Recognizing that it could not compete against consumer electronics superstores, boutique retailer Egghead Computer said Wednesday that it will shutter its 80 outlets nationwide and move to the ultimate superstore--the World Wide Web.
Like independent hardware stores, pharmacies and hobby shops, smaller computer stores have suffered under the onslaught of "big box" retailers such as CompUSA, Circuit City, Fry's Electronics and Best Buy. One year ago, Egghead was forced to close half its 156 stores--including 20 of its 22 Southland locations--but it was still unable to turn a profit selling computers and software.
Analysts praised Egghead for finally realizing there is no room for it in the new retail environment. The outlook on the Internet, on the other hand, is promising: Computer hardware and software is the biggest segment of the fast-growing online commerce market. Yankee Group, a Boston-based market research firm, projects online sales of computer gear will reach $11 billion by 2000, up from $2 billion now.
"It's much smarter going about your time trying to build a new business by leveraging the Egghead brand--which is really solid--on the Web site rather than worry about whether the old stores are going to survive," said John Taylor, an analyst with Arcadia Investment Group in Portland, Ore.