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Bernard Chiu

BY CSA STAFF

When Bernard Chiu sold his successful home-appliance company Duracraft in 1999, he planned to spend more time on the golf course and with his family. But in 1998, he was asked to take a leadership role in a new musical-instrument company that was just getting off the ground, First Act.

“At first, I didn’t want to be a part of it,” said Chiu, 51, CEO and chairman, First Act. “But then I remembered how much it cost to buy my first guitar. I wanted to change the industry by creating a new channel of distribution and put guitars into more hands.”

The company was founded with the idea of developing affordable, but high-quality guitars that would be sold in places where people shop everyday.

“I thought, ‘How many people think about going to a guitar store to buy a guitar on a daily basis?’ If you put one in a place where they shop everyday, the product gets so much more exposure,” Chiu said.

The challenge, however, was that big-box retailers were not all that interested in carrying guitars. Some had tried, but had little success. Chiu rethought the company’s strategy and launched a musicalinstrument line created specifically for children. The instruments were designed to make learning how to play fun, as opposed to a chore.

“It took off right away,” he said. “Customers loved it and we created a new category—and new revenue opportunities—for retailers. Because the children’s line was a success, it gave us the opportunity to go back to the retailers with an adult line.”

In less than 10 years, First Act has evolved into one of the nation’s leading manufacturers and marketers of musical instruments, with a diversified product lineup that includes guitars, drum sets, amplifiers, hand-percussion instruments and related accessories. Whether a person is a beginner or a big-time rock star, First Act can meet their needs. It sells direct to consumers on its Web site, and also supplies such chains as Toys “R” Us, Target and Wal-Mart. Its product offerings include beginning instruments for children, band instruments for school music programs and limited edition and customized guitars.

In 2005, the company opened its first freestanding location, First Act Guitar Studio, in Boston. The store celebrates the artistry of guitar making and invites customers to play any guitar that catches their eye. It includes a glass-enclosed space where visitors can watch a craftsperson put the finishing touches on a custom guitar. It also offers guitar lessons and live performances by major artists.

Chairman and CEO First Act BostonAnnual sales: $100 million (2006)Type of business: Manufacturer and marketer of musical instrumentsNumber of stores: OneAreas of operation: Global

“It’s a concept store that serves as a repository for people to come in and test products,” Chiu said. “We use the store to gather customer feedback for product development.”

The Boston location, Chiu added, is the first of 10 to 12 stores that the company plans to open in major markets across the country.

“They will be living advertisements that allow consumers to experience our brand in a truly interactive way,” he said.

Chiu, who grew up in Hong Kong and moved to the Boston area in 1983, hopes to continue to grow First Act.

“Our goal is to continue to make great products and new categories for retailers and consumers of all ages, from babies to rock stars,” he said.

Chiu has left the days of retirement behind, at least for now. But he still makes time for his family and golf.

“It’s hard to find a balance between work and play, but it’s important to make time for everything you love,” he said.

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CompUSA may get a new look

BY CSA STAFF

ADDISON, Tx. After opening a new format store last month, CompUSA may be changing the format of its other stores, depending on customer demand and product interest.

According to reports, the elements found in the prototype store, located in Texas, will be incorporated into other CompUSA locations across the United States.

The nearly 7,700 square-ft. relocation site includes an Apple shop featuring Mac computers, iPods and Apple accessories, and a full-length LCD TV wall.

Additional expansions include extended gaming, which includes an entire wall devoted to the Nintendo Wii, PlayStation3 and Xbox 360 gaming platforms, plus a PC gaming setup to test equipment and play new titles.

While businesses can get their share of support with a specialized services section, all consumers can visit the store’s redesigned IT support area.

“This new store aligns CompUSA’s vision to better serve its three core customers, the technology enthusiast, educated professional and small and medium businesses,” said Gabriela Villalobos, the retailer’s sales and operations evp.

CompUSA announced in April that it would narrow its focus to three core customer groups rather than try to serve a mass audience.

The move was part of a comprehensive restructuring, initiated last February, that included an overhaul of senior management and the closure of half its store base as the privately held chain looked to improve sales and profitability.

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Walgreens withdraws from CVS provider plans

BY CSA STAFF

DEERFIELD, Ill. After many months of talks over low and below-market payment rates by CVS Caremark for four prescription plans, Walgreens has withdrawn as a pharmacy provider from the plans.

Patients affected include members of prescription benefit plans managed by CVS Caremark for ArcelorMittal, Johnson Controls, Progressive Casualty Insurance and Wisconsin Education Association Trust.

Most of the affected members live in Illinois, Indiana, Michigan, Ohio and Wisconsin.

Trent Taylor, president of Walgreens Health Services, the managed care division of Walgreens, released the following statement:

“This is not where we wanted negotiations to lead,” he said. “We’re sorry that our pharmacy patients and CVS Caremark’s clients are caught in the middle, and we’ll do all we can to ensure a smooth transition for our patients to another pharmacy. Meanwhile, we’ll continue to work on resolving this issue with CVS Caremark.

“Leaving a benefits plan is an extraordinary step for us, but it demonstrates how extraordinarily low our payments were from CVS Caremark. We can’t continue accepting reimbursement rates that are drastically below market, while offering patients needed special services such as 24-hour pharmacy access and drive-thru pharmacies.”

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