Federated Group Inc.

Consumer Electronics

1970-1989

Where have you gone, Fred Rated?

For Angelenos watching television in the ’80s, the commercials for the defunct consumer electronics chain Federated Group featuring the wild and wacky Fred Rated clearly stood out. Played by actor Shadoe Stevens, Fred smashed electronics equipment, spoofed the old Pepsi ads by showing straws coming out of two different TVs (to see which “tasted less”), and in one particularly memorable spot was attacked by hundreds of rubber “rabid frogs.”

The ads made Stevens a star of sorts and epitomized the aggressive marketing and expansion strategy of Federated, which before over-extending itself had been one of Southern California’s top electronics retailers.

Federated was started by Wilfred Schwartz in 1970 when he bought a 25,000-square-foot warehouse from an electronics company and turned it into a retail outlet. The City of Commerce-based retailer quickly expanded in the early and mid-’80s. By 1984 it had 20 stores, and more than three times that number by 1987.

More than 1,000 Fred Rated commercials were aired, including one in 1986 in which Stevens told viewers, “Rabid frogs ate our warehouse, so we’re passing the savings on to you.” Sales reportedly shot up by 30 percent after that spot. When Adweek magazine prepared its annual Bad Advertising issue, Federated nominated itself.

But an expansion into Arizona and Kansas, along with an ill-timed move into the depressed market of Texas, put a financial strain on the company just as it was facing aggressive competition from chains like Circuit City.

Federated began losing money in 1987, so Schwartz decided to cash out, selling the 65-store chain to personal computer/video game company Atari Inc. for $67.3 million.

But Atari quickly soured on Federated, cutting its workforce from 3,800 to 1,800 in an effort to turn around an operation that had lost $124 million in 1988. It then filed a lawsuit against Schwartz and other former Federated officers, accusing them of overstating the company’s worth by more than $40 million. Schwartz, through his attorney, declined to be interviewed or to reveal any information about his business activities since Federated.

In 1989, Atari announced it would sell the chain, which by then had fewer than 40 stores. That November, Philadelphia-based Silo Inc., a national electronics retailer, announced plans to buy 26 locations; the remaining stores were liquidated. Silo absorbed the Federated stores into its own operations, and Silo itself was acquired by Fretter Inc. of Michigan for $50 million in 1993.

John Brinsley