the Hits Keep Coming / J&R Music & Computer World thrives by satisfying its customers

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JOE AND RACHELLE FRIEDMAN aren't worried. They've seen

competitors like Newmark & Lewis come and go. Crazy Eddie's out of business,

and The Wiz is still around, but only after a bout with bankruptcy.

The Kings Point couple, who used their wedding money to found J&R Music and

Computer World 30 years ago just to make a little money on the side, are not

fazed by the economy and turbulent stock markets. They've seen them surge and

falter many times before.

The secret to their success? Understanding their customers, they say.

"We're one location, with the bosses on the premises. Our buyers are

constantly going into the stores to speak and interact with the customers,"

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said Rachelle Friedman."We know how to listen and anticipate our customers'


That approach has propelled the family-owned retailer from a tiny

storefront on Park Row in 1971 to a mega-merchant that now takes up nearly an

entire city block and generates $325 million in annual sales.

That business has been built with loyal customers such as David Rivera, who

said that while J&R Music and Computer World is nowhere near his Jersey City

home or Madison Avenue office, he has trekked to the downtown landmark nearly

every other week for the past decade. He spends thousands of dollars there a

year because he says he can pick up music and software that's either hard to

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find or more expensive elsewhere.

"J&R has a larger selection, and if you don't see it, they can order it in

most cases," said Rivera, as he clutched six compact disc soundtracks of the

Babylon 5 television series that he couldn't locate at The Wiz or Sam Goody.

J&R, first opened at 33 Park Row near City Hall as a 500-square-foot

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store, has not only survived, but thrived, in the New York City-area's

cutthroat consumer electronics industry. The company lures shoppers with its

reputation for a knowledgeable sales staff, its high-tech offerings and wide

range of software and music titles.J&R is also unusual in several ways. It's

one of the few sizable electronics retailers with only one location, but it's

known nationwide because of its distinctive advertisements and a catalog it

mails to more than 1.5 million people.

Also, unlike most of its rivals, J&R divides its products among separate

stores with individual entrances and addresses along Park Row. This allows it

to devote almost as much space to one category, such as audio/visual equipment

or computers, than many rivals give to their entire consumer electronics

offerings, the Friedmans said. But it also means shoppers think they have to

walk between stores and line up twice if they want to pay for a Madonna CD and

a portable stereo to play it on. (Many don't know people can pay in one store,

they said.)

Though they've already built a 300,000-square-foot empire, Joe and Rachelle

Friedman (the J and R in J&R) aren't stopping yet. To kick off J&R's 30th

anniversary, they opened a six-floor computer and technology store on the

southern corner in mid-January. They also have taken over the northern end of

the block, where J&R will open a camera shop in the spring.

Other changes are in store-including the expansion of its corporate

offerings, introduction of home theater installations and addition of more

higher-end products in many departments-as J&R seeks to tap into new markets

and answer customer demands.

"We keep on evolving because we know what our customers want," said

Rachelle, during a recent interview in her office, which is lined with photos

of her with celebrities.

But despite having weathered other storms, industry experts say J&R will

likely face more challenges this year that may make it harder to keep ringing

up the 10 percent growth in annual sales it has enjoyed in recent flush times.

The merchant faces increased competition from rivals with deeper pockets than

the regional players that had populated the New York market in the past. For

instance, Best Buy, the nation's largest electronics retailer, plans to open up

to six stores in Manhattan in 2002.

And the slowing economy may dampen the boom that consumer electronics

retailers have savored for the past few years. A slew of computer makers have

warned that sales, particularly for PCs, are declining. Even the Consumer

Electronics Association, a manufacturers trade group in Arlington, Va.,

predicts sales growth will slow to 6.5 percent this year, compared to an

explosive 9.9 percent rate in 2000.

This means J&R will have to try harder to lure customers to the cash

registers, experts said.

"It's going to require more work than in the past," said Mark Seavy, senior

editor at Television Digest, a Manhattan-based consumer electronics

newsletter. "Businesses and people won't have the open wallets they had a year


The Friedmans, who were born in Israel, grew up in Flatbush and met on a

blind date, never intending to become entrepreneurs. He was an electrical

engineer at Western Union. She was a chemistry student at Brooklyn's

Polytechnic University, which had just started admitting women, and hoped to

become a doctor.

At first, they just sold electronics, such as stereos and TVs. But as

people asked for records, they began taking requests and opened a music shop in

the basement. Three years later, when Rachelle took a two-week maternity leave

for the birth of their first son, they opened a mail-order business.

The Friedmans said it was tough in the beginning, especially for Rachelle,

who had to battle for acceptance in the male-dominated industry. While her

husband handled store operations, she negotiated leases, bought products and

took charge of finances and advertising.

"When I did business dinners, I was the only female there. Others always

asked to talk to my husband and I said, 'If you want to discuss business, I'm

the one,'" said Rachelle, noting that her freshman year at Polytech, where she

was one of only three women enrolled, prepared her for those situations.

Their first big move came in 1979, when the couple transferred the

electronics and pop music divisions to the second floor of 23 Park Row. They

kept the original shop to sell classical and jazz titles. Over the next decade,

as the Friedmans snapped up more storefronts and even buildings, they expanded

their offerings and brought in new products. They also added warehouses in

Maspeth, which J&R now uses as a distribution center for the stores, as well as

the catalog and Web divisions.

By 1990, J&R was selling everything from stereos to small appliances,

cameras to computers, and of course, many genres of music. It opened its first

stand-alone computer store, which had a separate area for Apple

products-unusual at the time. Six years later, it launched a Web site,, run until recently by elder son Jason. The following year, J&R

opened a small satellite space in a Columbia University academic building to be

closer to its corporate clients there.

Over the past decade, J&R has continued to shift the types and locations of

its products as some grew in popularity and others waned. The Friedmans say

this setup has allowed them to cater better to customer demands and provide

more knowledgeable sales staff who are devoted to one specialty.

"You don't stay in business in New York unless you take care of your

customers," said Tom Edwards, analyst with NPD Intelect, a research firm in

Port Washington. "If a customer needs something, J&R goes out of its way to

find it. The people on the sales floor are very well-educated about the


Shoppers interviewed recently complimented the breadth of J&R's selection,

but some said they don't like having to move between buildings or follow signs

like those posted in late January saying video games had moved to 15 Park Row

and home-office equipment had relocated to 1 Park Row.

"Once you get used to a section, they move it to another building," said

Jon Kwong, who lives nearby, as he perused the selection of instrumental

renditions of rock songs.

The Friedmans are proud that they've always bucked industry trends. Over

the years, they've been asked to become a public company and to open other

locations, but have refused.

When it comes to expansion, the Friedmans said they don't look beyond Park

Row because they want to keep tight control over the business and not take on a

lot of debt. And, they want to make sure J&R maintains its distinct style.

"We couldn't be as passionate in a large chain because we wouldn't know the

customers as well," said Rachelle. "We can't duplicate this store somewhere


Going public is out of the question, because J&R would have to focus on its

stock price and profit levels, rather than the business, she added.

As a private company, J&R can carry lower-margin items. "Our classical

music business is not that profitable, but we feel it's the right thing for J&R

and for our customers," she said. "No one carries our jazz selection because

it's not as profitable as Britney Spears or 'N Sync."

With only one location, J&R also has the flexibility to experiment,

industry experts said. J&R was among the first retailers to carry DVD players

and discs, as well as high-definition television sets.

"Having the newest products creates the image in consumers' minds that this

is the place to go for technology," said Barry Sosnick, analyst at Fahnestock

& Co., an investment bank in Manhattan.

This also entices manufacturers to showcase new technology at the store.

3Com, for instance, plans to create a "digital home" in J&R's computer

store in March. The display will showcase high-speed and wireless Internet

connections, and the connectivity between computers, cameras and other


The networking company wouldn't do this at J&R's rivals for several

reasons, said Keith Rostcheck, 3Com's national account manager. Most sizable

consumer electronics retailers have multiple stores with standardized displays.

Also, their staff changes so often it would be difficult to train them.

"The other stores would just put it on the shelf and leave customers to

fend for themselves," Rostcheck said.

These special showcases also help bring people into the store, and this is

increasingly necessary as the Web steals away potential J&R shoppers. While her

business hasn't been hurt by brick-and-mortar rivals, Rachelle said more of

her customers are turning to the Web for the hard-to-find items they might have

purchased at J&R.

To combat this, J&R has expanded the number of events it hosts on Park Row.

For instance, it formed a partnership with Black Entertainment Television to

tape a monthly jazz show and a regular technology program hosted by jazz great

Herbie Hancock in the store.

J&R also uses its Web site to spark increased interest in the store. The

retailer airs a thrice-weekly Web radio program, hosted by veteran disc jockey

Vin Scelsa, from a studio in its rock music store.

The Internet has also brought the Friedmans' two sons into the family

enterprise. Jason, 26, left law school in 1996 to run the Web site, before

stepping down last month. Daryn, 23, recently began hosting one of the live Web

radio shows.

While she's hopeful her two sons will take over the business one day,

Rachelle is not entertaining retirement. A workaholic who turned 50 in

December, she can't detach herself from the store for long, even checking her

e-mail on her personal digital assistant while on vacation.

"There's no way I'll ever retire," she said. "I love it too much."

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