i3 | October 17, 2018

Resilient Retail

Gary Arlen

Local independent stores maintain their role in Amazon era

He was shopping for a TV set. She was looking for a Sonos system and asked him – a total stranger – if he knew anything about the product.

From that random connection at the Video & Audio Center in Santa Monica, California, emerged a fairy tale worthy of its Hollywood neighbor. The couple is getting married this year and wanted to celebrate their nuptials in the high-tech store where they met. Joseph Akhtarzad, founder and co-owner of the store, loves to tell this romantic tale as emblematic of the “community” at his stores (there are four others in the Los Angeles area in addition to the Santa Monica location). Alas, Akhtarzad cannot rearrange the store for a wedding, but he is helping the couple in more tech-related ways.

Meanwhile, in Lawrence Township, New Jersey, Debbie Schaeffer, the chief customer officer at Mrs. G TV & Appliances, is planning a party for Operation BBQ Relief, which provides meals to displaced residents and first responders.

Typically, 200 customers come to support charitable events like this at the Mrs. G store. Schaeffer encountered the charity when it helped residents and emergency workers after Hurricane Sandy’s devastation six years ago. In Dallas, Starpower Home Entertainment Systems provides a professional chef to prepare a gourmet meal when a client purchases a complete kitchen. And on any day in one of Starpower’s four stores, local musicians offer live performances and can discuss high-end audio, explains former Chairman and CFO Daniel Pidgeon.

Even though they are miles away, Akhtarzad, Schaeffer and Pidgeon have found similar ways for their independent electronics stores to thrive in the era of Amazon. While e-commerce – Amazon in particular – has shuffled the merchandising ecosystem in recent years, savvy local dealers continue to find ways to focus on their communities and provide services that make them stand out in the complex retail field.

Thanks to buying groups and competitive instincts, local merchants can often price match online sales. More, both long-time shoppers and newcomers recognize the community value, according to the merchants. This is also backed by research – an American Independent Business Alliance study identified “the multiplier effect” that locally-owned merchants keep within their communities. Independent stores “recirculate revenue” locally at nearly four times the rate (48 percent versus 13 percent) of other merchants, according to the study. Schaeffer at Mrs. G says she even buys office supplies from a local merchant rather than a big chain.

The Deloitte Center for Industry Insights, in its 2018 Retail, Wholesale and Distribution Outlook report, reinforced the strength of local merchants, noting that, “Digital advances alone will likely not capture customer loyalty or share of wallet indefinitely.” Deloitte recommended that “Serving up eye candy, along with a healthy helping of instant gratification in the form of experiential marketing and technology fueled immersive experiences, may be one of many ways to win market share.”

“We don’t shy away from online sellers,” says Daniel Pidgeon at Starpower. “We actually acknowledge and embrace the channel. We ask all our salespeople to be educated on the current online prices. We inform and educate clients as to the pricing and the pitfalls of buying online.

“Our biggest challenge is not addressing the issue after we have the client,” he continues. “The issue is getting the client in the first place,” which means “getting them to engage. We zero in on their lifestyle and don’t let go.” “Personalized service is a key differentiator, “but Pidgeon says that “the word ‘service’ is an overused, often overstated term.”

“Our ‘service’ advantage is actually time, which is scarce” to Starpower’s upscale customers, he adds. “Our focus is on solving the real issue with a technology solution that fits their particular lifestyle. Doing this efficiently and with credibility makes us important to our client,” emphasizing the importance of the local expert staff. “We are not built for everyone,” Pidgeon admits, but for target customers, “We save them from making bad decisions and allow them to enjoy their consumer electronics purchases quickly, without the hassle of making a time-sucking mistake.”

“We focus on areas where e-commerce does not do well, such as complex, multi-faceted projects where the barriers are high,” Pidgeon says.

As her “chief customer officer” title attests, Mrs. G’s Debbie Schaeffer (who is also President and CEO) is also customer-centric. Her desk, near the front door of the 20,000 square foot showroom, is where her grandmother Beatrice Greenberg (the original Mrs. G) sat for decades.

“We have generations of customers who come into the store,” Schaeffer explains, emphasizing that many arrive because of Mrs. G’s “strong digital presence online, including great reviews from customers.” Many shoppers come into the store having read reviews and know what they want, she says.

To enhance the local family business approach, the store offers beverages, cookies and often has a local chef using one of its eight “live” kitchens to show how products can be used. When bread is baking, the whole store has a homey feeling, Schaeffer says.

“The younger generation of customers want that,” she adds. “It’s not about the gimmick, it’s about making your life better.”

Mrs. G has also built connections to other companies during its 83 years in the area. “We’re very connected to industry partners, such as builders, architects and kitchen designers, who refer customers here,” Schaeffer says. “Our staff also goes out to meet them.” The store also has hosted local plumbers who want to see how to install new products and has worked with a local trade school to offer hands-on experiences to students learning technical skills that involve appliances and electronics devices.

Joseph Akhtarzad at Video & Audio Center focuses on “the niche” that his company has established.

“We make sure you have everything” when customers buy a product. “We offer same-day delivery and installation within 24 hours,” making the stores “a technology destination.” Akhtarzad and his brother opened the first store in 1981 aiming to be the first in the competitive Los Angeles market to bring new technologies to retail, thanks to its relationships with  manufacturers. Several of its locations are near the influencers and style/opinion makers at Hollywood studios and that has helped bring attention to new products.

Akhtarzad credits his staff for knowing “clients” (not merely “customers”) by name and for being able to go online to show clients competitive information that cements Video & Audio Center’s value as a local, knowledgeable purveyor of equipment they want.

Different Than the Big Box Battle

All three independent merchants agree that the online ecosystem is different today than during the showdowns they survived when big box retailers came to town. The lessons they learned have prepared them for competition in the e-commerce era, including the challenge of “showrooming” (giving in-store demonstrations to customers who intend to buy the device online later).

“We welcome showrooming,” says Akhtarzad. “We don’t see it as a threat. It’s an opportunity to see what customers are interested in and then offer them a reason to buy from us. We get their trust and understanding.”

Pidgeon describes big box players as “more nuanced” than e-commerce merchants. “Each retailer had its strengths and weaknesses and you have to navigate these differences as you found a way to win,” Pidgeon says. Their “dynamic” marketing, merchandising, and pricing strategies “kept you on your toes because you always had to wonder what competitors would do next and then react accordingly.”

In comparison, the variables in e-commerce are easier to identify and anticipate, he says. “As a result, we don’t try to defeat them,” Pidgeon says. “We have just become more focused on creating an elevated relationship with our target clients. Once we find them, we work to be everything to our specific customer.”

Schaeffer gives credit to manufacturers who are “managing their prices so that we don’t feel that e-commerce is as much of a challenge as it was in the past.” She says, “You have to have a very strong presence online so that you can be competitive at the same time.”

Mrs. G has faced off against big box stores for years. When Schaeffer’s grandparents moved their store from Trenton to the developing Route 1 corridor in the mid-1970s, they were pioneers in that area. In 2014, four years after her grandmother died, Schaeffer moved the store up the road, but still within sight of competitors like Best Buy, P.C. Richard, Sears and Staples. Schaeffer says her enthusiasm for demonstrating new products keeps customers coming in. Currently, her favorite demo is a Google Home app that can brew coffee inside a new Keurig-equipped General Electric refrigerator. She thinks it is “awesome” and her customers think so too, she says.

Thinking and Acting Locally

Video & Audio Center’s Akhtarzad is attracted by technology but remains focused on clients who want to own the newest breakthroughs. He hosts wine and cheese parties quarterly and his store becomes like a salon for modern, hightech times. Thanks to studio connections, Video & Audio Center runs “premieres” – first screenings of movie trailers or other entertainment, including early 4K videos. The company contributes to local charities and supports sports teams including at a local junior college.

Akhtarzad focuses on products that appeal to his upscale clientele. He’s convinced that customers “won’t buy a $20,000 TV set online.” At that price, clients want the assurance of a reliable local supplier, he believes.

Daniel Pidgeon, who with his twin brother David opened the first Starpower Home Entertainment Systems showroom in Dallas in 1995, is also a strong believer in the value of local connections. Starpower is positioned as a luxury brand electronics retailer and custom installer, with three showrooms in the Dallas area plus one in Scottsdale, AZ.

Pidgeon, who was Chairman of CTA’s Executive Board in 2015-2016 and remains an Executive Board member, believes the “win-win-win” formula involves bringing vendors such as Sony, Samsung and Martin Logan into events that Starpower sponsors, including a golf tournament that ties suppliers into local charitable organizations. Starpower contributes to nearly a dozen local charities, ranging from boys and girls clubs to a family shelter.

In a similar vein, Pidgeon sees the “meaningful” process of operating a local business in a fractured world. He wants to see clients “wowed by the experience” in Starpower stores.

“The client needs to feel connected to the brand,” he says. “I believe traditional retail salespeople give up too soon; they allow themselves to be sold on the belief that the client would rather buy online. They give up. That is the worst trend in retail, independent CE or otherwise. Our focus is on providing meaningful interactions, setting next steps and not giving up. These strategies are working as our business continues to grow.”

Schaeffer at Mrs. G sees local opportunities everywhere. She works with Dress for Success (a charity which matches job-hunters with apparel) and with the local Susan G. Komen breast-cancer campaign. “People feel good about shopping here because they know we give back to the community,” Schaeffer says.

Indeed, community involvement is a legacy that independent local retailers see as their core value. It’s part of building relationships.

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