After testing the waters outside New York City for the past year, Gateway opens its first store in Manhattan today.
The 4,000-square-foot Gateway Country Store at Columbus Circle will be the direct PC seller’s 161st around the country.
“Our act is pretty well-honed. It’s time to come to New York,” said spokesman Greg Lund.
Success in its newly- opened Connecticut and New Jersey stores gave Gateway the confidence for a frontal assault on New York City, and Columbus Circle is just the beginning. Gateway Country stores will also open in Union Square and Staten Island later this year.
While it’s half the size of a typical Gateway store, the West 58th Street store features the same “country” touches that others around the U.S. do – tractor-seat replicas for customers to sit on while they try out computers, murals of farm scenes, and, of course, the famous “spotted cow” motif from Gateway’s boxes and ads. All are designed to put first-time computer buyers at ease.
The move into New York City is part of Gateway’s continued push into traditional, land-based retailing – a world it avoided until recently.
When Gateway started selling 15 years ago, it sold only through its toll-free number. But the company decided a few years ago that it needed a physical presence. It sold a few of its products in superstores like CompUSA and The Wiz in 1996, before pulling those items and starting the Gateway Country stores the next year.
So far, Gateway’s stores have been a success.
But there are risks to operating more like a traditional PC retailer. Many such stores are struggling in the face of computer prices that continue to drop as the technology gets cheaper.
Computer City sold itself to CompUSA last year, after years of declining sales. CompUSA, for its part, just reported a $5 million dollar quarterly loss and said it was slowing expansion plans.
Trying to branch out, traditional PC retailers are now emphasizing other businesses. CompUSA is pushing its service and computer-training classes because those businesses are more profitable than selling PCs. And J&R has struck a deal with the German giant Siemens to market Siemens’ latest generation of digital phones.
Gateway has managed to avoid some of the typical financial troubles because it has never had to worry about rent. But getting into the store business is costly, especially in New York City, where rents are higher than anywhere else in the country.
Still, Gateway is hedging its bets. As with all Gateway Country stores, there will be no inventory in Columbus Circle. After choosing the features they want, customers will have to wait five to seven days for their computers to be shipped to them, just as if they’d called the 800 number or used the website.
That means the company can get away with smaller spaces than stores like CompUSA or BestBuy, which each stock thousands of models. It also means Gateway is taking care not to move too far from its roots.
“The stores are simply a showroom,” said spokesman Greg Lund. “We don’t have aging inventory in stores. We don’t make a system until someone orders it.”
Retail analysts agree that Gateway is not putting too much on the line. “Gateway is not stupid,” said Kurt Barnard of Barnard’s Retail Trend Report. “They’re using the storefront to get additional exposure and advertising for their main business and for the web.”