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.