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Software Stores Aren’t Just Appealing To Techies

March 13, 1989

NEW YORK (AP) _ If you want to open a software store in the big city, it helps to have a background in selling shoes. Or groceries. Or clothing. Or arts and crafts, for that matter.

Personal computers aren’t just for techies anymore, and software retailers have learned that if they want to sell to a mass market, they have to adopt the marketing techniques that work for more mundane products.

Software Etc. is carrying that concept to new heights this week with a hype-filled store opening on Manhattan’s Fifth Avenue that was heralded Monday with ads covering the back pages of all four sections of the New York Times.

Analysts described Software Etc.’s splash as a sortie in its escalating battle for market share with rival Egghead Inc., which runs Egghead Discount Software stores.

″This used to be a ma-and-pa industry. Now it’s just so competitive. These companies need to create market dominance,″ said Teresa Y. Lotzgesell, an analyst at Ragen MacKenzie Inc. in Seattle.

Among the celebrities scheduled to make appearances at Software Etc.’s opening this week were William Gates, chairman and co-founder of Microsoft Corp.; Earl Weaver, former Baltimore Orioles manager; Andrew Tobias, personal finance writer; Roger Rabbit, the toon; and ″Hacksaw″ Jim Duggan of the World Wrestling Federation.

The Amazing Kreskin, self-proclaimed mind reader, appeared Monday. So did Major ″Wild Bill″ Stealey of MicroProse Software, who demonstrated his flight simulation software on a video wall made of 16 television screens in a 4-by-4 array.

The crowds, reminiscent of a good day at Bloomingdale’s, warmed the hearts of the retail-minded executives of Software Etc.

″We can’t wipe the grins off our faces,″ said Jordan Levy, who joined the company last year as director of marketing. ″This is like a real retail store, not like a computer store.″

Software-only stores scarcely existed in the early 1980s, but they are catching on quickly, in part because their bulk buying allows them to offer low prices and take business away from other outlets, such as computer hardware stores.

The proliferation of software titles demands the kind of shelf space that is only available in a software-only shop. Software Etc. said its Fifth Avenue shop carries more than 2,000 titles, from desktop publishing to video games.

According to a survey of large companies by Computer Reseller Newslast year, about 40 percent of the personal computer software they bought was through software-only stores, while 27 percent was through computer hardware stores, 7 percent was by mail order and 7 percent was direct from the software publishers.

Software Etc. has the most outlets of any chain - about 240 - while Egghead leads in revenue.

Egghead is a public company based in Issaquah, Wash., while Minneapolis- based Software Etc. is privately held and does not announce sales or profit figures. Smaller chains include Software City, Babbage’s and Walden Software.

All the store chains are increasing the support they give customers, such as having full-time people demonstrating software. That’s part of the user- friendly attitude, which is subsidized in some cases by the software publishers.

The top people in the chains are retailers, not technologists. At Egghead, chairman and founder Victor D. Alhadeff used to sell shoes at a Seattle department store, while president and chief executive Stuart M. Sloan also holds down a job as chairman of an upscale supermarket chain.

At Software Etc., Levy used to sell computers wholesale. Stan Hirshman, the vice president of store operations, used to work at Banana Republic, the Gap and T.J. Maxx. And Dick Fontaine, the president and chief executive, came from B. Dalton Booksellers and Michaels Stores, a Dallas-based retailer of arts and crafts and hobby items.

Both chains, as well as their smaller rivals, are trying to take the fear and loathing out of buying computer software.

″This has been the kind of business where it’s made people scared of the product,″ Levy said. ″We’re creating theater in here. We’re going to have music. We’re going to have rock ‘n’ roll.″

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