Federated Group

Last updated

Federated Group
TypeSubsidiary
Industry Retail
Founded1970;53 years ago (1970) in Los Angeles, California, U.S.
FounderWilfred Schwartz
Defunct1989;34 years ago (1989)
FateAcquired by Silo
Headquarters
Sunnyvale, California
,
U.S.
Area served
Arizona, California, Kansas, and Texas
Key people
ProductsConsumer electronics
Parent Atari Corporation (1987–1989)

Federated Group was an American chain of consumer electronics retail stores with 67 stores in California, Texas, Arizona, and Kansas. [1] The company was founded by Wilfred Schwartz in 1970 and opened the first deep discount consumer electronics "superstore" in the United States. [2] In 1987, Federated Group was the fourth-largest discounter of consumer electronics in the U.S. [3] Its company headquarters were in City of Commerce, California and later in Sunnyvale, California. Federated Group was sold in 1987 to Atari and sold again in 1989 to Silo.

Contents

History

Federated Group was started by Wilfred Schwartz in 1970 when he bought a 25,000-square-foot warehouse in Los Angeles from an electronics company and turned part of it into a retail store. [4] In 1976, Federated Group closed two stores and built a 20,000-square-foot "superstore" in Westminster, California. [5] The company expanded quickly and launched a major expansion into Texas in December 1984. The timing of the expansion into Texas hurt Federated Group since the state was experiencing an economic slowdown from the oil bust. [6] In Federated Group's home territory of Los Angeles, the competition was increasing due to the entrance of Circuit City into the market in 1985. [7]

Federated Group began to lose money in August 1987, so Schwartz decided to sell the company to Atari for US$67.3 million. [8]

Atari

Atari purchased Federated Group to gain retail shelf space since many retailers had shunned the company's products after being hurt by the collapse of Atari's video game business. [9] The deal made sense for Atari since Federated Group could provide their expertise to sell more computers. [10] In 1988, Atari filed a lawsuit claiming that it was defrauded of US$43 million when it bought Federated Group. The lawsuit charged that Wilfred Schwartz and other Federated Group officers conspired to misrepresent the value of the company's assets. [11]

In November 1989, Atari agreed to sell 26 Federated Group stores in Los Angeles and San Diego to Silo after announcing a loss of nearly US$85 million earlier that year. [12] The remaining stores began liquidation sales in December 1989 and were closed four to five months later. [13]

Silo

Silo opened stores in San Diego in 1976 and had been looking for an opportunity to expand into the Los Angeles market. [14] [15] Federated Group's 21 stores in Los Angeles and Orange counties and five stores in San Diego were reopened under the Silo name in 1990. [16]

In January 1994, Silo closed nine former Federated Group stores in Los Angeles, the same year that Best Buy later entered the market. [17] [18] Silo filed for bankruptcy in December 1995 and closed all of its stores. [19]

Advertising

Shadoe Stevens began playing the "Fred R. Rated" character for Federated Group in 1982 and eventually appeared in more than 1,000 commercials. [20] In 1986, Stevens told viewers that rabid frogs had eaten the company's warehouse and they were passing the savings on to the customers. Sales went up by 30 percent after that spot and Federated Group nominated itself for Adweek magazine's annual "Bad Advertising" issue. [21]

After losing some share of the Southern California market to Circuit City in 1987, Federated Group began to tone down much of its Fred Rated advertising and began looking for a new image. [22]

Related Research Articles

<span class="mw-page-title-main">Atari</span> Video gaming brand

Atari is a brand name that has been owned by several entities since its inception in 1972. It is currently owned by French company Atari SA through a subsidiary named Atari Interactive. The original Atari, Inc., founded in Sunnyvale, California, USA in 1972 by Nolan Bushnell and Ted Dabney, was a pioneer in arcade games, home video game consoles, and home computers. The company's products, such as Pong and the Atari 2600, helped define the electronic entertainment industry from the 1970s to the mid-1980s.

<span class="mw-page-title-main">The May Department Stores Company</span> Defunct retail company acquired by Federated Department Stores in 2006

The May Department Stores Company was an American department store holding company, formerly headquartered in downtown St. Louis, Missouri. It was founded in Leadville, Colorado, by David May in 1877, moving to St. Louis in 1905. After many changes in the retail industry, the company merged with Federated Department Stores in 2005.

<span class="mw-page-title-main">Macy's, Inc.</span> American department store holding company

Macy's, Inc. is an American holding company of department stores. Upon its establishment in 1929, Federated held ownership of the regional department store chains Abraham & Straus, Lazarus, Filene's, and Shillito's. Bloomingdale's joined Federated Department Stores the next year. Throughout its early history, frequent acquisitions and divestitures saw the company operate a number of nameplates. In 1994, Federated took over the department store chain Macy's. Despite a long history of preserving regional nameplates, with the acquisition of The May Department Stores Company in 2005, they were retired and replaced by the Macy's and Bloomingdale's brands nationwide by 2006. Ultimately, Federated itself was renamed Macy's, Inc. in 2007.

<span class="mw-page-title-main">Best Buy</span> American multinational consumer electronics retailer

Best Buy Co. Inc. is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota. Originally founded by Richard M. Schulze and James Wheeler in 1966 as an audio specialty store called Sound of Music, it was rebranded under its current name with an emphasis on consumer electronics in 1983.

<span class="mw-page-title-main">Circuit City</span> Consumer electronics retailer

Circuit City Corporation, Inc., formerly Circuit City Stores, Inc., was an American consumer electronics retail company, which was founded in 1949 by Samuel Wurtzel as the Wards Company, operated stores across the United States, and pioneered the electronics superstore format in the 1970s. After multiple purchases and a successful run on the NYSE, it changed its name to Circuit City Stores Inc.

<span class="mw-page-title-main">Broadway Stores</span> American retailer

Broadway Stores, Inc., was an American retailer based in Southern California. Known through its history as Carter Hawley Hale Stores and Broadway Hale Stores over time, it acquired other retail store chains in regions outside its California home base and became in certain retail sectors a regional and national retailer in the 1970s and 1980s. The company was able to survive takeover attempts in 1984 and 1986, and also a Chapter 11 bankruptcy filing in 1991 by selling off most of its assets until August 1995 when its banks refused to advance enough additional credit in order for the company to be able to pay off suppliers. At that point, the company sold itself to Federated Department Stores for $1.6 billion with the acquisition being completed on October 12, 1995.

Waldenbooks was an American shopping mall-based bookstore chain operated by the Walden Book Company, Inc., and from 1995 was a subsidiary of Borders Group. The chain also ran a video game and software chain under the name Waldensoftware, as well as a children's educational toy chain under Walden Kids. In 2011, the chain was liquidated in bankruptcy.

<span class="mw-page-title-main">Big-box store</span> Physically large retail establishment

A big-box store is a physically large retail establishment, usually part of a chain of stores. The term sometimes also refers, by extension, to the company that operates the store. The term "big-box" references the typical appearance of buildings occupied by such stores.

<span class="mw-page-title-main">Yamada Denki</span>

Yamada-Denki Co., Ltd. is one of the largest consumer electronics retailer chains in Japan.

Atari Corporation was an American manufacturer of computers and video game consoles. It was founded by Jack Tramiel on May 17, 1984, as Tramel Technology, Ltd., but then took on the Atari name less than two months later when Warner Communications sold the home computing and game console assets of Atari, Inc. to Tramiel. Its chief products were the Atari ST, Atari XE, Atari 7800, Atari Lynx and Atari Jaguar.

<span class="mw-page-title-main">Worlds of Wonder (toy company)</span> 1980s American toy company

Worlds of Wonder (WoW) was an American toy company founded in 1985 by former Atari sales president Don Kingsborough, and former Atari employee Mark Robert Goldberg. Its founding was inspired by a prototype that became its launch product, Teddy Ruxpin. In 1986, it launched Lazer Tag and filed an IPO which Fortune magazine called "one of the year's most sought after stock sales". WoW partnered with the young Nintendo of America as retail sales distributor, crucial to the landmark launch and rise of the Nintendo Entertainment System from 1986 to 1987.

<span class="mw-page-title-main">Silo (store)</span> Electronics retailer

Silo was an electronics retailer operated throughout the United States between 1947 and 1995. The western region stores were known for a number of years as "Downings" in Colorado and "Appliance-TV City" in Arizona and California.

Fretter was an electronics and major appliance retailer based in Detroit, founded in the 1950s by Oliver "Ollie" Fretter.

<span class="mw-page-title-main">Bullock's</span> American department store chain

Bullock's was a chain of full-line department stores from 1907 through 1995, headquartered in Los Angeles, growing to operate across California, Arizona and Nevada. Bullock's also operated as many as seven more upscale Bullocks Wilshire specialty department stores across Southern California. Many former Bullock's locations continue to operate today as Macy's.

<span class="mw-page-title-main">FedMart</span> American discount department store chain

FedMart was a chain of discount department stores started by Sol Price, who later founded Price Club. Originally a discount department store open to government employees paying a $2 per family membership fee, FedMart earned four times more than its investors had projected in its first year. Over the next 20 years, FedMart grew to include 45 stores, mostly in California, and the Southwest in a chain that generated over $300 million in annual sales. The business expanded to several states in the Southwest United States. Many stores were previous White Front or Two Guys locations. Price later sold two-thirds of the chain to Hugo Mann, a German retail chain, in 1975 and was forced out of his leadership position the following year. FedMart went out of business in 1982.

<span class="mw-page-title-main">The Range (retailer)</span> Retail department store chain

The Range is a multi-channel retailer selling products in the home, garden, and leisure categories, with over 210 stores in the United Kingdom and Ireland.

<span class="mw-page-title-main">The Children's Place</span> Childrens clothing retailer

The Children's Place Inc. is an American specialty retailer of children's apparel and accessories headquartered in Secaucus, New Jersey. It also markets apparel under the Children's Place, Place, Baby Place, and Gymboree brand names.

BevMo! is an American retail chain focusing on the sale of alcoholic drinks. It is a wholly-owned subsidiary of GoPuff, after GoPuff announced the acquisition of BevMo! on November 5, 2020.

<span class="mw-page-title-main">History of retail in Southern California</span> Department stores list in Los Angeles

Retail in Southern California dates back to its first dry goods store that Jonathan Temple opened in 1827 on Calle Principal, when Los Angeles was still a Mexican village. After the American conquest, as the pueblo grew into a small town surpassing 4,000 population in 1860, dry goods stores continued to open, including the forerunners of what would be local chains. Larger retailers moved progressively further south to the 1880s-1890s Central Business District, which was later razed to become the Civic Center. Starting in the mid-1890s, major stores moved ever southward, first onto Broadway around 3rd, then starting in 1905 to Broadway between 4th and 9th, then starting in 1915 westward onto West Seventh Street up to Figueroa. For half a century Broadway and Seventh streets together formed one of America's largest and busiest downtown shopping districts.

References

  1. ↑ Pollack, Andrew (August 25, 1987). "Atari to Acquire Electronics Retailer". The New York Times . Retrieved October 10, 2020.
  2. ↑ "Wilfred Schwartz Founder, Chairman of Federated Group". It Is Innovation (i3) magazine. November–December 2015. Retrieved October 11, 2020.
  3. ↑ Saporito, Bill (August 3, 1987). "DISCOUNTERS IN THE DUMPS Once again the electronics retailers have overexpanded. Invading each other's turf, they touched off price wars that are pounding profits after years of astounding growth". CNN Money. Retrieved October 10, 2020.
  4. ↑ "Federated". Los Angeles Business Journal . July 19, 1999. Retrieved October 10, 2020.
  5. ↑ "Wilfred Schwartz Founder, Chairman of Federated Group". It Is Innovation (i3) magazine. November–December 2015. Retrieved October 11, 2020.
  6. ↑ Pollack, Andrew (August 25, 1987). "Atari to Acquire Electronics Retailer". The New York Times. Retrieved October 10, 2020.
  7. ↑ Rivera, Nancy (October 21, 1985). "Firm Bets on 'Superstores' in Southland: Circuit City to Push Electronics Products at 15 New Outlets". Los Angeles Times. Retrieved October 10, 2020.
  8. ↑ "Federated". Los Angeles Business Journal. July 19, 1999. Retrieved October 10, 2020.
  9. ↑ Yoshihara, Nancy (August 24, 1987). "Atari to Acquire Federated Group for $67.3 Million: Deal Would Give Video Pioneer Access to a Retail Network". Los Angeles Times. Retrieved October 10, 2020.
  10. ↑ Motamedi, Beatrice (August 24, 1987). "Atari to buy Federated stores for $63.7 million". United Press International . Retrieved October 10, 2020.
  11. ↑ "Atari Files Suit Over Federated Group Acquisition". Associated Press . August 30, 1988. Retrieved October 10, 2020.
  12. ↑ "COMPANY NEWS; Atari Is Selling 26 Federated Stores". The New York Times. November 11, 1989. Retrieved October 10, 2020.
  13. ↑ "All 16 Federated Electronics Superstores in Houston and Dallas..." United Press International. December 20, 1989. Retrieved October 10, 2020.
  14. ↑ Silverstein, Stuart (November 12, 1990). "In Electronics, Store Wars: Retailing: With newcomers Silo and the Good Guys taking on Circuit City, consumers may enjoy lower prices. But mom-and-pop outlets may find their survival at stake". Los Angeles Times. Retrieved October 10, 2020.
  15. ↑ Lazzareschi, Carla (November 10, 1989). "Silo to Buy 26 Federated Units in Southland". Los Angeles Times. Retrieved October 10, 2020.
  16. ↑ "COMPANY NEWS; Atari Is Selling 26 Federated Stores". The New York Times. November 11, 1989. Retrieved October 10, 2020.
  17. ↑ White, George (January 12, 1994). "Silo Closes 6 Stores in Southland: Retail: Intense competition among electronics stores and a weak economy have squeezed profit". Los Angeles Times. Retrieved October 10, 2020.
  18. ↑ Lee, Patrick (August 30, 1994). "Best Buy Will Open 7 Stores in Southland: Retailing: Consumer electronics giant plans to be in business in time for Christmas. One analyst predicts a competitive 'slugfest.'". Los Angeles Times. Retrieved October 10, 2020.
  19. ↑ Johnson, Paul (December 6, 1995). "Silo Holdings Seeks Chapter 11 Bankruptcy Protection: Retailing: Chain's president says he does not want to speculate on whether it will emerge from bankruptcy". Los Angeles Times. Retrieved October 10, 2020.
  20. ↑ Horovitz, Bruce; Marlow, Shirley (April 28, 1987). "Has Success Spoiled 'Fred Rated'?". Los Angeles Times. Retrieved October 10, 2020.
  21. ↑ "Federated". Los Angeles Business Journal. July 19, 1999. Retrieved October 10, 2020.
  22. ↑ Horovitz, Bruce; Marlow, Shirley (April 28, 1987). "Has Success Spoiled 'Fred Rated'?". Los Angeles Times. Retrieved October 10, 2020.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.