Hot competition among US computer retailers is spilling overseas
Boston — It may sound overly idealistic, but William Millard sees computer retailing as having the potential to improve the world, to ''break down the barriers that separate countries.''
ComputerLand, the founder of the Oakland, Calif.-based computer chain said in an interview here, ''has opportunities that transcend business.'' An international network of computer stores that could make the world's best products available almost anywhere and at low prices ''will, every day and all day, produce value for everyone involved.''
He adds, however: ''Either the business is viable or it's all a joke.''
Bump. We're back on Earth. Selling personal computers overseas through storefront operations is extremely complex, analysts and retailers admit, including Mr. Millard. ComputerLand, which has 136 stores outside the United States and 64 more due before the end of this year, has a head start on other US retail chains that have announced intentions to expand internationally.
Entre Computer Centers Inc., the third-largest US chain behind ComputerLand and Radio Shack (Tandy), is beginning Canadian expansion now and, over the few months, in France, the Netherlands, Britain, West Germany, and Italy. Businessland, a newcomer to US retailing, plans to set up shop in Britain.
Competition among computer retailers in major cities in the US is now so fierce ''that the chains are having to look to other markets for growth,'' says Robert DeMarzo, a senior editor at Computer Retail News. ''The international market is definitely one of them.''
It's not quite accurate to lump every country outside the US into one market and talk about it as a whole. A few common threads do link them together, however. First, all other countries are behind the US in their acceptance of the personal computer.
Depending on whom you talk to, analysts and retailers say Europe lags the US by 18 months to three years. Canada is eight or nine months behind. Australia is somewhere in between. Parts of Asia, like Japan and Hong Kong, are considered more savvy than Europe when it comes to computer acceptance, but the lack of keyboards and software to accommodate Asian languages is holding the market back.
Second, storefront retailing outside the US is still in the beginning stages and amounts to a mere drop in the bucket, compared with direct sales by computer manufacturers. In Japan, the manufacturers dominate the scene, and in Europe the development of chains is ''fragmented,'' according to Evan Moltz, manager of microcomputer services at International Data Corporation, a consulting and research firm.
For the most part, business still buys directly from the manufacturer or distributor. ''The business person doesn't even think of a computer store,'' says Enzo Toressi, a former Olivetti executive and a cofounder of Businessland. ''Retail, as we know it, is not developed there - which is an opportunity for us.''
''There's been some question in the past if that (European) market is ready yet, and it's clearly proven it is,'' agrees James Edgette, who delayed Entre's overseas move for a year while he waited for more market development. Not too long ago, he elaborates, ''the idea of personal productivity was not in existence (in Europe). Computers were just used for accounting,'' he says. ''Now it's not only being recognized as viable, but hardware, keyboards, and software are recently available.''
Analysts and retailers say the market window is wide open, that now is the time to make the move. But James Nichols, senior vice-president of Tandy International Electronics, the biggest US retail presence in the West, thinks the new movement abroad is premature. ''There's a lot of business to be had, but with the number of retail shops everyone is saying they are going to open there, it's going to get awful tough for somebody.''
Moreover, he adds, ''locations are hard to get and expensive.'' Tandy has decided to hold off opening new computer centers and instead will add computer products to more of its general electronics stores.
Aware of the expense involved, Mr. Edgette expects Entre, a publicly held company, to post a loss next year but hopes by 1986 it will be profitable again.
Meanwhile, ComputerLand has had its own problems. The company, privately held and controlled for the most part by Mr. Millard, has been building experience in overseas operations for the last seven years, and the lessons learned ''have been huge,'' comments Tony Freedley, senior vice-president of international operations. ''All the companies that go overseas are going to have to learn the lessons themselves. It's going to be painful and expensive for them, just like it was for us.''
Those lessons deal with basic differences in culture, language, and currency, Mr. Freedley says. For instance, ComputerLand takes the franchising approach overseas, just as it does in the US. ComputerLand has seen the entrepreneurial attitudes of franchisees make the US stores successful, but in Japan, for example, entrepreneurship is not big.
The firm entered Japan in a joint venture with Kanematsu-Gosho Ltd., Japan's largest electronics trading company, and while the 15 stores ''legally look like franchises, culturally, there's a big difference,'' Freedley says.
For the time being, Entre is keeping Asia at arm's length. ComputerLand sees it as a tough nut to crack, but one worth opening. It is about to renew efforts in Japan, and Millard recently returned from China, where he set up a joint venture to open stores there. ''It may be 10 years before you look at it and say it's thriving,'' Millard says. But he doesn't mind waiting. To him, it's part of being truly global, ''of playing together and living together.''