By: Laura Heller | October 28, 2011
Not too long ago, the independent retailer seemed endangered. Unable to compete with the purchasing power and supply chain prowess of national chains, the mom and pop shop seemed destined for the dust heap. How then have some independent retailers thrived where big boxes fail?
In retail, everything is cyclical.
Abt Electronics is a single store in the suburbs of Chicago that sells home electronics and appliances. It's a third generation family run business that has consistently grown 10 percent each year, for 75 years. It competes head to head with Best Buy, and did so with Circuit City, Sears and all the national chains that came before.
I think there's a place for everybody as long as you execute properly, says Jon Abt, co-president of Abt Electronics along with his three brothers: Mike, Ricky and Billy. Abt was founded in 1936 by Jewel and David Abt and grew exponentially under the management of Bob Abt, Jon's father.
To say Abt Electronics is a single mom and pop location is a bit disingenuous. It is just one store Bob Abt opened a second location in the 1980s, but closed it soon after but it's a massive, 65,000 sq. ft. facility with nearly 1,000 employees. It also boasts several stores within the store, including both Sony and Apple shops.
The customer base is clearly middle to upper income, but there's no way around the need of even high-end retailers to match on price, something Abt does consistently. We try to be competitive, says Jon. It does hurt our margins, of course it does, but people want service too.
Advantage independent. Whereas Best Buy did away with commissioned sales, Abt did not. Sales associates receive a salary plus incentives.
We don't want them to be cut throat on the floor, but we have guys that have been with us for 40 or 45 years, says Jon. We cater to our customer base, we do everything for our customers.
There's not a retailer that doesn't say the customer comes first, but there's a difference between saying and doing. Especially for large national chains with shareholders, analysts and boards of directors that often seem to come before the customer. There are a lot more moving parts.
Advantage independent retailer. Privately held companies answer only to themselves and their customers. It's easier to implement change, abandon an initiative or react to shoppers.
But how can an independent retailer compete with Amazon, especially when national chains like Best Buy are having trouble doing just that?
According to Jon Abt, it's not just a challenge, but an opportunity.
The online shopper is for the most part shopping price, confirms Jon, but the online presence is winning the store new customers outside its physical trading area. The family launched online sales in 1998, earlier than many larger chains, and was recently rated the best place to buy an appliance online by Consumer Reports.
The retailer ships to all 50 states and according to Jon, close to 80 percent
of online sales are going to first time customers. Sure, Abt must compete on
price and collect sales tax in Illinois where it has a physical presence, but
given an even playing field, We know we can beat the competition on service,
Advantage, independent retailer. New research shows that where once shoppers would research items online and then buy in stores, the opposite is now true. Consumers are using physical stores as showrooms and then buying online to save a few bucks.
This hurts chains like Best Buy, as evidenced by the retailer's recent financial performance. But independent retailers like Abt can thrive based on customer service, even online. During our short conversation, Jon discovered a customer waiting in the virtual queue for customer service. He quickly had an agent help the customer and returned to our call.
I don't like to have people waiting, he said. That's the level of detail I get into.
And that's the biggest advantage. Independent operators are offering something that's different, personal service. And it's a role they consistently own.
We've been fortunate enough to keep growing, says Jon. The store did see a slip in sales for the first time in its history during 2008 and 2009, but we turned it around by continuing to into do what we do. There's no magic formulate for reinventing ourselves, we've been doing this since 1936.
As the age of the big box store gives way that of the online retailer, mom and pop's still do have a winning place.