among the nation's most expensive suburban locations nationally .•. " The study by Grubb & Ellis--the nation's largest commercial real estate firm--priced retail space along the Ventura Freeway corridor at $20 per square foot, compared with $18 in second-ranking San Jose. Land zoned for office space along the 101 corridor was the eighth most expensive among the 21 locations surveyed. It cost $14 per square foot, compared with Orange County's John Wayne Airport area, the most expensive surveyed at $29 per square foot. Howard Foster, regional manager of Grubb & Ellis in Sherman Oaks, said the land's value is being increased by " ... the overall economic vitality of the Los Angeles Basin and the fact that stretch of 101 is the busiest freeway in the nation." "It also funnels people from Los Angeles to Ventura County--one of the fastest growing in the state," Foster said. The Southern California Association of Governments expects the county's population to jump 23 percent in the next 10 years, compared with the 8.4 percent in Los Angeles County. The price for land zoned for office space along the 101 corridor has been rising 8 percent annually

'

21 percent. "The price of land tends to track long-term economic conditions more closely than fluctuations in vacancy rates", Foster said. The study, which surveys prices between 1984 and 1986, looked at 21 commercial corridors in major metropolitan areas that had experienced the fastest growth since 1980, including Boston's Route 128 and the I-82 Research Boulevard in Austin, Texas. 14

In addition to the 101 corridor and the major malls of the San Fernando Valley, there are other enclaves of retail activity located in what could best be described as the traditional town centers for the various communities of in the Valley. These include such areas as the center of canoga Park located near the intersection of Topanga Canyon

Blvd. and Victory in the west, Toluca Lake Village in the east, and the downtown portion of Van Nuys, which not only contains retail and commercial activities but also functions as the civic center of the San Fernando Valley.

Van Nuys, located near the center of the of the valley, contains administrative offices for not only the City of

Los Angeles but many for the federal, state, and county governments as well.

Quite naturally, the Valley area is also served by a myriad of "L" shaped corner convenience centers located at sites that typically had been occupied previously by gasoline service stations. There are also neighborhood centers anchored primarily by large chain drug stores and supermarkets, as well as specialty strips like those of car

14 "Valley Has Costliest Suburban Retail Sites," The Daily News, 23 September 1986, business sec. pp.1-2. 22

dealers located along Lankershim between Burbank Blvd. and the intersection of Cahuenga; Van Nuys Blvd., between

Calvert and Riverside Drive, and Roscoe between Sepulveda

Blvd. and the San Diego Freeway. All of these shopping facilities imply that the San Fernando Valley is well served by a broad based hierarchy of businesses and business types that provide for the retailing requirements of the study area.

Professional Services

One final major economic factor of the San Fernando that perhaps played a role in the distribution of computer retail stores was that of the professional services industry. These Doctors, lawyers, accountants, architects and others, were found located primarily in the following areas: along Ventura Blvd., especially west of Van Nuys

Blvd. in Sherman Oaks, and Encino; Warner Center in

Woodland Hills, at the west end of the valley; and the

Universal City, Burbank Media section of the east valley.

Within these centers there exist high concentrations of attorneys, certified public accountants, hospitals and medical buildings, real estate and escrow offices, banks, thrifts, and savings and loan institutions, and other similar types of professional businesses. These categories of income producing activities are often over looked and proved somewhat difficult to locate but, in this instance, their importance became obvious when compared to the distribution of SRCS locations on the Workers by 23

Occupation, Percent Professional Specialty of the San Fernando Valley. THE MERCHANDISE The Micro Computer With the study area defined the next task is to define the product that caused the growth of this new retail activity based on the selling of micro computers. While the specialty retail computer stores in the San Fernando Valley grew and proliferated, the development of their main product was evolving at an absolutely phenomenal pace. The rise of the micro processor used in personal computer has been referred to the third wave of the electronic revolution following that of the transistor and the integrated circuit. This technology developed with blitzkrieg intensity. From the Altair computer of 1975, with its flashing banks of light emitting diodes (LEOs), to the high speed, large capacity "super micro1115 computers of 1986 there had been progress in the field of personal computers that seemed to be self perpetuating with its innovative intensity. While it could be argued that the age of electronic information processing commenced with the invention of the transistor at the Bell Laboratories by

I5 The latest wave of micro computers, the Intel based 80386 systems have power far beyond that of yesterdays mini computers and lack only an effective operating system and software before they become multi-user, multi-tasking and perhaps able to replace the mini computer altogether. 24

Walter Brattain, John Bardeen and William Shockley16 it is

safe to say that it was not until the mid 1970's when the micro processor became an important component in computer

systems that information processing truly made its impact

felt across the entire spectrum of society.

At the same time as the computer industry was developing and utilizing the micro processor, computer retailing started to grow with the introduction of the micro processor based Apple and Tandy computers. Beginning

in December 1976, when the original Apple computer was

first distributed through 10 retail stores all across the nation, computer retailing has evolved into a multi-billion dollar industry with literally thousands of computer retail stores nation wide.17

There are other parallels between the growth of computer stores and the growth and maturation of personal computers in general. In 1975 MITS of Albuquerque produced what has commonly been called the first personal computer. originally developed from a design used for a mainframe

16 "Brattain, Transistor co-Inventor," The Daily News, 14 October 1987, sec. 1, p. 10.

17 This estimate is from InfoCorp's Retail Channel Tracking Service, where it is estimated that there were some 157,000 units sold in May of 1987 at an industry aver­ age "street price" of $1,988.00. If this is extended across a 12 month period an estimated yearly sales number for the retail computer sales would be something on the or­ der of $3,745,392,000.00. Even though the month of May is only used as a sample month and may not accurately reflect either the volume or price of the units sold, it does provide a clear indication that the retail sales of computers is indeed a multi-billion dollar industry. 25

computer terminal, it was sold by mail order in kit form at

a price of about $400.00. Its usage was made easier and

more personal when nineteen year old Bill Gates, who went

on to found Microsoft, one of the nations leading software

publishing companies, and his friend Paul Allen produced a

micro computer version of BASIC programing language. 18

BASIC (beginners all purpose symbolic instruction code) had

originally been developed by John Kemeny and Thomas Krutz

at Dartmouth College as a simple programming language that

could be rapidly learned and used for almost any

programming task. 19 In ensuing years, a great many

companies, both new and old, began developing and manufacturing personal computers that could take advantage of the new programs that were being developed. Companies like Altos, Northstar, Cromenco, IMS, and Vector were among the first to manufacture micro computers. For the most part these early systems used the Z-80 micro-processor introduced in 1976 by Zilog. It was this chip that allowed software programmers for the first time to write high quality programs (especially in BASIC) that could be used for such important business activities as word processing, accounting, and database management.

T8' "Rebels With A cause," Communique, November 1987, Santa Ana, California, p.3.

19 Bob Albrecht, Leroy Finkel, and Jerald R. Brown, Basic for Home Computers, (John Wiley & Sons, New York, 1978) p. vii. 26

At about this same ttme, other manufactures were developing additional chips and computers. Intel introduced their 8080 and Motorola developed their 6800 and

6500 series of chips including the 6502. The selection of this last chip, the 6502, by two young computer designers working in a garage workshop in 1976, forever changed the way in which computers would be developed and sold. Steve

Jobs and Steve Wozniak had designed and produced the first low cost microcomputer with a video terminal and 8K bytes of RAM (random access memory) on a single printed circuit board. The Apple was to become, along with being one of the first "retail" micro computers, one of the very first

"user friendly" computers designed primarily for personal or home use. This computer, for the first time, put into the hands of middle management and small businesses, the power of true computing. Prior to this time, they had to make do with the use of calculators, hand filing systems, accounting reports, and if they were lucky, sometimes they were able to request reports from the large computers in their own data processing departments if they worked for a large enough firm. Now however, almost anyone could create and maintain their own databases, do their own accounting or create electronic spread sheets, perform their own financial or statistical analysis as well as use the PC

(personal computer) for writing letters and reports using what had come to be known as "word processing" software.

It was indeed quite remarkable that a computer designed for 27

"home use" could so naturally find its way into the world of business. Ultimately however, the utilization of "home computers" did not make nearly the impact that the original designers and early visionaries had intended. Most of those purchased for home use ended up as merely expensive entertainment devices, and used for an occasional letter or two. THE MERCHANT The Specialty Retail Computer Store With the market area defined and the product to sell selected, it is then necessary to define the marketing vehicle, the specialty retail computer store (SRCS). For the purpose of this study this store type is defined as a retail location selling micro computers as the primary economic activity of the location. It is important to note that other stores such as department stores like: Federated, Target, Kmart, Robinsons, and Sears all sell computers as do the majority of Radio Shack stores, but that this activity does not comprise their primary business in the way it does for the locations examined in this study. Within the complex urban areQa, the function of the SRCS was essentially a specialized one, to sell micro computers. 20 In this study the focus is on those specialty 20 Micro, mini, and mainframe computers are primarily differentiated by their size, power, and the number of op­ erations that can be taking place at any one time. Usu­ ally, the micro computer is a single user, single task de­ vice where as the mini and the main frames are able to have many users performing many task simultaneously. ' l' 28

stores and for all intents and purposes excludes department stores21 and other businesses that sell computers as an adjunct to their other product lines.

One further aspect that requires consideration is, that while this study focuses on the sales of micro computers via the retail channel that concentrates specifically on selling to the end user, the person or business that is intending to purchase the computer, for their own use, it needs to be acknowledged that there are a few businesses who maintain special relations with retailers to purchase computers specifically for the purpose of reselling them. These businesses, principally known as Value Added Resellers (VARs), generally speaking, needed to add some kind of value to the computer in order to obtain this status. This particular aspect of computer retailing usually required some kind of a formal agreement between the retailer and the VAR and ordinarily required authorization by the manufacturer of the computers to be resold.

There was one other type of sale that some computer retailers made but were reluctant to discuss. When a store received authorization to sell a manufacturers product, it ordinarily meant that the retailer had met certain standards with regard to location, facilities, training,

21 One such store, Robinsons, even went so far as to have a computer concession called The Computer Spot set up within several of its locations. It was short lived and was not seen in the San Fernando Valley. 29 service, et cetera, and with this authorization they were then able to purchase equipment at a discount from the manufacturer. Other stores, which had not received authorization, while unable to purchase directly from manufacturers, would buy computers from authorized retailers. This latter group was commonly referred to as being the "gray market". This, it should be noted, was not an illegal activity. When contacted, one of the oldest computer retailers in the San Fernando Valley, H.W.

Computers, explained that they could offer better pricing and service by not wasting time or money on becoming authorized. While not illegal, it was a violation of most manufactures authorization agreements to sell for resale and when discovered, any retailer found knowingly selling to an unauthorized retailer was at risk of losing the manufacturers authorization. IBM and others, in an attempt to curtail the sales of their products by unauthorized stores boldly prints a warning on their product packaging stating that the product is warranted only if purchased from an authorized dealer (see warning labels copied from computer packaging, next page).

The SRCSs located within the study area sold a large variety of computer brands. Of these, there are essentially two types. The first, were the computers designed for the home market and included systems manufactured by Atari, Commodore, Radio Shack, Apple, and others. The Second group, noted for its emphasis toward 30

Important Notice

Applicable only in the United States and Puerto Rico, and in Canada.

IBM's Limited Warranty is valid only if you retain proof of purchase from IBM or an IBM Authorized Dealer/approved reseller for this Product. Warranty service is available only in the country of purchase.

If you purchase this Product from any other source, your purchase is "AS IS;' which means that IBM grants to you no warranty and you, not IBM, assume the entire risk as to quality and performance, including the entire cost of any necessary servicing of this Product or repair of any defects.

For additional information and limitations, see the Statement of Limited Warranty for this Product.

NOTICE

The COMPAQ® Limited Warranty requires proof of product purchase from an Authorized COMPAQ Computer Dealer. Products purchased from an unauthorized source arc not covered by this Warranty. I COMPAQ Limited Warranty information is in the enclosed I• Operations Guide.

(MANUFACTURERS WARRANTY STATEMENTS) 31

the business market, included such giants as IBM, AT&T,

Tandy (Radio Shack), Compaq, Apple, Hewlett Packard and others less well known firms such as Kaypro, Leading Edge,

Epson, AST, Tandon, Zenith, Digital Equipment, Texas

Instruments, and Sperry, to name but a few. This is not a complete listing of the computer manufactures offering systems for sale but they are, for the most part, those most readily available to both the buyers and sellers of personal computers in the San Fernando Valley.

San Fernando Valley Computer Stores

The earliest of the specialty retail computer stores found in the San Fernando Valley were not computer stores at all. H.W. (Hobby World) Electronics was, as the name implies, a hobby shop, albeit one specializing in electronics. Another of the early computer retailers, Data

West, was an office equipment store and Computer Components

Inc. was, in reality, a store specializing in military surplus electronic components. The addition of computers to their product mix simply came as a natural extension of their existing business just as it did to the Radio Shack stores which introduced the TRS 80 computer in 197722 , and which subsequently went on to become the single largest computer retailer in the nation, in terms of locations, as well as units sold. Radio Shack operated somewhere near

500 full-line Radio Shack Computer Centers and 1,235 Plus

22 "Developments: Tandy Corp," The Daily News, 4 August 1987, Business sec., p.2. 32 computer Centers, (computer centers located within Radio

Shack stores) selling their own name brand line of computers. 23 However, in terms of market share in 1986,

Radio Shack (Tandy) ranked third (17%) behind Apple (26%) and IBM (18%) 24 . Later on in the evolution of computer retailing, stores like National Camera, the Xerox store, and Pac Tel Info Systems joined the list of companies that opened stores to sell micro computers as an adjunct to their primary businesses. Most of these eventually went on to be known as "Business Centers" or "Office Automation" stores but, in reality were opened primarily to sell computers into the business market place. In some cases, like the Xerox Stores, this broad spectrum approach was attempted by offering items such as typewriters, copy machines, telephone systems, calculators, along with accessory and consumable computer supplies.

In 1981, Sears, the nations leading retailer, prepared to open an entire chain of Business Centers designed to sell primarily one item, the newly introduced IBM personal computer. A host of other companies, including IBM itself, soon followed suit until finally a multitude of new specialty retail computer stores had opened to sell

Z3 "Tandy Focuses on its Image," Micro Market World, 8 December 1986, Southeastern, PA, pp. 21-24.

24 "Retail Channel Tracking Service," InfoCorp, July 1987, Cupertino, California, p. 52T. 33

computers, almost exclusively, to the business market

place.

During the eleven years examined in this study (1976

through 1986) there were some 96 computer stores operating

out of 81 locations within the confines of the San Fernando

Valley (table 1, map 4). Of this total, some had been

active at the same location for many years and yet had a

history of numerous ownerships and operated under a

assortment of names. Some of these companies had changed

locations and some had closed. Some had a comparatively

long history within the industry, however, the majority of

the stores came along after 1980, a point in time when

there were only 17 personal computer stores operating in the San Fernando Valley. Some of the stores located in the

Valley had only a short existence while others survived through out the entire eleven years of the study period and beyond.

A cursory view from start to finish, in terms of the number of locations revealed that by the year 1976 there already existed 6 stores selling micro computers in the study area. By the year 1984 the total number of retail sites had grown to 55. However, by the end of 1986 the number of operating sites had dropped to only 46. This was the first apparent downward trend in the total number of specialty retail computer store sites after nine years of growth. ~~ !;!:I;: c~~s 1:~1<' l'tl !:':!ill ~Of~ 1>1" 2 ~ ~; ~ n' ~ ~q -p IP ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ : n~ ~~~~ s ~ ~ . ~ ~ :; ~ ~ ~ j ~ n~ ~p ~ 6 j p ~ ;;1 ni REi~ ~ • e ~a ~ ~ ~L s: a: y ii~-~ ~ ~ 6 ~b a a= ~ ~ ! iii ~ a ! • I ~ s.!>~ ~ ~ ~ ~ ~

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(/) ~ ~ 0 (/) ~ C/J

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ooo-oooooooooaooa-oooooooooocoooooooooooooo ···-···-·····--~---·······-················ "~ ooa--oo-oooooooo-aooooooao-oooooooooooooaoo 01 ...... o ...... DaQ-eeo ..... Dactoooaom .. at:>ooaooaooooa~:~-'D ~

~ ~ t

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v£ SAN FERNANDO VALLEY 1976 - 1986 SPECIALTY RETAIL COMPUTER STORES N~ I

v .L ,J ... 5 Sccle in Miles

A/S NYKAS Sf\1

(MAP 4)

w lJ1 36

Trends

According to one study conducted at the end of 1986,

"The retail channel for personal computers has stopped

growing. For every store that opens, one closes. 1125 This

pattern has gone one step further in the study area where

there was a loss of nine locations between 1984 and 1986.

It is clear that trends in computer retailing in the

San Fernando Valley are manifested in several ways. A

simple count of store sites for each of the eleven years

reveals that the retail computer sites grew in number,

reached a peak and have fallen (graph 1) . This same trend

is clear when the total square footage of computer retail

space is examined (graph 2). Over the course of this study

many publications printed articles concerning the status of

computer retailing and according to one such source "The

concept of a computer store--where a customer walks in,

noses around, plunks down a few thousand dollars and walks

off with an armload [sic] of equipment--is fast

disappearing. 1126 The article goes on to state that the

consumer seeking to purchase a personal computer " ..• are

taking a back seat as most of the nation's 4,500 computer

retailers court business customers." They go on to say

~ R. Gary Bridge, PH.D. "Sample survey of u. s. Computer Retailers: Report to Participating Dealers" from the survey conducted in December 1986.

26 "Vendors Go Beyond Stores to Add Sales," The Daily News, 14 April 1986, Valley Business sec., p.4. SAN FERNANDO VALLEY SRCSs NUMBER OF SITES 60 1----- 50 / ~ ~

40 I (f) w I- (/) 30 I (f) I u 0::: v (f) 20 / v ~ 10 /

f.--- -

---- ' 0 76 77 78 79 80 81 82 83 84 85 86 YEARS

(GRAPH 1)

w .._J SAN FERNANDO VALLEY SRCSs TOTAL SQUARE FEET 150000 1------v ~ f- 100000 I w w LL w 0:::: I <( =:> v 0 (f) 50000 / v ~ - ~

0 76 77 78 79 80 81 82 83 84 85 86 YEARS

(GRAPH 2)

w 00 39

that the home computer market place had been very weak in

1985 and 1986.

Towards the latter part of the study period, the buzz

words had become "direct sales" and "store front versus

door front" with some even arguing that a retail location

of any type is of little or no value in the marketing of

micro computers to the business community. In fact, there

were some in the industry who called computer retailing

dead and indeed many computer resellers sent their sales

forces outside and into the business world to sell directly

to the customers at their own places of business thereby

reducing the need of a retail store site to serve any

particular market area. Needless to say, the result of

this attitude was that many SRCSs found it necessary to

recruit outside sales forces in order to call on the business market place and thereby survive in a changing business environment.

One of the prime areas that these businesses target with their new direct sales forces was that of small businesses. One reason was, according to Harry Green, manager of JMR Computers, a personal or home use computer oriented Northridge retailer, 27 that these small businesses comprise the majority of businesses in the San Fernando

Valley and "We can't afford not to do it. JMR is making plans to recruit its own outside sales staff, but the

27 Shortly after the first of the year in 1987, JMR went out of business. 40 company hasn't determined how many people it intends to hire. 1128 According to Elliot W. King, the West Coast editor for Computer Dealer, a Tustin California based trade magazine:

11 The trend is gaining momentum with recent moves by IBM and Apple Computer to cut down on or eliminate authorized dealerships. IBM's action last November, intended to dry up the gray market, is forcing existing vendors by grow by acquiring competitors, an example of the trend came this month from Businessland. The San Jose­ based chain intends to buy the 36-store Amerisource chain from United Telecommunications for $20 million. The stores, in the Midwest, Southeast and South, had sales of $70 million in 1985. That purchase will give Businessland toe holds in much of the Nation. The 69-store chain is concentrated in the Southwest and East and had sales of about $350 million last year. 1129

Such formidable competitors, whose buying power can command hefty discounts from manufactures, leave the independent computer retailer vying for the smaller businesses, and the smaller, albeit frequently more lucrative, vertical market niche sales.

"The subgenre of smaller stores aren't getting rich, but they are surviving quite nicely." King went on to say that independent computer stores, which make up about 43 percent of the retail store market, are successful by

" ••• serving people who only buy one or two computers. 1130

Z8' Ibid

29 Ibid.

30 Ibid. 41

The shift away from consumers toward business and

professional customers was seen as a matter of survival.

Closures and consolidations were widespread. Evidence of

this can be found in Pathfinder Computer Centers Corp.

Since opening its first store in Encino in 1982, Pathfinder

tallied losses of $6.3 million and then in 1986 went on an

ambitious acquisition spree and grew to 18 stores. Just

prior to closing all but one of their locations they had

planned to close 12 locations and deploy a direct sales

force into the markets they had been servicing from store

fronts. However, after the Woodland Hills-based chain

reported a lost of $4 million on sales of $16 million in

1985 they filed for bankruptcy late in 1986. 31

This is not to say that only the small computer retail

stores are closing. Quite the contrary, according to

Philip Mogavero, manager and co-owner of Data systems West,

a Sherman Oaks computer retailer in the same article. He

stated, "Two years ago, we were battling the independent on

low-end products ••• " and " .•• now, the greatest competition

is on high-end products from Computerland. The weak

independents have gone out of business." Data Systems,

which operates another outlet in San Gabriel, had at that

time, a four man sales force selling primarily NCR and

Kaypro computers. Mogavero, who co-owns the store with his

father and another partner, went on to say that "Direct

:IT Ibid.

' \~ 42

sales is the way things are going.", however, Data Systems, which opened in 1971, is committed to retaining storefront operations to keep walk-in traffic alive. Store sales help justify fairly high product inventory, which proves a boon to outside sales accounts. Mogavero further stated that outside sales accounts--businesses with equipment needs-­ can get service more quickly when dealing with a store front operation.32

Along the same line but from the perspective of a large franchise organization, MicroAge computer stores of

Tempe, Arizona., which has 174 franchises, doesn't exactly discourage walk-in business, but it stresses outside sales calls. The chain, which had a store in Glendale believed computers ought to be carefully prescribed for each individual customer. At some of their outlets, 95 percent of revenues are generated from outside sales calls, according to MicroAge spokesperson Linnea Maxwell.

With all this, King questioned whether or not an independent computer retailer could afford the cost of deploying a skilled and professional sales force. While it is true that micro computer systems can cost several thousand dollars, he drew a clear analogy of the problem facing the micro computer retailer when he stated in the article that car dealers can't afford outside sales people to call on accounts. 33 The implication in his statement is

32 Ibid.

33 Ibid. 43

that there is simply not enough profit involved in the sale of micro computers, just as in car sales, to afford the requisite training and compensation structure for doing much more than selling computers based on price alone, and that is the dilemma confronting micro computer retailers as an industry.

Taking the evolution of computer sales one level further and creating even greater pressures on the SRCSs,

Tom Quinlan of Computer Retail News wrote concerning the direct sales of micro computers by Apple:

"Apple Computer Inc., seeking to expand its penetration in the corporate market, is refocusing the efforts of its dealer-support staff on outside sales to Fortune 2000 companies". "Apple's latest attempt at lessening IBM Corp'.s dominance of the large-business market follows the disbanding of its 350-member direct sales force last May, which was prompted by dealer complaints." "Those 350 sales people were added to Apple's dealer-support network, which will soon begin working with resellers to increase Macintosh sales to corporate accounts, said William campbell, Apple's executive vice president and general manager." "Rather than expand its Key Accounts Program-­ through which Apple continues to supply product to an estimated 75 corporate customers of the now-defunct direct-sales force--the company intends to work more closely with dealers." "For the past year, Apple has been forced to deal with the reorganization of the company along more traditional lines and, more recently, with its decision to streamline its dealer base by dropping an estimated 600 dealers, Campbell said." "In the past, Apple's direct-sales accounts were looked upon by dealers as competition, Campbell said, with the underlying thought being that Apple might resurrect its direct-sales force. 1134

34 Computer Retail News, 26 May 1986, p. 4. 44

While Apple struggled with their dealers regarding how

best to gain market share, IBM, which has always had a

direct sales force for its personal computer line,

continued to pursue not only direct sales to end users but was also engaged in selling to their Value Added Resellers

and authorized dealers. This distribution strategy had

always been a natural adjunct to their sales of main frame

and mini computers systems. It was natural that when a

company wanted to connect one of their large systems to personal computers within the company the IBM

representative was able to oblige. IBM also maintained separate sales forces to sell to governmental agencies and schools as well as a retail store front operation up until

1986 when they sold their 95 computer stores to Nynex, a company owned by the New York Bell operating company.

Even though IBM sold their retail stores, they continue to sell direct on a nation wide scale.

Conversely, and on a more regional level, Photo & Sound, a company that started out as an audio-video dealer in 1939 and placed 19th in the Computer Retail News TOP 20

RETAILERS list, has never operated as a traditional retail store. They have relied entirely on the business generated by a 45-person outside-sales force.35

In addition to the discussions taking place in the literature, a number of interviews were conducted with

35 "TOP 20 RETAILERS," Computer Retail News, 26 May 1986, p. 85. 45

people knowledgeable in the field of specialty retail computer stores. It was clear that these people echoed many of the impressions gleaned earlier from the print media. Jeff Steimle manager of Valley Computer Resources, a new computer store located in Canoga Park (opened in

1987) said that he had been involved with computer sales in the San Fernando Valley from about 1981. In his opinion the arena of retail sales had changed dramatically. With the increasing pressure of direct sales forces focusing on the business community, the only place for computer retailing is with the personal and entertainment market place. Jeff further explained that he had sold in several types of computer sales environments. The first was with

Micro Business World and involved selling mail order computers and software. He then moved to Bison Computers doing pretty much the same thing and eventually got into retail sales at Compu Plus. When that store closed he worked at brokering computer store inventories and eventually ended up at Valley Computer Resources after owning part of Ram Trading, a company that sold computer peripherals and supplies. He commented that in order to sell computers today it really takes very little in terms of support or particular knowledge to sell into the corpo­ rate market place. What that group of buyers are looking for is price. If you sell the same product line as another company the company selling for the lowest price will get the sale. All companies promise service, support, and 46

training but only a few are actually equipped to deliver on

these claims, and what really takes place is that even when

the computers are sold at a price that can not afford extra

services the customers tends to demand them none the

less. 36

John Abney, owner of Com Sell in Sun Valley echoed

Steimle's opinion of the personal market place as being the way go in computer sales. Having started out in computers

by writing a program for his own computer to do estimating

for his printing business, he soon found that there was a demand for not only his program but others as well. He

found that the small area of his printing shop that he had used to sell software soon took over more and more space.

In 1983 he sold his printing business and went full time selling computers and software. He opened first a store in

Sun Valley and later, one in Reseda. His business started out selling Commodore and then Atari computers. He felt that Atari by far had the best home computer on the market but its major problem was that it was not IBM compatible.

According to Mr. Abney, the personal computer market place had not yet been fully exploited even though there had been a tremendous fall off in the sales of personal computers for home use. He anticipated sizable growth in this area with the introduction of new equipment that will

30 Jeff Steimle, interview held during the site survey phase of research for this thesis, Van Nuys, California, April 1987. 47

conceivably incorporate other aspects of the growing home

entertainment field using both audio and video technologies

in combination with computers. Mr. Abney went on to

discuss the current franchising trend in the composition of

computer retailing. He felt that this trend would

eventually burn out when those involved realize that it is

not a viable approach to the retailing of complex solution

oriented equipment such as computers. He also thought that

the added overhead of franchise fees were more detrimental

than the benefits derived from group volume purchasing. 37

From a totally different marketing perspective, Dennis

Marshall, regional manager of Moore Business Centers, a

company that actively courted the business market place,

flatly came out and said "Retail is dead!" and that the retailers were dumping products into Major Accounts because of their need to fulfill commitments to: their banks, venture capitalists, their vendors, and their employees.

He said that this activity made it difficult for companies such as Moore Business Centers with their high administrative costs to compete in that type of market environment. He further stated that the sale of micro computers to business had moved from being originally a retail activity to an outside direct solution oriented

37 John Abney, interview held during the site survey phase of research for this thesis, sun Valley, California, April 1987. 48

selling activity targeting retail sales, middle market

businesses, and major accounts.

According to Marshall, retail sales into the business

market place still exists but he felt that the future trend

will be away from the traditional retailing. What he

foresaw was the sales of computers and all their associated

goods by a direct sales force. 38

One further verification of the decline in computer

retailing came from Gary Bridge of the Bridge Group Inc.

where he wrote:

"Computer retailing is changing, of that there is no doubt; but I would not describe this change as a 'fall'. Expensive store fronts are being replaced by leaner 'sales office' operations, and outbound sales have supplanted walk-in trade. But the percentage of all machines that go through the retail channel (as contrasted with the manufacturers' direct sales force) has not declined in recent years, and hence change is probably a better term than fall when it comes to de­ scribing the computer retailing. Of course, from the standpoint of individual stores that have been elimi­ nated in the shake out, fall is probably the right word!"39

It is clear that the selling of micro computers

through the specialty retail computer store was in a state

of flux by 1986. With the apparent trend away from

traditional retail sales, an activity heavily dependent on

location, to outside sales, the value and impact of

3E Dennis Marshall, Regional Manager of Moore Business centers, Regional Conference, Laguna Hills, California, February 17, 1986.

39 Letter from Gary Bridge, PH.D., Bridge Group Inc., New York, New York, 6 July 1987.

' 0 49 locational influences for these types of stores would, in all probability, have to change in order to meet the needs of an industry that was, by most accounts, also changing.

What had worked for the early SRCSs selling personal computers to the retail market was, at best, somewhat haphazard from a marketing view. One of the early company owned chain stores, The Xerox Stores had, according to Rick

Hanson, District Manager, done some market analysis and for the most part placed their stores fairly successfully in order to capture a market share they had initially targeted. Xerox had a very effective direct sales force selling their copiers and computers into corporate America, however, they recognized early on that a more practical, and cost effective type of distribution for small business and home use would be a chain of retail stores. In the

Southern California area, Xerox opened 10 stores to cover an area extending from the San Fernando Valley to San

Bernardino in the east and Costa Mesa in the south. Their other centers were located in downtown Los Angeles,

Pasadena, Long Beach, Torrance, Santa Monica, Brea, and

Huntington Beach. When Sears opened their own business centers two years later, they placed a good number of then in very close proximity to existing Xerox Stores. This was a well tested and cost effective method of location planning when the market was in a growth mode as it was when Sears opened their stores. This type of location worked well when the target market remained that of small 50

businesses and personal users. However, if the corporate or business market place was the market of choice then the locational considerations would in all likelihood change.

It was apparent that computer store owners sought to impress businesses with their success and stability, and so sought "prestige" addresses for retail computer store sites. In the San Fernando Valley this meant an address on

Ventura Blvd., preferably west of Van Nuys Blvd. An examination of table 1, and illustrated on map 3, shows that 34 or 42% out of a total of 81 specialty retail computer store locations fell into this pattern and that 42 or 52% were located on or with in one mile of Ventura Blvd.

One other aspect of the grouping of these stores is their apparent clustering near Topanga Canyon Blvd., Reseda

Blvd., and the intersection of the San Diego Freeway or

Sepulveda Blvd.

SRCS Trends

From the beginning, the very name "personal computer" implied that this was a device for everyone and the natural out growth of this assumption was that the distribution of this new technology would be along traditional lines. Thus was born the specialty retail computer store where anyone and everyone could go to get one of these remarkable new machines. In fact, many of the very early computer stores had simply added personal computers to their existing product lines. Soon after, however, a number of new stores opened in an attempted to profit from the demand that the 51

frenzied purchasing public had for these artifacts of the technological revolution.

In the San Fernando Valley, generally speaking, what transpired was the following. When the greatest number of computer stores were opening, between the years 1980 and

1985, there was a popular belief that the personal computer would eventually find its way into every home. However, the picture was not quite what it seemed. First of all, the early PCs were not known for their ease of use and it soon became apparent that if any kind of serious work was to be done with a PC a few rules of the game would be need to be learned before proceeding. The often stated idea that a PC would be a handy way to store recipes or

Christmas card mailing list soon faded when it was realized that who ever was going to use the computer to do these task needed to learn about such things as the use of a disk operating system. They needed to know how to format, copy, check disk storage capacity, and any number of other functions. Only then was it safe to learn all about some kind of data base. When all this was added to the need to learn some sort of word processing program in order to write letters, and some kind of mail merging utility to get the names and addressed to print along with the letter, it was soon very apparent that most "home users" did not want to invest the kind of time required to operate the system.

Business applications were another matter all together. It was the introduction of the electronic spread 52

sheet that gave businesses a powerful justification to use personal computers. Businesses of all sorts started using these software applications to prepare budgets, financial forecasts, and any number of statistical analysis. This new and business oriented market place gave rise to a new requirement for locating new computer stores to be used in conjunction with those of the already established market place of the home or personal users.

Given the diverse economic activity within the confines of the study area it is appropriate to look at the same area in terms of computer retailing. By the end of

1976 the area already contained six computer stores. These were located in a widely dispersed pattern in the portion of the Valley west of Van Nuys Blvd. (map 5). over the eleven year time span of this study, there evolved an unmistakable tendency of the new stores to form a string of concentration along Ventura Blvd. (map 4). In this light, it is interesting to note that of the original six stores, only three are still located at the same site and two of these are located on or very near Ventura Blvd. It is fair to surmise that computer stores like to locate on Ventura

Blvd. however, as previously mentioned, that tends to be an expensive address for an industry that finds its profits eroded by the effects of competition.

By the end of 1986 the distribution of computer stores had changed significantly and one of the major aspects of that change was the growth in the number of computer store SAN FERNANDO VALLEY 1976 SPECIALTY RETAIL COMPUTER STORES N~ I

3 4 Scale in Miles

A/S NYKAS 76

(MAP 5)

Ul w 54

locations. One of the forces that powered the growth and

the apparent strength of personal computer retailing in the

San Fernando Valley was the high disposable income earned

by the shoppers and residents of the area. According to an

advertising report prepared as a marketing tool for

Computerland, 40 the San Fernando Valley is one of the

largest and most affluent areas in all of Southern

California. 41 In addition, this same area contains a

population of whom 44% have attended college, 74% are

employed as white collar or professional workers, and

approximately 24% of the families own computers. 42

Another important reason justifying locating retail

computer stores in the San Fernando Valley is the number

and importance of business located in the area. "About

fifty of California's top 500 companies are located l.n' ••• II

the market area of the San Fernando Valley. 43

Many factors threaten the profitability of retail

sales of computers or any other product. According to

Ransome, "An unnecessarily large number of retail

businesses fail each year because of inadequate market

~ One major group of franchise stores in the study area comprising 11% of the total computer stores found to exist at one time or another during the 11 years of the study period.

41 "The Daily News Market For: Computerland", Prepared by the research staff of The Daily News, 1987.

42 Ibid.

43 Ibid

' \) 55

research and poor location planning."44 Clearly, one basis for the seemingly ephemeral status of computer stores along

Ventura Blvd. could be that little if any market research was done by those opening specialty retail computer stores.

This, in turn, seems to have led to SRCSs nesting near others in an attempt to capitalize on their success. A natural effect of this type of location technique is increased competition at best and at worst a compounding of mistakes made by others who perhaps had done faulty or poor research. Another problem with nesting is that even if the original locational planning was solid the market or trade area may shift and what had once been a good location becomes one that is marginal.

While it is clear that the San Fernando Valley would make a good area in which to locate a specialty retail computer store the problem remains as to where within an area of 137 square miles, when all the various locational factors such as competition, accessibility, demand, range, as well as legal considerations such as zoning are considered, are the best possible sites.

Clearly, there was very little agreement among those in the industry as to where the industry as a whole was headed. What was needed was a more finely tuned understanding of the forces at work in the market place.

'2f1l' Jack c. Ransome, "Organization of Location Research in a Large Supermarket Chain." Economic Geography, 1961, Vol. 37, No. 1, p. 42. 56

In order to better evaluate these and other factors, an examination of a specialty retail computer store, its trade area, and cliental will be presented in the next chapter. CHAPTER III

Compu Plus: A Case Study

Location

Early on in the process of research for this thesis it was determined that a market area analysis was needed to form a base line frame work from which to compare the various computer retail sites. To this end a descriptive analysis was done on a computer store located within the study area. The store site chosen for analysis in this study was that of Compu Plus located at 5848 Sepulveda

Blvd. in Van Nuys. This location was selected for a number of reasons. First, this site was located near the center of the study area (site #s 79,80,81, map 4). Second, according to Dick Dickenson, who at the time of this study was the company vice president, the store had occupied the same location from 1976 until it filed for bankruptcy and closed in 1983. He further stated that it had been the second oldest store of its type in the entire United

States, and the oldest at the same location. Third, during the time that the analysis of the location was taking place the store appeared to be successful. Fourth and last, the company made available a good number of documents without which a study of this type would have been far more difficult and far less comprehensive.

57 58

One of the determining factors for selecting this

example was that the company appeared to be a successful

business. One of the definitions of success is by

longevity. Fortunately, this is one factor that can be

easily obtained. Another descriptive determinant to the

success of a store is its appearance, both inside and out.

If a store looks successful and has been doing business for

a number of years it is generally safe to assume that the

store is successful otherwise it would not still be doing

business unless it just happened to be someone's expensive

hobby or a tax shelter for some other company, both

unlikely possibilities.

The Physical Site

According to Epstein, "The physical conditions of a

potential business site deserve careful attention since

they are often decisive ..•• n4S In this instance, the store

occupied approximately 3600 square feet on a commercially

zoned lot that contained what Berry would describe as a neighborhood center. 46 In addition to compu Plus the

center also contained three other businesses. The largest

of these (approximately 18000 sq. ft.} was the Broadway's

furniture and appliance outlet store. This store sold

~ Bart Epstein, "Geography and the Business of Retail site Evaluation and Selection." Economic Geography, 1971, Vol. 47, No. 2, pp 192-199.

46 B.J.L. Berry, Geography of Market Centers and Retail Distribution. (Prentice-Hall, Englewood Cliff, New Jersey ,1967) 59

shop-worn or outmoded goods sent from the chain's regular

stores. The other two stores in the center were, a Pier

One Imports and a Penny Saver five and dime, and each

contained an area of approximately 7200 sq. ft. While it

was not possible to obtain all the operating costs for the

store, the monthly rent for Compu Plus was only $2000.00.

That translates into less that sixty cents per square foot

for rent, which even for 1982, was very low.

The entire center location was set back on its lot

and, according to Bart Epstein " ... There is usually a

preference to grade a site upwards toward a building. This

affects the visibility, drainage, and the visual impact

make on a customer. 1147 In this instance however, the grade

is up to the street thus detracting from the visual impact

of the building. This negative impact was not nearly as

serious as the visibility of the center due to there being

a down slope from the street to the front of the center, making the building appear low when viewed from Sepulveda

Blvd. This effected perception of signs located across the

front of the buildings, which not only appeared to be very

low, but were also subject to interference by street signs

and parked vehicles. One further aspect that worsened the visibility problem was being located directly across the street from the center of a truck service center, with

7f7 Bart Epstein, "Geography and the Business of Retail Site Evaluation and Selection." Economic Geography, 1971, Vol. 47, no. 2, p. 192. 60

trucks waiting to be serviced or picked up at times parked

on the street in front of the center thereby making it

almost impossible to see either the center or its store's

signs from the street. While it is true that there had

been a well designed sign facing the street its impact was

sharply reduced by the construction of a six story office

building directly to the north of the center. In addition,

a five foot brick wall that ran from the front of the

building out to the sidewalk and made it nearly impossible

to see any of the center's signs until directly in front of

the center and then only if there were no trucks parked in

the street.

Accessibility

The location, being set back on the lot and provided with ample parking in front along with easy access, fits what Berry would describe as an urban arterial center. 48

The parking lot had spaces for 144 cars and additional parking was available on the street. This amount of parking provided for a comfortable ratio of parking in excess of one space for every 125 square feet of store area.

In addition to parking, there is also sufficient

ingress and egress opportunities with three options on

Sepulveda Blvd. and one accessing Hatteras street to the

~ B.J.L. Berry, Geography of Market Centers and Retail Distribution. (Prentice-Hall, Englewood Cliff, New Jersey .1967) 61

south. The fact that Sepulveda Blvd. is a four traffic

lane street with a median lane adds to the safety and

convenience of shoppers driving south on Sepulveda and

having to cross the oncoming traffic lanes in order to

enter the parking lot.

Freeway access to the facility is also excellent. Two

blocks south of the store site is the intersection of

Burbank Blvd. and the San Diego Freeway. This intersection

is barely one mile north of the intersection of Sepulveda

Blvd. and the Ventura freeway. Ease of access, especially

southbound from the store to the freeways, makes the

friction of distance less a factor than if a customer had

to drive several miles along surface streets in order to

reach the store.

The study site is well located to serve an area much

larger than the immediate surrounding valley market area.

It is interesting to note that it was along the very busy

101 corridor that so many stores had chosen to locate.

compu Plus, by locating as it did along the San Diego

freeway between the shoppers located in the northern side

of the Valley and on into the outlying communities north of

Los Angeles in effect acted as an intervening opportunity

between the shoppers and the mass accumulation of stores on

Ventura Blvd. 49

7f9 Bart Epstein, "Geography and the Business of Retail site Evaluation and Selection." Economic Geography, 1971, Vol. 47, no. 2, p. 192.

' " 62

Utilities

Location and accessibility work in conjunction with

the necessary utilities of the store to service the needs

of the customers. In addition to water, gas, electricity,

and cleaning, an additional utility to be considered is the

physical lay out of the retail showroom. Upon entering

Compu Plus it is immediately apparent that it is a store

selling computers, software, peripherals, and books. The

store was well designed to demonstrate any one of a number

of different models along with various other items such as

printers, monitors, and software. There was a large but

somewhat dowdy showroom in the front and another smaller

and much nicer showroom towards the back. To get to the

smaller of the two rooms it was necessary to walk through

the store and it was evident that much work was required in

order improve on the impression that the store was being

remodeled. some very simple cosmetics like closed

doorways, new ceiling panels, and a bit of paint would have

made a world of difference to the overall appearance of the

interior. In addition to the sales area the store also had

a technical servicesjrepair shop to configure computer

systems and to service the customers whenever a hardware

failure occurred. There was also a stock room and

administrative offices located at the rear of the store.

Another positive aspect was the location of a loading

dock at the back to the store. This meant that when goods

were being shipped or received this activity did not u 63

interfere with the sales activity that was taking place during normal business hours. The dock area was accessible via an alley way connecting the back of the center with the southern portion of the parking lot and its opening onto

Hatteras street.

The six year history of the firm, good accessibility, the required physical facilities of a retail store, low rent, and the legal right to conduct a business, all combined to make the study site a good location from which to gather further data with regard to spatial perspective of the market area. Now one must ask: Who were the customers? Where did they come from? What did they purchase? When these and other factors are combined with the physical characteristics of the site, a fairly comprehensive picture of a San Fernando Valley specialty retail computer store should result.

Customers

Data Collection

Two data bases were compiled to determine the customer base of the firm. The first was from a company-compiled customer mailing list and the second from sales records of one sales person spanning a period of three months, January

1982 through March of 1982. From the second, certain data were extracted. These included customer name, address, city, state, zip code, and date of sale. In addition the purchase type was extrapolated from the description written on each item purchased. Purchase types were next broken 64 down into four categories. The first, hardware, contained items like computers, printers, and monitors. The second category was software which included all the educational, business, scientific, and entertainment (games) software sold at the store. The third group, peripherals, was somewhat of a catch all category. It included such things as diskettes, equipment covers, computer paper, extension cords, printer ribbons, and so on. The fourth and last category contained books and magazines.

The last bit of data extrapolated from the invoices was that of customer type. Three types were used in this study: the personal user, the business user, and the combined business and personal user. These three categories could be used to describe the vast majority of purchase types.

When the data for the two databases were assembled they contained the following. A total of 2105 discrete customers were on the mailing list compiled across a period of eight months from August 1981 through March 1982, for which invoices had been written. The second list was compiled from 274 invoices written by one sales person. It is not often that data of this type is made available but if records had been accessible in some other manner then a random selection from a number of sources would perhaps have been more characteristic of the actual customer base.

Of the 274 invoices, 214 were used and the other 60 discarded because the invoices contained incomplete or 65

inaccurate information i.e. no zip codes, no addresses on

some cash sales, and incomplete listing of items purchased.

For example, sometimes the item description lumped all

products purchased into one item reading "computer

supplies" with the prices for all the items tallied. These

214 would appear to represent a sample size of about 30% of

the monthly totals based on a comparison of all sales in

the mailing list but in fact no percentages of the totals

can be drawn because multiple purchases or repeat customers

were eliminated and invoiced customers of cash sales not

having names and addresses written on the sales receipts

could not be included in the customer sampling.

Customer Analysis

The next step in the process was the construction of a

schematic for mapping the collected data. A review of

existing geographic techniques in the literature of the

field provided not only a basis for techniques used to

gather, and analyze data but for its presentation as well.

M. J. Webber, in his examination of the effects of free

entry, cooperative price equilibria and many of the factors

that tend to cloud the world of economic theory, concluded

that location patterns are in the long run not generally unique. 50 It could be further concluded that if patterns could be shown for a retail computer store, then these same patterns ought to be of value in locating other specialty

50 M. J. Webber, "Free Entry and the Locational Equilibrium." Annals, 1974, Vol. 64, No. 1, p. 24. 66

retail computer store sites. The value of this type of analysis was pointed out by Jack Ransome, when he cut straight to the point by stating, that "An unnecessarily large number of retail businesses fail each year because of inadequate market research and poor location planning. 1151

From the examination of the literature Applebaum•s52 and

Goodwin•s53 methods both provided very useful ideas for the plotting of a variety of information on maps of the study area.

It was clear from the onset that the most useful map presentation format for the larger of the two data bases would be to overlay a grid of zip code boundaries over the study area and then display the raw numbers within each cell. The next step was to evaluate the number of customers in each cell. To do this all the zip code cells were tallied for the study area and it was found that 825 customers from the mailing list fell into the grid of 43 zip codes. This number of customers represented only 39% of the total 2105 customers in the mailing list data base and would seem to indicate that the location of the store

5T Jack C. Ransome, "Organization of Location Research in a Large Supermarket Chain." Economic Geography, 1961, Vol. 37, No. 1, p. 42.

52 William Applebaum, "A New Approach to Mapping Store Facilities." The Professional Geographer, 1964, Vol. 16, no. 1, pp. 9-11.

53 William Goodwin, "Sales Performance Maps for Marketing Geography." The Professional Geographer, 1967, Vol.19, No. 5, pp. 263-267. 67 was such that it was able to attract customers extensively from outside the San Fernando valley. It is possible that the store, due to its centrality, was indeed able to attract or intercept customers from outside the study area in part because of the very heavy advertising the business did in the Los Angeles Times, which covered a much greater market area than just the san Fernando Valley. It should also be mentioned that the advertising focused on the theme that the store sold computers at very low prices.

Examination of map 6 shows that the customer base was located primarily in a local cluster of the immediately adjacent cells surrounding the store site. The next level of concentration however is clearly to the west of the location. Equally clear was the unmistakable trend towards the east of the store site where the customer count in the cells fell significantly below the mean. When this is compared to the location of the other computer stores in existence in 1981 and 1982 (maps 7 & 8) it is evident that they were for the most part vying for the same customer base. It is also clear that the occupants of the San

Fernando valley who were buyers of computers at the time were to a high degree located in the western portion of the study area.

The positioning and placement of the customers from the mailing list data base was one way to establish a basis for comparison between that and the invoice data base. If it could be established that the gross numbers between the SAN FERNANDO VALLEY COMPU PLUS CUSTOMERS

ZIP AREAS I BY ZIP CODES GRANADA HILLS 91344 2.'\

(MAP 6)

0'1 (X) SAN FERNANDO VALLEY 1981 SPECIALTY RETAIL COMPUTER STORES N~ I

3 Scale In Miles

A/S NYKAS 81

(MAP 7)

0\ 1.0 SAN FERNANDO VALLEY 1982 SPECIALTY RETAIL COMPUTER STORES N~ I

2 4 5 Scale rn Miles

A/S NYKAS 82

(MAP 8)

-..J 0 71

two databases exhibited similar trends then the utility of data contained on the invoices should also prove a valuable tool in a more focused process for analyzing the customer base and its distribution.

Data Analysis

Prior to examining any relationships between the two data bases, it was first necessary to determine if in fact the data bases were derived from the same population. An examination of graphs 3 and 4 from tables 2 and 3, respectively, indicates that there exists some basis for a follow up analysis to see if the conclusions drawn from one group can also be applied to the other. In order to do this it needed to be shown that there existed no difference between the population means of the customers on the mailing list and the customers contained on the list derived from invoices of one sales person.

Since there needed to be a comparison of two sample means presumed to be taken from normally distributed populations with equal variances the Student's t-ratio two sample case was suitable (table 4). The value oft was obtained using the formula: 54 t = ((M Xl-M X2))jsqrt ((SS1+SS2/Nl+N2-2)*(1/Nl+l/N2))

where: M Xl equaled the mean of mailing list customers M X2 equaled the mean of invoice customers SSl equaled the sum of the squares of the mailing list SS2 equaled the sum of the squares of the invoice list 54 Kirk w. Elfison, Fundamentals of Social Statistics, (Addison-Wesley Publishing Company, 1982), p.376. Compu-Plus Customer Data Base: San Fernando Valley Mailing List

50 -+-- Customers

-B- M=Meon

---*- M+STD. 40 ----'V'- M-STD.

2 30 Q) E 0 -+-' (j) u::J 20

10

O+<~~~~r,~~~~~~~~~~,~~~r,~~

Zip Codes

(GRAPH 3)

-...) 1\J 73

(TABLE 2)

Compu-Plus Customer Data Base: San Fernando Valley Mailing List August 1981 through March 1982 Zip Codes Customers ------91303 7.00 91304 22.00 91306 7.00 91307 11.00 91311 35.00 91316 19.00 91324 29.00 91325 29.00 91326 22.00 91330 1.00 91331 11.00 91335 24.00 91340 4.00 91342 25.00 91343 29.00 91344 29.00 91345 10.00 91352 14.00 91356 24.00 91364 20.00 91367 36.00 91371 .00 91401 32.00 91402 19.00 91403 45.00 91405 36.00 91406 40.00 91411 41.00 91423 30.00 91436 46.00 91501 1.00 91502 8.00 91504 8.00 91505 11.00 91506 4.00 91601 12.00 91602 9.00 91603 1.00 91604 23.00 91605 18.00 91606 17.00 91607 15.00 91608 1.00 ======Standard Deviation (STD.) 12.83 Total customers 825.00 Total Zip Codes 43.00 MAX 46.00 M+STD. 32.02 M=Mean 19.19 M-STD. 6.36 MIN .oo Compu-Plus Customer Data Base: San Fernando Valley Sales Invoices

6 --t- Customers I ---8- M=Meon 5 --*- M+STD.

___s;;~- M-STD.

4 en L (]) E 0 3 ~ -+--'en \ + :::J u [ I ---EJ 2 l ¥ L

H \ A \I \I \ I I v 0 I

Zip Codes

(GRAPH 4)

-.J *"' 75

(TABLE 3)

Compu-Plus Customer Data Base: San Fernando Valley Sales Invoices January 1982 through March 1982 Zip Codes Customers 91303 .00 91304 5.00 91306 1.00 91307 1.00 91311 5.00 91316 3.00 91324 6.00 91325 3.00 91326 1.00 91330 .00 91331 .00 91335 1.00 91340 .00 91342 5.00 91343 6.00 91344 2.00 91345 1.00 91352 .00 91356 5.00 91364 3.00 91367 2.00 91371 .00 91401 3.00 91402 1.00 91403 5.00 91405 2.00 91406 4.00 91411 2.00 91423 3.00 91436 6.00 91501 1.00 91502 .oo 91504 1.00 91505 3.00 91506 1.00 91601 4.00 91602 3.00 91603 .00 91604 2.00 91605 3.00 91606 4.00 91607 .oo 91608 .00 ======Standard Deviation (STD.) 1.92 Total Customers 98.00 Total Zip Codes 43.00 MAX 6.00 M+STD. 4.20 M=Mean 2.28 M-STD. .36 MIN .00

• 0 76

(TABLE 4)

T-Test Compu-Plus Customer Data Bases Mailing List Invoices Zip Codes X1 X1A2 X2 X2A2 ------91303 7 49 0 0 91304 22 484 5 25 91306 7 49 1 1 91307 11 121 1 1 91311 35 1225 5 25 91316 19 361 3 9 91324 29 841 6 36 91325 29 841 3 9 91326 22 484 1 1 91330 1 1 0 0 91331 11 121 0 0 91335 24 576 1 1 91340 4 16 0 0 91342 25 625 5 25 91343 29 841 6 36 91344 29 841 2 4 91345 10 100 1 1 91352 14 196 0 0 91356 24 576 5 25 91364 20 400 3 9 91367 36 1296 2 4 91371 0 0 0 0 91401 32 1024 3 9 91402 19 361 1 1 91403 45 2025 5 25 91405 36 1296 2 4 91406 40 1600 4 16 91411 41 1681 2 4 91423 30 900 3 9 91436 46 2116 6 36 91501 1 1 1 1 91502 8 64 0 0 91504 8 64 1 1 91505 11 121 3 9 91506 4 16 1 1 91601 12 144 4 16 91602 9 81 3 9 91603 1 1 0 0 91604 23 529 2 4 91605 18 324 3 9 91606 17 289 4 16 91607 15 225 0 0 91608 1 1 0 0 ======SUM 825 22907 98 382 43=N1 43=N2 19.19=M X1 2.28=M X2 .025= SIGNIFICANCE LEVEL 84= df 1.99

N1 equaled the number of mailing list zip code cells N2 equaled the number of invoice list zip code cells.

This test resulted in a t value of 8.45 and since this was greater than the critical region of 1.99 it was then possible to concluded that mailing list data base and the invoice data base were taken from the same population and could thus be considered comparable.

Mapping Customer Data

Proceeding to an analysis of the invoice customer data base it was important that a more intensive schematic be devised for mapping the data. The format chosen was once again that of a zip code grid. However, due to the nature of the data it was decided that the framework should be extended to encompass the customers true distribution. To do this a map extending the coverage area to all of Los

Angeles and portions of the four surrounding counties of

Ventura, San Bernardino, Riverside, and Orange was used.

It was necessary that each customer plotted on this map be illustrated with as much information as possible with respect to their individual attributes. Using some of the techniques developed by Applebaum55 and Goodwin56 a format was devised. It was decided that symbols as simple as possible should be used and that each symbol should display

55 William Applebaum, "A New Approach to Mapping Store Facilities." The Professional Geographer, 1964, Vol. 16, no. 1, pp. 9-11.

56 William Goodwin, "Sales Performance Maps for Marketing Geography." The Professional Geographer, 1967, Vol.19, No. 5, pp. 263-267. 78

as much data as possible with out being confusing. Those selected, as illustrated on the following page, were: a circle for business customers; a square for personal customers; and a "lazy D" for the customer who combined purchased for both business and personal usage.

Each of the symbols had to contain other information in addition to the customer type, therefore each symbol was divided into quadrants and each quadrant was assigned a product type. This scheme allowed for the depiction of most of the possible purchase combinations. For this study each product type also received a color coding for presen­ tation on the large plot map. Black was used to represent hardware, red for software, blue for peripherals, and yel­ low was used for books and magazines. The employment of colors on the map was not absolutely essential for this study but it did add to the ease of product recognition when working on as large an area map as was required with as many plots as were used in this study.

In order to present some of the plot map data and to better analyze the distribution of the customers and their various purchasing attributes in relation to the location of the store site, a series of desire line maps for each of the customer types and their various purchases traits was produced. The information for these was taken directly from the plot map and put onto maps of a smaller scale.

Next, a series of concentric rings were drawn on the all the maps and the distance information obtained for each 79

COMPU-PLUS CUSTOMER AND PURCHASE TYPES

JANUARY THROUGH MARCH 1982

Business Personal Combined Business and Personal

...... I I I I I I I I I I I I I I I r·I ·······I I I I ····1I I BLACK RED BLUE YELLOW Hardware Software Peripherals Books and Magazines

Plot Map Symbol Scheme 80 customer was used to produce a graphic illustration of the market range for all the customers. These were then broken down into groups for each customer type as shown on maps 9,

10, and 11.

Map Analysis

By far the largest of the customer groupings was that of the personal customer. Of the 214 total customers 111 or 53% fell into this grouping. Another very important as­ pect of this data was that 82 of this group representing

39% of the total customer base came from an area within an

18 mile radius of the store. This represented a total of

74% of the 111 personal user customers plotted on the map.

The second largest group was that of the business customer. This group contained a total of 55 purchasers representing 25% of the total customer base. Again, as with the personal shoppers, a high percent of this group were located within the 18 mile radius of the store. Of the 55, 45 fell into this range representing 20% of the total customer base and fully 82% of the business purchasers.

The third group representing the smallest portion was that of the combined purchaser for business and personal use. This group contained 48 customers or 22% of the total. As with the other two groups the location pattern for this group was that 37 or 77% were located within 18 miles of the store accounting for another 17% of the total group falling into this pattern. 0 '

0

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C1 53 ttJ ~ 55 a ,-... 3': S2 ~ ~ 1-tJ ~

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Cl '-a &3 a'---3 Ci)~ 3: a ~ :x=- ~ '"'d ~ f-' '---3 0 t'-i ...... ~ Q:j £8 84

Taken as an average, the 18 mile radius accounted for

77.67% of the total invoice data base. A look at the maps further indicates that past this point their numbers flatten and then progressively thin to an ultimate range that extended as far out as Redlands and Dana Point, some

60 miles away from the store location. The flattening out of the number of customers, however, occurred at different points for each of the groups. The combined users flattened at 12 miles while the personal customers went to

15 miles before flattening. Largest groups of customers, the personal users, did not flatten out until they reached about the 21 mile mark resulting in an over all average market range of 16 miles for the store.

The number of customers that were located beyond their particular average market area could most likely be attributed to various behavioral shopping patterns, possibly influenced by effective advertising techniques, lack of effective competition, or any of a host of other shopping pattern phenomena falling under the auspices of behavioral studies.

As noted, the personal user was by far the largest group of purchasers of computers from Compu Plus. If in addition, the amount of time the combined customer used their computer for personal purposes could be prorated and 85

applied to that of the personal customer, the trend would

be clearer. 57

Demographics

Further analysis of the distribution of the customer

base for the store site was done by examining data derived

from a commercial source of demographic data, Urban

Decision Systems, Inc. which provided information for two

concentric ring areas. The first area was for a radius of

six miles from the study site, and the second was for a

ring area 6 to 12 miles from the study site. The

population of the ring 0-6 miles of 591,469 when combined

with the 1,347,977 of the 6-12 mile ring comprised a total

population within 12 miles of the store site of 1,939,446.

It can be assumed that the population for the 16 mile

market range was well in excess of 2 million. These two

areas contained a population density of approximately 4300

persons per square mile. It was found that within these

two rings the median age of the population was

approximately 34 and that the racial composition of

households was 85.5% white in the 0-6 mile ring and 78.5 in

the 6-12 mile band. Blacks accounted for 7.1% of the 6-12

57 Note, at this point it must again be mentioned that the first computer designed especially for business to be sold through a distribution network of specialty retail computer stores, the IBM PC, had been on the market for only a short time during the period represented by these data. It should also be pointed out that although Compu Plus applied for authorization it never had the opportunity to sell this computer before ceasing operations in the summer of 1983. 86

mile ring while the Spanish population accounted for less than 1%.

The next significant set of numbers that were examined were those of income. Once again there was only a slight variation in the numbers between the two bands. The 0-6 band had a per capita income of $10,552 while the 6-12 ring was somewhat higher with $11,110. It was also necessary to look at the average family income where the 0-6 band had an average of $31,471 while it was 35,500 for the 6-12 mile ring. This produced a market area average family income of about $32,000.

Compu Plus summary

The data presented represent an illustration of Compu

Plus, its location, its features, its market area, and its customers. It is clear that this SRCS services an area that is densely populated, containing a racial composition that is largely white, and relatively affluent. In addition, from the study of the two samples of customers it was shown that while some were willing to travel great distances to shop at the location, the bulk of the customers were derived from within an 18 mile radius.

Additionally, a examination and comparison of the desire line maps 9, 10, and 11 and map 8 showing the distribution of computer stores in the study area for the year 1982 shows that Compu Plus was able to draw successfully from areas where there were significant concentrations of competing specialty retail computer stores. Yet this 87 company failed. It filed for bankruptcy in the spring of

1983. While all the particulars are not known, it is generally accepted that the cause of its failure was bad management of cash flow. The company sold, at a highly discounted price, several hundred newly introduced Apple

IIe computers, and when Apple could not fill the orders fast enough, customers who did not want to wait, started to request refunds. By that time it was clear that if the company started refunding their deposits it would very rapidly run out of cash and be unable to meet its payroll and other financial obligations. It was at this point the company filed for bankruptcy protection. In short, the company was never able to refinance or reorganize and had ceased operations all together by the summer of 1983 thus ending eight years of computer retailing activity at this location. CHAPTER IV DISTRIBUTION OF SRCS

Site Survey Now that a case study of the customer base, its distribution and composition has been presented, it was next necessary to compile an inventory of computer stores for each of the eleven years of the study period. This was required not only to locate the SRCSs, but to examine their placement relative to the overall scheme of distribution within the confines of the San Fernando Valley. Where in the Valley did they locate; along what corridor, if any; and where did they locate in relation to other SRCSs; were but a few pieces of the puzzle that needed to be fit together for a clear understanding of the distribution of SRCSs within the confines of the San Fernando Valley. Eleven Year Inventory Of the six computer stores found to exist in 1976, only one of them, Heath Zenith Computer Center was located on Ventura Blvd. From a look at all their locations (map 5) it is evident that their concentration definitely falls towards the west end of the valley with three of the six sites located in the north west section of the study area. This particular part of the valley happens to coincide with a concentration of industrial locations (map 2) for this part of the valley.

88 89

In 1977, (map 12) the number of computer stores grew

by one. The new store, Computer Components, Inc. opened in

Burbank on Verdugo Ave. This was the second store by this

same name and was part of an informal purchasing

association that eventually grew to five stores located

throughout the Los Angeles area. There were two in the San

Fernando Valley area while the others were located in

Westminister, Brea, and Hawthorne. These stores changed

their names to Computer World in 1980 and by 1986 all had

ceased operations. The Burbank site represented the first

SRCS in the San Fernando Valley to be located east of Van

Nuys Blvd.

In 1978 (map 13) two new stores were added to the list

of computer retailers in the study area. Computique in

Tarzana and Jade Computers in Woodland Hills, both located

on Ventura Blvd. Once again the concentration of computer

stores remained in the west but there was now an additional

noticeable trend of SRCSs locating along Ventura Blvd.

In 1979, (map 14) there was an increase of four stores

for a total of 13. These new sites were located on Topanga

Canyon Blvd. in Canoga Park, on Reseda Blvd. in Reseda, on

Ventura Blvd. in Encino, and on Laurel Canyon Blvd. in

North Hollywood. Once again, all but one of the new SRCSs

were located to the west of the San Diego freeway.

The year 1980 (map 15) saw four more stores open and

gave the first indication of what was to become a rather

dynamic activity of name changes, buying and selling of

• t} -""

SAN FERNANDO VALLEY 1977 SPECIALTY RET AIL COMPUTER STORES N~ I

2 Scale In Miles

A/S NYKAS n

(MAP 12)

1.0 0 SAN FERNANDO VALLEY 1978 SPECIALTY RETAIL COMPUTER STORES N~ I

4 5 Scale in Miles

A/S NYKAS 78

(MAP 13)

t.O ~ SAN FERNANDO VALLEY 1979 SPECIALTY RETAIL COMPUTER STORES N~ I

0 + Scale tn Miles

A/S NYKAS 79

(MAP 14)

\0 N SAN FERNANDO VALLEY 1980 SPECIALTY RETAIL COMPUTER STORES N~ I

0 4 Scale In Miles

A/S NYKAS eo

(MAP 15)

1.0 w 94

existing stores, and the closing of stores that failed for one reason or another. The Computer Component Inc. stores were renamed Computer World. Two new locations were added in Burbank, and two others located along Ventura Blvd., one in Encino, and one in Woodland Hills.

By 1981, (map 7) there were 25 locations scattered through out the Valley and a definite trend was evident along the western half of Ventura Blvd. A total of 12, or almost half of the SRCS sites, were then located along

Ventura Blvd.

In 1982, (map 8) the year IBM introduced their first personal computer, there was an addition of six locations for a total of 31 stores. However, the movement of stores and store names had started to shift at an increased pace.

Computer World in Burbank and Van Nuys changed their respective names to Computerama and Compu Plus when their informal association ended. This was already the third name change for each store. Alphabit Computer Systems became Blue Chip Computers and Hobby World shortened its name to H.W. Computers.

In addition to the adding of six locations to the total SRCS count and all the name changes, the first failure of a SRCS occurred. Rees Electronics in Burbank closed its doors after only one year of operation. As it was to ultimately turn out, Burbank, while offering some kind of attraction for computer stores, had a high percentage of failed locations. The two Burbank SRCSs that 95

manifested the most stability overall either moved (OS

Systems, Inc.) or repeatedly changed their names (Computer

Components Inc., Computer World, Computerama, Pathfinders).

In 1983 (map 16) there occurred the most dramatic rise

in the total number of locations during the 11 year study

period. There was a net increase of 18 stores for a total

of 49 SRCSs but along with the rise the total count there

was also a rise in the number of SRCSs that were failing.

The compal stores in Encino and Woodland Hills both closed

in this year as did Bison computers, National Computers,

and Olympic Sales. Of these five locations, it was worthy

of note that three had been located on Ventura Blvd. and

all were located west of Van Nuys Blvd.

In the year 1984 (map 17) the number of computer stores in the San Fernando Valley reached its zenith. The number topped out at 55 stores for the eleven year study period. Of special interest is that this was the third year following the introduction of the IBM PC and that many

SRCSs closed and a high number of changes in ownership and store names eventuated. For example, the Radio Shack

Computer Center that had been located on Topanga Canyon

Blvd. moved onto Sherman Way in Canoga Park. The Genra

Group in Encino was purchased by Moore Business systems and changed the name, and the total number of Computerland sites grew from three to eight, with the addition of stores in Chatsworth, Encino, Granada Hills, Studio City, and Van

Nuys. This activity by Computerland accounted for most of SAN FERNANDO VALLEY 1983 SPECIALTY RETAIL COMPUTER STORES N~ I

4 5 Scale In Miles

A/S NYKAS SJ

(MAP 16)

\.0 0'1 SAN FERNANDO VALLEY 1984 SPECIALTY RETAIL COMPUTER STORES N~ I

0 5 Sccle in Miles

A/S NYKAS "

(MAP 17)

1.0 -...1 98

the change in the total number of SRCSs for the year. It

should also be mentioned that during the year stores

changed names or ownership, yet occupied the same location

as evidenced by The Genra Group becoming the Moore Business

center. For the purpose of this study only one SRCS was

counted for the location at which this occurred.

The year 1985 (map 18) was the first year of decline

in the total number of SRCSs in the San Fernando Valley.

From a high of 55 in 1984 the number dropped to 53, a

decrease of two, in 1985. Additionally, the Computerama

location changed its name once again as it became a

Pathfinders store along with the two Rainbow Computer

Stores located in Northridge and Woodland Hills.

The final year of the study period was 1986 (map 19).

This year ended with a total of 46 SRCSs sites in business

during the year. This represented a decrease of 13% as the

total number of stores dropped from 53 for a reduction of

seven sites. All the Pathfinders closed as did CompuCad in

Tarzana. Digital Equipment Corp. closed their Encino

store. Computerland in Chatsworth and Encino closed but,

the Encino location was replaced by Advanced Computer

Solutions. Computer Source in Van Nuys closed up after

less than one year at their Sepulveda Blvd. location, and

IBM sold their product centers to Nynex, a regional Bell

operating company, an example of one of the new types of

SRCSs operators such as PacTel Info Systems and CompuShops, which is owned by Southwestern Bell. All in all this was a SAN FERNANDO VALLEY 1985 SPECIALTY RETAIL COMPUTER STORES N~ I

2 5 Sccle In Miles

A/S NYKAS 85

(MAP 18)

~ ~ SAN FERNANDO VALLEY 1986 SPECIALTY RETAIL COMPUTER STORES N~ I

0 4 Scale in Miles

A/S NYKAS "

(MAP 19)

1-' 0 0 101 year in which there was a great deal of activity in the computer retailing industry. Late in the year it was announced that the Moore Business Centers would be sold again after being operated by Moore Business systems for just about two ye~rs. As Moore was unable to find a buyer for the entire nation-wide chain of 45 stores, the chain was ordered broken up and each individual store along with its inventory and fixed assets were to be sold. survey Trends

Across the eleven years of the study period there had been many changes in the composition of computer retailing in the San Fernando Valley. Several trends had developed from these changes. One of these, as clearly illustrated on graph 1, where the number of locations were plotted across the study time period, was that there were eight years of growth followed by two years of decline in the number of SRCS sites in the San Fernando Valley. Along with the growth in number of SRCSs, the total square footage given to this activity rose right along with the number of stores, as would be expected. However, the average square feet as shown on graph 5 actually moved in an inverse ratio. What this meant was that as the number of stores grew they tended to occupy smaller store sites.

One other trend that also became evident at this point was that from early on in the study period there was a rapid and sustained pattern of development along the Ventura

Blvd. corridor. SAN FERNANDO VALLEY SRCSs AVERAGE SQUARE FEET PER SITE 4300

!

I

3800 ~

1-­w ~ w LL I n::::w 3300 ~ I <( I :=J 0 (/) ~

2800 ~ '~ ~ T -1 I I

~ ~v I 2300 76 77 78 79 80 81 82 83 84 85 86 YEARS

(GRAPH 5)

1-' 0 1:\J 103

This inventory of SRCSs has provided some clear trends

in terms of the rise and fall of computer retailing. What needs to be considered next is a more detailed examination of geographic trends. To this end, the following portion of this chapter presents an analysis of the spatial distribution of the SCRSs located in the San Fernando

Valley.

Analysis of Dispersion

With the inventory of SRCSs locations complete, the next requirement is to analyze their distribution within the study area. To accomplish this a measure of dispersion of SRCSs was performed for each of the eleven years of the study period. The results of this analysis provides for an even better understanding of the spatial relationship that exist between the SRCSs of the San Fernando Valley.

Nearest Neighbor

In order to attempt any type of spatial analysis it is usual to first select an appropriate technique. For this study nearest neighbor distance was selected because it is a technique that is particularly useful when examining point patterns. Even though there are problems with this measure in terms of direction to nearest neighbor and proximity to map borders in this study, utilizing an area bounded as it is by physical breaks in the landscape, this last effect was not considered to be critical. This type of analysis is widely used in geographic studies and its 104

results are easily presented and understood by those wishing to use this analysis.

As the area had been previously defined and the boundaries set, the next step was to map each of the eleven years where each appropriate site was plotted. over these maps a grid composed of cells one mile by one mile was placed and with this aid the various distances between sites were calculated. In this manner the distances between neighbors can be measured in Euclidean space where: 58 2 2 0 5 Distance l=[(x1-x2 ) +(y1-y2 ) ] · . Thus the various sites plotted on the maps for each year could be used to determine the nearest-neighbor distances.

A method was then devised for determining nearest-neighbor in a highly accurate way. A computer matrix was built and the various locations were input in relation to their grid location, and their distances were calculated. If there were any questions as to precisely which site was in fact closer, all that was required was a quick input into the basic matrix that had been constructed using a standard computerized spreadsheet and the numbers were then confirmed.

Once the nearest-neighbor distances were obtained, they were then used to determine if the spatial distribution pattern for the San Fernando Valley was

58 David Unwin, Introduction to Spatial Analysis. (Methuen, New York, 1981) p. 43. 105 uniformly distributed, clustered or randomly dispersed using the Nearest-Neighbor statistical technique: 59

R = [Sum l/(N2-N/2)/1/{Sq. Rt.N/Total Area)]

and R = Nearest-neighbor value on a scale where: 0.0 = clustered, 1.1 = random, 2.1 = uniform.

As presented in the tables of Nearest-neighbor for the eleven year period contained in Appendix A the following is a summary of the resulting R values.

TABLE OF 'R'VALUES 1976 = 3.240 1977 = 3.133 1978 = 1. 572 1979 = 0.660 1980 = 0.356 1981 = 0.137 1982 = 0.092 1983 = 0.031 1984 = 0.029 1985 = 0.034 1986 = 0.041

A breakdown of the results for the years of the analysis as illustrated in graph 6 are as follows. The first two years, 1976 and 1977 with their R values of 3.24 and 3.133 respectively were uniformly dispersed across the

San Fernando Valley. This finding is also supported by reference to maps 5 and 13 of site locations for these two years. It is also very clear that although the measure of

59 Ibid. p. 58. NEAREST NEIGHBOR ANALYSIS

4

3 z 0 un for (}) cr:::zw Q_ (}) 0

c 1 e 0 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 YEARS

(GRAPH 6)

I-' 0 0\ 107

dispersion clearly indicates a uniform distribution, a

further look at the maps reveals one of the difficulties

using the nearest neighbor statistical analysis.

In 1976, all of the sites were located west of Van

Nuys Blvd. and all but one were located south of Nordhoff

street in an area roughly one fourth the size of the study

area. This would seemingly indicate that there might be

some flaw in the measure of dispersion. However, when an

additional analysis of the dispersion for 1976 was done, an

area of 56 sq. miles containing the sites or roughly the

area of the southwestern portion of the San Fernando Valley was used. The resulting R value of 2.071 as shown in

Appendix A was obtained. This measure is almost a textbook value for a measure of uniform dispersion and leads to the

conclusion that even though most of the sites for these

first two years were located in the southwestern portion of the Valley they were also, nevertheless uniformly

dispersed, within this alternate area.

The year 1978 was an entirely different matter. The

resulting R value of 1.572 for that year would seem to

indicate a movement away from a uniform dispersion to that of a random distribution. An examination of the map 14 for

1978 shows that there were two new sites and that they were also located in the same southwestern portion of the valley as were all but the site located in Burbank during the

first two years. As in the first year, the result of the nearest neighbor R value computation provided a value of 108

1.005 for the same alternate 56 sq. mile area used in the second 1976 analysis. Once again, this R value of 1.005 is nearly textbook close to the measure of a random distribution. It is of interest to note as well that both of the new sites for this year were found located on

Ventura Blvd.

In 1979 two of the four new sites were likewise located along Ventura Blvd. The two other new sites however, were located almost equal distance east and west of Van Nuys Blvd. thus tending to balance each others effect on the R value for the year. None the less, the R value of .66 displayed a dispersion that while still closer to a random distribution, was a measure that was tilting towards the direction of a clustered R value.

In 1980, the rate of increase in the number of retail computer stores accelerated by jumping from 13 to 17 sites which produced an R value of .356. As in 1979, two of the four new sites located on Ventura Blvd. while the other two opened in Burbank in the southeastern portion of the study area. At this point, the trend towards clustering is irrefutable with the value of R dropping to .356, well beyond the halfway point between the value of 0.00 for clustered and 1.00 for random measures of dispersion.

In 1981 there was another pronounced increase in the total number of sites when eight more were added to the list. Once again the R value dropped closer to the clustered value of zero with an R value result of 0.137. 109

This time however, six of the eight new sites were situated

along Ventura Blvd. and all of these were located west of

Van Nuys Blvd. while the other two new sites, once again,

formed a balancing act for the study area with one locating

in Burbank and the other in Woodland Hills.

In 1982 the number of SRCSs increased by six bringing

the total number to 31. Now, as could be expected, the R

value dropped again with the resulting value of 0.092.

This value represented strongly clustered distribution.

Once more, three of the six new sites were found on Ventura

Blvd. The other three were located in Northridge, North

Hollywood, and Canoga Park, somewhat canceling out their

respective influences on the over all pattern of

dispersion.

In the year 1983, the number of sites increased by 18

to a total of 49 and produced an R value of dispersion of

0.031. The increase of 18 sites was the largest in the

eleven year study period and as could be expected, the

majority of new sites were located on Ventura Blvd. In

addition 25 of the 26 sites located on Ventura Blvd. were

situated west of Van Nuys Blvd. This factor alone tended

to imply a heavily clustered distribution of SRCSs in the

San Fernando Valley without any examination of an analysis

of dispersion. Clearly, some of those who had been

responsible for the locating of all the new SRCS sites

would have been cognizant of this fact and if there was

nothing else to indicate to them where to place a new

' \) 110 retail computer store, the pronounced clustering along the

Ventura corridor west of Van Nuys Blvd. would have been perceived a good bet as "the place" to locate.

By the end of 1984, there was a total of 55 retail computer stores located in the San Fernando Valley. This increase of six new locations resulted in the peak number of SRCSs for this study period. In addition, the R value reached its nadir at 0.029 which once again indicated a heavily clustered pattern. once again, a look at map 16 clearly illustrates the intense concentration of 28 sites along Ventura Blvd with 26 of then sitting west of Van Nuys

Blvd.

One additional trend mentioned previously also became evident at this time concerning the distribution of SRCSs along Ventura Blvd. There existed a graphically apparent tendency for the sites to clustered at or near three street intersections along Ventura Blvd. In the west just east and west of Topanga Canyon Blvd there was a concentration of 6 sites. At Reseda Blvd. there was a cluster of 9 sites within a little over one mile east and west of the intersection. Lastly, a third clustered grouping was located close to the intersection of the San Diego Freeway and Ventura Blvd. This last area had some 11 sites within one mile east and west of the intersection on or near

Ventura Blvd. These three clusters accounted for 26 or 47% of the total number of locations found during the study period. 111

By the year 1985 the growth period of specialty retail

computer stores had passed its peak and the number of sites

dropped for the first time. This drop of 2 in the number

of SRCSs brought the total for the year to 53 locations.

Correspondingly, the R value rose to 0.034. While that was

not much of a change, the shift in the measure of

dispersion could have been predicted based on the results

obtained for the preceding years. It is additionally

interesting to note that the stores that closed were

located on Ventura Blvd. and west of Van Nuys Blvd. Where

there had been 28 locations along this corridor there were

now only 26.

The last year of the study period, 1986, showed yet

another drop in the total number of SRCSs in the San

Fernando Valley. There was however, a significant decline of seven locations this time, down from 53 to 46 sites.

This represented a drop of almost 15% compared to a drop of

only 3% the previous year. In addition to the decline in the total number of sites, the R value increased once again to a value of 0.041. True to form, once again the number of locations dropped by four on Ventura Blvd., to 22. This accounted for 57% of the total store closures in the study area.

After all the various individual years were examined one final measure of dispersion of the SRCSs in the San

Fernando Valley was considered necessary. A nearest neighbor analysis was performed for all the unique site 112

locations that had been found to exist during the eleven

year study period as illustrated on map 4. This was done

for the actual sites only and not for the various companies

operating at some of the locations. This would have

totally distorted the analysis because, as mentioned

previously, at some of the sites there had been several

changes with a few sites having as many as four different

companies operating the sites during the study period.

The resulting R value for the 70 different sites

identified for this study was 0.017. This value represents the closest approximation of the o.o value for clustering achieved during this entire analysis.

Summary of Analysis

In order to summarize the findings of this chapter it

is helpful to look at the nearest-neighbor data on graph 6.

When the trend from uniform to clustered became apparent it was most heavily influenced by the strong tendency for new

SRCSs to locate along Ventura Blvd., west of Van Nuys Blvd.

As illustrated on map 20 there was a shift in the pattern of SRCSs locations. Early SRCSs were uniformly dispersed and over time the addition of new sites caused the pattern to become clustered in a somewhat linear pattern along

Ventura Blvd. While it would appear that there is a strong correlation between distribution and the number of SRCSs in the study area, it is important to consider that there exist further dynamics of spatial distribution that are intertwined with the other factors at work drawing the SAN FERNANDO VALLEY

SHIFT IN SRCS DISTRIBUTION N~ 1976 - 1986 I

FOOTHILL FREEWAY

DISPERSION

1976 me UNIFORM 1986 ~~~~~~ CLUSTERED

0 2 3 4 5 Scale in Miles

A/5 N'rl

(MAP 20)

I-' I-' w 114

retail activity of computer sales into the San Fernando

Valley. A presentation of a number of these other factors is the focus of the next chapter. CHAPTER V

SRCS AND THE MARKET PLACE

With the distribution patterns of the SRCSs having been examined along with a general understanding of their retail activity, the next phase in the process of analyzing the rise and fall of computer retailing in the San Fernando

Valley is a presentation of their locations relative to selected demographic features of the study area. It is critical to compare where the SRCSs are located in relation to such features as income, education, occupation as well the locations of other economic activities such as those discussed in Chapter II.

There were two principal types of data collected for this analysis of SRCS sites in the San Fernando Valley.

The first, as examined earlier, was on the physical location of each and every computer store found to have been located in the San Fernando Valley during the years

1976 through 1986. The second was on the demographic character of the Valley based on the data collected in the

1980 census. A close look at the demographic profile of the San Fernando Valley from the 1980 census data will perhaps help explain why so many SRCSs located where they did.

115 116

Mapping Demographic Data

In order to examine the selected demographic data and

graphically compare it to the distribution of the SRCSs

located in the study area it is first necessary to map the

data. To do this, a series of maps of the study area were

drawn depicting various demographic features. Since the

data used were that of census tracts, it was essential that

these maps should present the data within those census

tracts that comprised, in essence, the same area as

previously defined as the San Fernando Valley. In addition

to depicting the San Fernando Valley in census tract format

it was necessary to break down the data to be presented for

each tract. To do this a scale for each data type was

calculated. As these data already represented the average

for each individual tract, it was clear that what was

needed was a comparison between tracts. It was decided

that for all the tracts, an overall average would be

calculated and it would then be scaled into ranges

representing the average plus or minus the standard

deviation. This eliminated any artificial biases and

standardized the measure for all data types. Once these

data were mapped it was then possible to examine the

distribution of the SRCSs relative to the demographic

features of the area. For the objective of this study a

composite of all locations was used due to the fact that

the demographic data being used was basically for the year

1980 and was intended specifically to note any general

. " 117

trends in the in the location of SRCS within the study

area.

Map Analysis

The maps representing the data for education were 21,

for percent of population with 12 years only; 22, for

percent of population with 13-15 years, and 23, for percent

with more than 16 years. A comparison of these maps

clearly reveal that the location of SRCSs sites follow very

closely the relationship between higher education and

higher concentrations of SRCSs. In brief, the

concentration of computer stores along the Ventura corridor

closely follows the highest percentage of the education

level for a population with more than 16 years of school.

It was clear that the higher the level of education, the

greater the frequency of computer stores and at the other

end, where there were concentrations of population with

lower education levels almost no SRCS were found.

The data presented for household totals (map 24)

established that there seemed to be no observable

correlation between the SRCSs and number of households. It

is interesting to note, however, that for the entire valley

it is difficult to note any kind of pattern for household totals except where the densities are low such as in the tract containing the Sepulveda basin and Universal studios.

This particular feature could not be considered much of an influence on the location of SRCSs. SAN FERNANDO VALLEY 1980 CENSUS DATA EDUCATION PERCENT OF POPULATION WITH 12 YEARS ONLY N~ Source: Notional Decision Systems I

PERCENT

..greater than 39.14

11132.77 - 39.14

-26.39 - 32.76 0 $cole in Miles D less than 26.38

A/5 NYKAS

(MAP 21)

...... ()) SAN FERNANDO VALLEY 1980 CENSUS DATA EDUCATION ~ PERCENT OF POPULATION WITH 13-15 YEARS N Source: National Dcclsion Systems I

PERCENT

.. greater than 29% Ill 24-29 1D 18.9 - 23.9 Scale 1n Mlles CJ less than 18.9

A/S NYKAS

(MAP 22)

I-' I-' 1.0 SAN FERNANDO VALLEY 1980 CENSUS DATA POPULATION BY EDUCATION ~ PERCENT WITH MORE THAN 16 YEARS N Source: National Deci:sion S>-slems I

PERCENT

.. greater than 31.2.1

- 20.34 - 31.21

0 4 - 9.45 - 20.33 Scale in Miles D less than 9.45

A/S NYKAS

(MAP 23)

..... 1:\J 0 SAN FERNANDO VALLEY 1980 CENSUS DATA ~ 1980 HOUSEHOLD TOTALS N Source: Notional Declslon S)'!!ltems I

NUMBER OF HOUSEHOLDS .. greater than 2327 ~ 1564 - 2327 • 801- 1564 0 2 3 4 Scole in Miles D less than 800

A/S NYI

(MAP 24)

I-' I\) I-' 122

The next aspect examined was that of income. The estimated 1986 per capita income (map 25) was compared to an household average income for 1980 (map 26). Overall these two maps exhibited a apparent correlation of distribution. In addition to the two types of measures being similar, the distribution of SRCSs could be seen to locate in very close association with higher income groupings. It was abundantly evident that the frequency of computer stores closely follows that of income.

The distribution of SRCS relative to total retail sales (map 27) was the next feature to be examined. It was a bit of a surprise to find that, as in the total number of households, it was difficult to note any apparent connection between total retail sales and the distribution of SRCSs. What was apparent, however, was a comparison between household totals and total retail sales. This could most likely be explained by the fact that when there are more households there is ordinarily more demand for goods and services.

The next series of distributions that were compared were those of occupation. As with education and income, white collar workers occupations (map 28) were highly correlated with computer stores. Once again it would be safe to state that the higher the concentration of white collar workers, the greater the probability of finding a computer store near by. In somewhat of a surprise however, this can not be said for technical support workers (map ""

SAN FERNANDO VALLEY 1980 CENSUS DATA INCOME ~ 1986 PER CAPITA (EST.) N Source: Notional Declsion S~tems I

DOLLARS

- greater than 21,515 Ill 15,152 - 21,515

0 1 2 3 4 5 iii 8,800 - 15,151 Scale in Miles D less than 8,800

A/5 NYKAS

(MAP 25)

~ N w SAN FERNANDO VALLEY 1980 CENSUS DATA INCOME 1980 HOUSEHOLD AVERAGE N~ I Sourcl!l: Notional Decision Systems

DOLLARS

.. greater than 38,015

Ill 27,044 - 38,014

5 R 16,074 - 27.043 Scale In MUes D less than 16,073

A/S NYKAS M

(MAP 26)

f-' N ,j:>. SAN FERNANDO VALLEY 1980 CENSUS DATA SALES 1980 ~ TOTAL RETAIL ($MIL) N Source: Notional Declslon Systems I

DOLLARS (mil.)

.. greater than 29.75

l!llliJ 20.24 - 29.75

0 - 10.73- 20.23 Scale in Miles D less than 10.72

A/S NYKAS Q

(MAP 27)

~ N U1 SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPA~ON ~ PERCENT WHITE COLLAR N Source: National Decision System:; I

PERCENT

.. greater than 78.2

1111 63.2 - 78.19

0 1 2 3 4 5 - 48.21 - 63.1 Scale in Miles D less than 48.2

A/S NYKAS

(MAP 28)

1-' IV 0'1 127

29). It would seem that this segment of workers would ordinarily be a safe bet to fit the profile for education and income but as was shown, their distribution tended for the most part to be located away from that of the SRCSs.

This was definitely not the case with workers involved with sales (map 30). It is clear that there exists a good deal of connection between this group and the distribution of

SRCSs. Another group exhibiting this same strong connection was that of professional specialty (map 31).

The next group, precision craftsmen (map 32), once again illustrated that workers involved in the trades, as was shown by the distribution of technical support workers have little likelihood of having an SRCS locate close by.

In fact the location of precision craftsmen was almost inversely related to the locations of the computer stores.

It is of interest to note that the four stores located in the Sun Valley area had all sold the less expensive home computer systems that were highly sought after for their entertainment and educational value. The next categories, other service workers (map 33), and machine operators (map

34), further substantiated the tendency of distribution exhibited by other trades occupations.

In the final groupings however, there did exist a very high association between administration and management workers (map 35) and the location of computer stores. This association contrasted with the low association of SRCSs SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPA~ON ~ PERCENT TECHNICAL SUPPORT N Source: Notional Decision S}l5lem3 I

PERCENT

- greater than 4.6 lim 3.3 - 4.59

0 2 4 - 2.0- 3.29 Scale in Miles U less than 1.99

A/5 fJYKAS

(MAP 29)

I-' tv (X) SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPA~ON ~ PERCENT SALES N Source: Notional Decision Systems I

PERCENT

.. greater than 15.56%

IIIII 11.45- 15.55 Em 7.33 - 11.44 Scale in Miles D less than 7.33

A/S NYKAS

(MAP 30)

...... (\.) ~ SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPATION ~ PERCENT PROFESSIONAL SPECIALTY N Source: Notionol Ottd:slon Systems I

PERCENT

- greater than 21.39% IIIII 14.53 - 21.39

4 lim 7.66 - 14.52 Scale in Miles CJ less than 7.66

A/S NYKAS u

(MAP 31)

..... w 0 SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPATION ~ PERCENT PRECISION CRAFTSMEN N Source: Notional Decision Systems I

PERCENT

.. greater than 17.11%

Ill 12.23- 17.11

0 4 5 - 7.36 - 12.22 Scale in Miles U less than 7.36

A/S NYKAS v

(MAP 32)

...... w ...... SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPA~ON ~ PERCENT OTHER SER~CE N Source: Notional Decision Systems I

PERCENT

.. greater than 13.36%

1111 8.49 - 13.36

0 2 3 4 - 3.62- 8.48 Scale in Miles Q less than 3.62

A/S tlYKAS w

(MAP 33)

1-' w 1:\.) SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPA~ON ~ PERCENT MACHINE OPERATORS N Source: Notional Decision Systems I

PERCENT

.. greater than 14.34%

Ill 7.78 - 14.34

0 4 5 - 1.22- 7.77 Scale in Miles CJ less \han 1.22

A/5 NYKAS

(MAP 34)

...... w w SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPA~ON ~ PERCENT ADMINISTRATION & MANAGEMENT N Source: Notional Decision Systems I

PERCENT

.. greater than 20.13

- 14.28- 20.13

0 4 - 8.44- 14.27 Scale In Miles D less than 8.44

A/S NYKAS

(MAP 35)

1-' w ""' 135 and the location of administration support workers (map

36) •

Those data presented on this series of maps illustrating some relevant demographic features of the composition of the study area clearly add to the base of information for the customer base in the San Fernando

Valley. Those aspects that add texture to this base are the correlated data relating to higher education levels.

Especially relevant was that of the higher than 16 years grouping. Again, as in the Compu Plus study, the per capita and household average income groups evidenced a particularly strong correlation with SRCSs. On a broad scale, the distribution of total retail sales followed that of the computer store location, indicating that, in general, the sites were strategically positioned within the framework of other retail activities. Perhaps the most significant classification that was not examined by the

Compu Plus study had to do with occupation. It was clear from these data that computer stores are positioned in close association with white collar workers. More specifically they correlate highly with those working in sales, professional specialty jobs, and administration and management positions. These data would prove an invaluable tool for any retailer trying to focus sales efforts towards any special occupation type or income grouping, or for that matter any combination of factors which could very easily SAN FERNANDO VALLEY 1980 CENSUS DATA WORKERS BY OCCUPATION ~ PERCENT ADMINISTRATION SUPPORT N Source: Nationcl Daclslon Systerns I

PERCENT

.. greater than 23.79

- 19.65 - 23.79

0 ill 15.51 - 19.64

Scale In ~iles D less than 15.51

A/S NYKAS

(MAP 36)

1-' w 0'1 137

be extrapolated from the data contained on a series of maps

such as these.

It should be mentioned at this point that the data

collected during the analysis of Compu Plus in Chapter III

presented a composite view of the locational character of a

"typical" computer purchaser at that point in time. It was

assumed that this analysis could be used to establish a

base line for further analysis of the SRCSs in the San

Fernando Valley. It is also clear at this point that the

economic forces at play within the confines of this area

are almost incalculable. What is it that motivates a

shopper to visit one retail computer store as opposed to

another? In some instances, it has to do with the variety

of types of computers sold at the store. In other

instances, it has to do with the prices the various stores

charge for their goods and services. At other times it has

to do with whether or not a store can provide the kind of

service that a customer needs. Finally, all of this ties

together with the location of the store. If, for instance,

all things were equal between stores, that is to say they

all carried the same products, and provided the same

service, all at the same price, it would be fair to assume

that for the most part the customer would patronize the

store closest to what? The home, or the businesses? Even

more important is the question, who is the customer? These

and other questions left unanswered will be the topic of

' ~ 138

the final chapter devoted to a summary of the various analyses. CHAPTER VI

SUMMARY OF ANALYSIS AND CONCLUSION

Summary

The purpose of this thesis was to present, examine,

and evaluate the spatial distribution patterns manifested

by the rise and fall of SRCSs in the San Fernando Valley

between the years 1976 and 1986. To this end, in Chapter

II, the study area was scrutinized and found to contain a

physical area that presented the writer an exceptional area

to research given its natural boundaries and relatively

uniform topography. The area was also found to contain a well developed and broadly diversified economy containing

significant areas of industry, retailing, and professional

service activities. One aspect of the Valley's

infrastructure that was examined, transportation, was found

to be especially important. It was shown that the

transportation network of the study area influenced not

only the location of the industrial zones, but retailing as well by providing the market place with good accessibility.

In addition to the market place, Chapter II presented

a brief history of the micro computer and the technology behind it. The micro computer was shown to be a rapidly evolving segment of modern technology and its impact on society, especially business was no less dramatic. As the micro computer evolved so too did the merchants and their customers.

139 140

Information taken from trade publications, interviews, and newspapers made it clear that the SRCS had changed from a home computer, retail sales activity in the early years of the study period to one of business applications being sold via direct sales forces at the end of the study period. It had been shown in the final portion of Chapter

II that SRCSs had their roots in other types of traditional retailing such as, office equipment, electronic parts stores, and hobby stores. SRCSs, over time, evolved into specialized, clientele based, as opposed to consumer oriented, stores that provide "business solutions" in the form of computers.

The final aspect of SRCSs examined in Chapter II was the rise and fall in the number of SRCSs in the San

Fernando Valley. It was clear from the data presented for the numbers and locations of the SRCSs in the San Fernando

Valley that the number of retail locations selling computers had increased each year of the study until reaching a high point in 1984. The number of SRCSs then fell off during the final two years. By 1986, some merchants felt that the traditional retail look of computer retailing was a thing of the past and yet there are those who feel that it is the home market that will be the future of SRCSs while yet others think the only road open is to sell as many computers as possible and profit from the volume. It is safe to conclude from the information presented in Chapter II that while accessibility to the 141 purchasing public was an important factor in originally

locating SRCSs, it would not be so critical if, in fact, the complexion of computer retailing continues to change in the direction of direct sales.

In Chapter III the focus was turned to an in depth examination of the attributes of one SRCS. This was accomplished by selecting one store and scrutinizing as many aspects of its operation as possible. This included descriptions of its: physical location, accessibility, utilities, customer base, and market area. This study revealed that in 1982 accessibility played an important role with regard to determining market area and range. It can be concluded that, at this time, the computer was a high order item in the hierarchy of goods to the store's customers, some of whom were willing travel 60 miles to buy from this store. As a result and in typical fashion, the majority of new SRCSs chose locations accordingly. The trend that developed was for the competition to nest in areas of good accessible and more often than not relatively close to the preceived customer base. In the San Fernando

Valley this meant that Compu Plus's competitors tended to locate along Ventura Blvd. and as a result, it was felt that Compu Plus was able to intercept some customers that would other wise have bought from a store located on

Ventura Blvd.

With the study area, the micro computer, and the specialty retail computer store all described, Chapter IV 142

proceeded to analyze the distribution of SRCSs found

located in the San Fernando Valley. To do this an

inventory of SRCSs was compiled and the individual

locations mapped. Once mapped, the inventory data was then

used to perform an analysis of dispersion using nearest

neighbor distances. Once it was known what the

distribution of the sites within the study area was for

each of the 11 years covered in the study, earlier

conclusions were indeed confirmed. From early in the study

period the SRCSs were uniformly distributed across the san

Fernando Valley. This uniform pattern of dispersion

rapidly shifted to one that was very strongly cluster. As

shown on the map series for SRCSs their clustering occurred

along the Ventura corridor as their numbers increased. In

1984, when the number of SRCSs started to fall it was shown

that the tendency to cluster was also reduced.

Chapter V presented an examination of the sites in

relation to selected demographic features of the San

Fernando Valley in an attempt to discover what elements of

the economic landscape caused SRCSs to cluster. The

features examined by census tracts included education,

income, household totals, retail sales, and occupations.

It was illustrated cartographically that higher education, high income, and white collar occupations of, sales,

professional specialty, and administration and management,

strongly related to the distribution of SRCSs. These 143

findings provided the justification for the clustering of

SRCSs but offer little insight as to their future.

Conclusion

Given all the data, and all the summary conclusions

reached, it is clear that the retailing of computers in the

San Fernando Valley has changed. From the base line

profile of a SRCS presented in the case study of Compu Plus

it was shown that the majority of customers were personal

users. However, this customer profile changed with the

introduction of the IBM Personal Computer in 1982 and with

it came the personal computers credibility with those who

were in charge of purchasing computers for business.

The original home market for micro computers started

to wane as the business market place started to open up.

Along with this trend, the nature of the computer retailer

also started to change. At first, most of the computer

retailers were either office products stores, electronic

component stores, or hobby stores. It was not until after

the introduction of IBM's Personal Computer that SCRSs like

Sears, Businessland, Nynex and other "Business Centers"

made their debut.

Along with SRCSs catering to the business market, it

was also shown that in the contemporary market place, the

major forces in micro computer sales are without question

those who call on businesses via the traditional methods.

There has developed over the past few years a sophisticated

marketing scheme that calls for the utilization of an ' d 144

outside or direct sales approach to the marketing of

computers. What this meant to the locational attributes of

SRCSs was a shift from the traditional high rent, prestige

locations with good accessibility to locations were these

were no longer such important factor. This was due to the

fact that the sales person calls on the customer rather

than the customer coming into a store to purchase a

computer for use in their business. This trend started to

become evident towards the end of the study period when

several SRCSs that had been located along the Ventura

corridor either closed or relocated into less "central"

areas where rent was less of a factor.

Over the span of eleven years, specialty retail

computer stores in the San Fernando Valley have exhibited

many facets. They have sold numerous brands of computers

to many types of customers from various kinds of stores.

In doing so, SRCSs have made an indelible impact on the

lives of the many who have shopped and purchased computer

systems from them. Prior to the existence of the SRCS

there was practically no way home users or small businesses

could have had the opportunity to realize the impact

computer technology would have on their lives and their

businesses. The development of new computer technology was

indeed phenomenal and these strides made in the technology

were parallel to the growth and evolution of computer

retailing. u 145

All the years of growth in the distribution of computer stores in the San Fernando Valley reached a climax in 1984 and even then other changes loomed on the horizon.

It is not only that the number of stores rose to a high in

1984 and then began a period of decline, but that the total square footage available shrank with the number of stores.

Perhaps for some this was an attempt to reduce the cost of doing business from locations that by any standard were demanding a high price per square foot, especially along the Ventura corridor. For others it could be that in anticipation of future trends away from the retail environment they have attempted to get an early competitive edge. The writer expects that when IBM, Apple, and other computer manufacturers no longer require the retailer to maintain a show room, the only computer stores that will be but marginally effected will be those catering almost exclusively to the home market, and even those will be pressed to compete due to the rising pressures from the mass merchandisers who can only foresee selling home computers in ever increasing numbers.

When manufactures eventually release the SRCSs from their retail store agreements, another milestone in the evolution of computer retailing in the San Fernando Valley will most decidedly be reached, and the spatial distribution of computer retail sites will more than likely change dramatically. In anticipation of such a time, the question that needs to be asked is: what will become of the 146 decreasingly important home computer user who wants or needs to buy a system? Will they be rudely dismissed and forced to purchase from a mail order company, or mass merchandisers, or catalog stores. Perhaps, in order to see, test, and purchase, they will be forced to drive into industrial park areas where the rents are traditionally lower than in commercial retail areas? Will stores open up in malls to sell computers and software? That just such a trend is starting to develop is evidenced by the existence of the Radio Shack stores selling computers in almost every mall and shopping center in the Valley. There is also a trend toward book stores opening subsidiary stores like

Software Etc. in the Sherman Oaks Galleria to sell software and peripheral items such as modems and memory to the mall shoppers. However, it is the conclusion of this writer that the SRCS will not fade from the landscape of the San

Fernando Valley and into oblivion because, just as there are specialty retail stores for other types of goods, the

SRCS will in all likelihood continue to make its presence felt. The micro computer is after all still a computer.

It still requires a plethora of knowledge to successfully implement a computer system to accomplish any specific task. It is the kind of skill and knowledge that is only acquired over time. Many businesses and home computer users no longer need the skills of a SRCS and will purchase future systems elsewhere. There are those however, who will need what the SRCS offers above and beyond simply 147 selling computers in a box. It is in this vein that the writer feels the future of SRCSs in the San Fernando Valley lies. A narrower, more specialized future to be sure, but one that would be extremely difficult to usurp.

The original premise for this thesis, that there had been a rise and fall of computer retailing in the San

Fernando Valley, has been shown to be correct in terms of the total number of stores and the aggregate retail space occupied by this activity. This premise has also been shown to be a correct assumption in the minds of those whose business it is to write of such things in terms of the computer industry at large. The fact of the rise and fall of SRCSs has even been shown to be correct in the minds of those who own and operate such stores in the San

Fernando Valley. What is commonly believed is that there exists today, and will continue to exist, a market for the technology presently being distributed through the retail channel. It is also believed, that as this technology evolved, so did the customer. It then follows, that as the customer evolves so too must the Specialty Retail Computer

Store. 148

BIBLIOGRAPHY

Abney, John. Com Soft, Sun Valley, California. Interview, April 1987.

Albrecht, Bob, Finkel, Leroy, and Brown, Jerald R. Basic for Home Computers, New York, New York: John Wiley and Sons, 1978.

Applebaum, William, and Cohen, Saul B. "Evaluating Store sites and Determining Store Rents." Economic Geography, 1960 Vol. 36, No.1, p. 8.

Applebaum, William. "A New Approach to Mapping store Facilities." The Professional Geographer, 1964, Vol. 16, no. 1, pp. 9-11.

Berry, B.J.L. Geography of Market Centers and Retail Distribution. Englewood Cliff, New Jersey: Prentice­ Hall, 1967.

Brattain, Transistor Co-Inventor," The Daily News, 14 October 1987, sec. 1, p. 10.

Bridge, Gary, PH.D., Bridge Group Inc., New York, New York. Letter, 6 July 1987.

Bridge, R. Gary, PH.D. "Sample Survey of U. S. Computer Retailers: Report to Participating Dealers" The Bridge Group, New York, New York. survey Report, December 1986.

"Competition Changes in Maturing Mall Market," The Daily News, 7 June 1987, Business section. pp. 1-2.

"Computer Center, Major Computer Technology Firms Choose Valleys as Headquarters," The Daily News, 16, August 1987, Lifestyles '87, pp. 30-31.

The Daily News Market For: Computerland. Van Nuys, California: The Daily News, 1987.

"Developments: Tandy Corp," The Daily News, 4 August 1987, Business section. 149

Elfison, Kirk w. Fundamentals of Social Statistics, New York, New York: Addison-Wesley Publishing Company, 1982. I, Epstein, Bart. "Geography and the Business of Retail Site Evaluation and Selection." Economic Geography, Vol. 47, No. 2, PP 192-199.

Goodwin, William. "Sales Performance Maps for Marketing Geography." The Professional Geographer, 1967, Vol.19, No. 5, pp. 263-267.

Industry Guide: San Fernando Valley. Project Development Company, Westlake Village, California. 1986.

La Gory, Mark and Pippin, John. Urban Social Space, Belmont, California: Wadsworth Publishing Company, 1981.

Marshall, Dennis. Moore Business Centers, Laguna Hills, California, February 17, 1986.

Mumford, Lewis. The City In History: Its origins. Transformations, and Its Prospects, New York: Harcort, Brace and World, 1961.

Price, Rob. So Far: The First Ten Years of a Vision, Cupertino, California: Apple Computer, 1987. Ransome, Jack c. "Organization of Location Research in a Large Supermarket Chain." Economic Geography, 1961, Vol. 37, No. 1, p. 42.

"Retail Channel Tracking Service," InfoCorp, July 1987, cupertino, California, p. 52T.

"Rebels With A Cause," Communique, November 1987, Santa Ana, California, p.3.

Steimle, Jeff. Valley Computer Resources, Van Nuys, California. Interview, April 1987.

"TOP 20 RETAILERS," Computer Retail News, 26 May 1986,p. 85.

"Tandy Focuses on Its Image," Micro Market World, 8 December 1986, Southeastern, PA, pp. 21-24. 150

Unwin, David. Introduction to Spatial Analysis. New York, New York: Methuen 1981.

"Valley Has Costliest Suburban Retail Sites," The Daily News, 23 September 1986, business sec. pp.1-2.

"Vendors Go Beyond Stores to Add Sales," The Daily News, 14 April 1986, Valley Business sec., p.4.

Webber, M. J. "Free Entry and the Locational Equilibrium." Annals, 1974, Vol. 64, No. 1, p. 24 •

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~;,! ,,!'"! ~~ !"1!1 42 .i,..~.o,, 43 'J..; ,, 00 ~ .H:.. -t,_: .00 ~0 .CD 47 '·' '"'('rli 42 o\i\.' 49 1 ~fj 50 .DO ~·..!:.. .00 52 .00 53 .oo 54 t"\!'\ 55 '"".uv,"\n 56 "0 ~~ .-- ..;t .00 nn 58 .uu 59 .OD 60 .co 61 --- - -======62 AREA = 137 dl = 17.53 63 N = J:..J~" MEAN •1"= .70 64 65 R= .137 66 U~ERE ~ Rs \-'ALUE l=[(xl-x2l.2+(yl-y2).2l".5 67 O.CO =CLUSTERED 1\'=[dihW2-N/2J/l/\GvlDTAL A~E.<4)} 68 l. 00 = Ril.ND0.'1 69 2.14 = IJ'NlFORM .00 70 .00 158

.·. 1 1 :1 ; f" 1 I . ' - ': ._. . ! \,.,· I: '' \E~.F.ESi i{EIGP.BDR A:~h~-·ts:s ~CQ:

.. ,,! - ': .... c 3itE ~~~a~~st CJ-or nat~; 0f j r;c:;;brr ::-ordinates neighbor neare re~chbor distance " (xl) ~y1) (x J(y2) .~. { -~ .;,: .i'1r .~·' 1G .43 10 .00 .7 8 .OD ~:'i ,,~ l,' 1~ .9 18 •'-':.,1 ,1,.,,~ !:' ~· .~ .6 Vl.f 1 r 1~ ~ 1s .~ 14 1. 00 ~'1 .~ £.• .7 23 .C:,J 'H ... 23 .7 ~l .6G ,;:_ .. 'jC: 24 ,'1 ...... 1J l", ... < 0 .;,D ;_, .4 35 dU ,-,,R, ;:, 17 I 4 27 .~a 'Y= .~ 27 'n -:·Q ""~-1 19 1 .6 39 'l ..... ~,.. ')~ .. r: i,ij"" l • 'l.h.; -., 2? .2 l I~'.: .." .~ ~-:. 1.35 i ~ ~.::." .2 43 .:~ ,~ ~3 ···' •£. .14 ': ':·~. .8 42 .:.,,._~_, .-.c- "' <:r: i...J "'._\,;. .~ J.J .~~ 1 r~ 26 "'.J ..:· .3 24 r.l ..· -., ') -;ry ·-. ~.,.i.t o-4,..,;. ..:.t -·~ •4 '" -:~ -.R, ..,! j ~·J ,,., . .2 .1 ,(j,J -.,-.. '"' 'i .Fi ;;._r 7"] .3 n 1.1\.i"­ ·::. .., ...., n• ,, {Q . 9 0~ ' ,,J/ r;.., 3! 81 .., 5 73 3. rJi,, .?2 24 38 ,/.1 33 88 "3 8'? .20 .-, -~ ("-,-. .;:"t ::J7 3 88 .2j :·1 35 ;·2 3 94 L' o.:..;,. "·' 1 < .::~ . ~ 3 89 .4D '2.7 ".,1., 2.9 92 .22 on :38 .uu 3? . GJ 40 .on •,-~ i .00 -~ 1". ~L .00 43 .co :L_. ~~ .0 '~ 45 . 00 nn "tO·" .vu '17 •CD ·~ .no -~ ·R:•1 ~9 "~n .GO ;-.r, =·._'! ,·.;·..; 52 f1t'\ ~~ ·'- . 08 54 . JG 55 • QC r:• ,,0 .no 57 .00 58 . on 59 .vvon 60,, .oo ~J -======62 AREA = 137 d1 = 20.39,, 63 N = 31 :-~EAN ", !'= ,.:::J 64 55 ~'= .G~2 ~-o ~;~ERE r R" ~iALUE 1=[{:-d-n..: .. · 2.!.~ .. ~-/:·: ::·' .: 67 o. co = c:~cSTERED R=fdl/(N"2-f1/2)..'!/( {N/1'0\A~ ~.REA}) 63 1.G!J = RANDm1 ~9 2.!4 = U~·HFS!;~~ .DD ..,n on l L: rUv 159

ol I r J II ; ;:.. :: :· c : [ ~ ,,..,_,.._ .....' F G ~ ;;E;;RE3T ~::::~BCiP ~~-~ALYSIS FGR: !::''::;

. . l- :·! t!:' s~~@ ~earest number ~9:~~dinat~~ll neighbor ~~~~~i r~:r~~Ii) distance .j : ., .; 14. .4 0 15 1.43,.._ ~ ., 8 6 !4. .6 0 j._i .J.i ·~( ,, '"i l !~ l .6 0 J .DD ~ :1 .., !,,, ,,l'-' J..: i • i,.., 8 l rU\.! 13 .o 14 .10 <[1 1~ .9 13 olu 13 "',.j .6 96 4 .72 .. ,-. ~ ., J.0 ,.._1" 14 .:..t 1.00 ·"'H ., f I ~. .5 ,, 23 • t.O :•1 ry i ;! i...i...... 7 23 I~ \.i ~~ 23 .J' .7 .. ~ .lO !:3 26 .9 .6 30 r;~·, ·' .36 ~!j 27 3.6 .4 35 .:.,""!' . .1 0 ~1 ':•..: L,'i: .... -.; .:..~ 1W\J :?:3 3.5 .3.. 27 2.~ 35 2.7 .1 27 G,C> 23 27 .),.J'" .9 ~..:.·'" .86 ..t!'\ ':0 ., . ' 'l 24 ~ .:.. 11.1 .6 3i .~. ·;t: .-,,-. l '" f2.3 .2 38 .i.' ,.)" .40 26~-· 41 4.9 .4 43 .9 1.35 27 42 ·5 .2 43 .9 • 14 ?"~o 43 .9 .3 42 6 .14 ~~ l'! •;..·~ .6 4.3 47 .8 .89 30 46,., .6 4.8 48 .7 .14 ry~ .,, .8., 4 7 48 .7 .:o '" jj -~., 32 oi 4.7 ~· .9 .I 0 "33 5! .7 2.4 54 .5 .i..:.ro.:-... 34 52 .3 L.L~ " c:;.,,. .2 . :0 .-. . 8 2.3 35 .7 .14 1.! r "·'-'""t ,.; .3 56 .5 .1 G ~., "1 ') .5 ... 54 ,,J" .I 0 28 ""_,,.."" .2 " 52 .3 .1 0 E;Q q :3'i v.O .4 ··'" .7 .26 40 "' ~') "1V ~3 .I .9 64 1 I 9 ,,_.:., .H ,, ~ ~ ,..~ .,, -~'1 .9 .7 63 1 .1 ..._;,_r ,JL. -~? 1~ 66 .o" 3 71 .7 ...... 22 ~ ') -. :-. 43 7J .6 .) I L, 71 ·-··! ,:.,..:. .1 a .,, ') "· .-., 44 il .7 .., ... 66 5.8 3 ,i,.L ~5 72 .9 3.2 70 ".;,Q. . .70 ,, ~ ,.. 't~ 2: .I 3.5 83 '!.1 I.OG ... :··'} !.t,' ...;...: .9 4 .I 81 9 .I !. co 48 85 ..' 3 94 w.1 "/ .22 49 88 .4 3 89 3.2 3 .20 ~.;.;;; 19 ,.2 3 88 3.4 3 .2~ 51 :?a 2.5 3 93 2.8 3 .30 t:;'j ? r d!"l ., .. 91 2.1 3 90 ~·.; 3 ,,o 53 93 £.0 3 90 2.5 3 .30 ""' ";') 54 94 3.9 2.9 85 4.1 3 ti-4 55 96 3.2 4 15 2.8 4.6 .72 56 .00 57 .00 58 .00 59 .on 60 .00 61 ·- - 62 AREA = 137 dl = 22.11 63 N = 49 MEAN 'l'l= .45 64 ~:-= •031 66 l,!t-~ERE I! Rp !_)ALUE l=[(xl-x2l"2+Cy!-y2l"2J•.s 67 0. 00 = CL'JS'iERED R=tdl/>:W2-il/2):'1.': :~l/TOTF.L ARE.4JJ o.'ll !.00 = RP!i:•Gil 6'? 2.14 = ~~HFORM .co _, !':1 c II.'.J 160

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986~ I; '' ! l II \I i ( ...

Z91 163

-: I l 8 ~! ~ 2 NEAREST 1iEJ GHBOR PNAL¥Sl S FGR: j 9:'6-i ~B6

Site Site ~1earest Co-or nate~ ':".!• 'I r~;.;::1:e :' Co-ordinates ne i gt,bor r:~a~~. re !gi~~~ dista~ce ~ .d J :: ~t)

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