As the recent Retail Eyes-Retail Gazette Salary Survey 2011 identified, the vast majority of retailers have increased their focus on customer service since the UK moved out of recession in January 2010, but some are doing it better than others.
Electricals specialist Richer Sounds is one retailer that comes highly recommended for its customer care, and Chairman David Robinson is confident this strategy combined with careful cost management will result in another profitable year for the business in 2011, unlike other larger companies operating in the sector.
Having picked up the best high street retailer accolade at the Which? Awards for the second year in succession last month, Robinson admits to Retail Gazette that it is not easy running a successful company in the current trading environment.
“You’ve got to be absolutely on top of your game and fighting for every penny,” he states.
“All retail markets are tough at the moment, but electricals has always been tough to succeed in - and even more so now.”
He is not wrong. Market leader Dixons Retail, although profitable, has had to completely transform its business in the last few years in an attempt to avert sliding sales, while rival Comet recently reported losses of £9 million for its last financial year and may not even be in existence this time next year depending on current takeover talks.
Meanwhile the much-hyped Best Buy UK arrived on this side of the Atlantic last year promising to open a vast portfolio of stores, but has curtailed these ambitious expansion plans after realising that consumer demand for electronic products is currently just too low.
This makes Richer Sounds’ latest award and continued profit growth all the more admirable, as it has not been thrown off track despite the hurdles being stacked up in the sector in which it operates.
“We are incredibly thrilled and very surprised to win the Which? award two years in a row,” said Robinson, who credits his 400-strong team of store staff and additional support office employees for their hard work and dedication to the cause.
“It’s the best accolade around because it is totally impartial and you don’t even know you’ve been nominated until you receive an email one month before the awards ceremony takes place.”
In the 2009-10 financial year Richer Sounds made profits of just under £5 million from a turnover of around £160 million, and similar results are expected for the year just passed.
Operating from 52 stores in mainly secondary high street locations across the UK, the retailer sells the latest hi-fis, flat-screen TVs and other electrical appliances.
Robinson says that his business, which was founded by Julian Richer in 1978 with the opening of a small store in London Bridge, benefits from the fact that 85 per cent of its freeholds are owned by the retailer.
Demonstration rooms are situated in a number of its outlets, helping meet the requirements of the discerning modern shopper, and although there are not yet any major plans to increase its store portfolio, this part of the business is being closely monitored in terms of group expansion in the years ahead.
“As products have become more technical, the sales process with the customer has become longer,” he admits.
“We are not a cash & wrap business any more. People don’t just come in and buy a CD player now, they want a lot more technical advice, they have far more questions and they have probably found out about the product they are after online.
“Years ago we could have a lot smaller stores because we didn’t need the floor space, but being in the flat panel TV market we need much more wall space to display the stock, and we also need to find stores in which we can install more listening rooms.”
But the high level of customer service, which includes paying for its shoppers’ parking charges, is not overly promoted by the company – that is left to others. Robinson is only too aware that it may be held against the firm later down the line, and instead prefers to focus on the retailer’s product range.
“Our business model allows us to offer the best deals we can for customers and we want these to attract people into stores, where they will be knocked out by the service they receive,” he reveals.
“We don’t say come in because we offer really great customer service, we sell the business on the deals – we have the best brands and great prices.”
So what can struggling high street retailers learn from the Richer Sounds model?
The Chairman, who arrived at the company as a 17-year-old in 1983 and became Managing Director in 1991 before taking on the top job six years ago, says that the business has always been careful about controlling costs and keeping base overheads down. This has been a notable feature of its growth over the last 33 years.
It has also continually improved its customer service through relationships with companies like Service Power Technologies, which manages the home services part of the business and recently won a three-year contract renewal worth £1.5 million.
All of these features are beneficial to the business, but it is perhaps Richer Sounds’ propensity to take the battle to its competition that other high street firms should recognise, such as the offer of payment for parking.
“We have to offer free parking because we are up against the out-of-town developments that provide this facility or the big shopping centres where drivers don’t have to pay for parking.
“Richer Sounds tries to be unique on things and we try and look at it from the customer’s point of view because we recognise, particularly in our sector, that it is very easy for customers to sit at home and order goods online.
“Retailers must recognise that there has to be a unique selling point, a reason for customers to come in, particularly at the moment when they must pay so much for petrol. There must be incentive to get people into stores.”
It would be an unprecedented achievement if Richer Sounds was to win the Which? best retailer award again next year – no firm has ever picked up a title from the consumer magazine three years in a row.
Questioned on whether the business can make it a hat-trick Robinson shies away from any predictions that might come back to haunt him, but with the renewal of its tech support contract agreed this week and plans in place to roll out further customer demonstration rooms in stores nationwide, the retailer is certainly showing electricals specialists the way when it comes to customer service.