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·Aheir whe n· it sC~s big com pute rs to corp.orati~ns; •.I~M

is a Bambi of a stor.e fron t retailE;t. In .the early 1980_'& the
corn pany bega n open ing gra11~ly decorated e.omp.u ter stor e~·
calle4 IBM Prod uct Ce11ters in high -ren t busi ness districts,aU over Ainerica.
While ·t he first 81 store s had saJcs estim ated at ·$100 million in 19·8 3, IBM
shelved p'l ans to cxpa11d the cl1ain to 100 storc.s. " ·
..,. ( Conlihues)
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 ·rhc ccnl«..: rs sdl IHM•~ l'l!rson al Computt;r ( l'C) dlld 1y pcw111 i:n ,1111111;
1
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with add-on gear and softw,.u-c made l>y IBM ~•nd other~. lhardcncd ,,·Hli
start-u p ,.;osls and high ovcrhc:atl, the stores made far kss tha~l the :.w
pcr\;cn t per year llJM is accuMom~d Lu Citrning 011 ill\'l!~tcd ~ap1wl. ·
qlimps ing the chan~c to sell typewriters to :;mc.111 busmcsscs and
branch offices of big companies withou t costly tloor-to-door ~aUs, IBM
1
had opened three Produc t Centers by mic.1-1981. Then, when the ~C burst
on the scene, the compauy decided to plunk stores down m every
mctropolitau area. However, most of the I ,GOO-odd independent stores
that cany the finn's PC and compe ting makes have done a better job of
selling tlic target clientelc. The rival stores belong mostly to big chains
suc·h as ComputcrLamJ, .Ent re Co~nputcr Center s, anti Scars Dusiliess
Systcn is ~nters . · .
IBM made, mistakes right off the bat. Althou gh it i~ a 1najor produc er
of sophisticat~d point-of-sale compu ter system s to central ize billing,
inventory, and sales audits -with 1983 sales estima ted at $125 millio n-
' ~c compa ny fQrced _its own salcspc~plc to record transac tions on Stone
Age ca·rbon-paper invoices. At · the end of. each day, clerks typed· the
infoqnali on into a compu ter in ·the back room. Rcs~lt: mistak es galore
in ·record-keeping and billing. .
In.~}Jposing the Product Ccnlcrs• decor, IBM rcvcalcc.l retailing naivete. ·
Anx.ious not ·to appear c.;old anJ remote, it abandoned · its traditi opal icy
blue and decora ted th<f · centers bright red. "Reel doesn' t just irritate
bulls," remark ed Warren Winger, chairm an of Compu Shop, a Dallas-
based chain, "it 111akcs salesmen.hostile and alarms u1stom crs." To keep
its stores classy, IBM cschcwcr.l the usual tac..ky trappin gs of compu ter
rct4ili ng-fla shy in-store displays, brochu res, ancl racks of impuls e items
near the cash registe rs. ·"The in-store mcrcha ndisil_1 g-wc never realized
how ilnportant it was," confes sed Jim Turner . the IBtvl vkc presid ent in
charge of the centers. IBM itlso staffed dw stores entirely with its 0\\'11
career salespeople, few of whom · had rctt1iling experience. Consumer
researc h by a large New York a<l agc11cy showc<l t~1at the staff intimidaJcd
first-time CU6torncrs. In intervi ews the custom ers revealed that they
cxpcc.tcd more of JHM Produc t Centers than of other compu ter scores,
but came away disillusioned. · . , ·· · _: · . - _
Product Center chi~fTurncr t1ints that .in the future the ~enter s-1jlay _.
~o~ccntra~e on selling fµll-blown office automation systcr,1s._While ·he
!~sis.ts _th~t.-1131'1 ha~ .no .plan~ -to close up shop, there's sotne._qucstion .
wl1cthcr .thc con1pany ought to be in the retail jungle at all. n1c 1nargins
~re.low, CQq1pctition is fierce; ~ntl the pthcr a.nin1c1ls arc quick ancl crafty
_ and know the terrain. · '
I
DISCUSSION QUESTIONS ·
1. IBM clcarly failed to analyze consum er/prod uct relationsl1ips wl1cn it
opened i~s own retail stores. List all of tl1e 1nistakcs it made bcca~s c
.of-tl1is failure.
2. W11y ·did'11't IBM anal}'ZC COllSUlllCr/product rclationsl1ips?
J. What do you tbi11k consun 1ers expect ed when th_ey went to an IBM
Produc t Cc11tcr?