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Abt to Succeed

By Linda Pohle

Something fishy is going on in Abt Electronics' store in Glenview, Ill., a suburb of Chicago. Like so much that this 68-year-old, award-winning, independent appliance and consumer electronics retailer does, customers love it. The 7,500-gallon salt-water fish aquarium is a magnet for visitors, especially children. At 20 feet long, 8 feet deep and 8 feet tall, the aquarium features an artificial coral reef and more than 100 brilliantly colored, exotic fish, including a moray eel, puffers, triggers and a 30-inch-long leopard shark. The latter three are meat eaters! At least twice a week, a brave diver goes into the tank to clean it. Like its much smaller predecessor in the company's previous location, this aquarium has a practical purpose, which is to give camcorder buyers an opportunity to use different products and compare their performance and color quality. However, it provides that opportunity with real panache, a signature of Robert Abt, son of founders David and Jewel Abt. According to Robert's son, Jon, who is in charge of the company's marketing and Internet operation, Robert is a retail sales and service visionary whose passion has been the key driver of the company's long-term success. "All four of his sons are now involved in the business, and we've inherited his considerable work ethic," Jon Abt notes. In addition to Jon, the third generation of Abts and their responsibilities include Mike, who is president, Ricky, who oversees customer service and outside personnel and Billy, the video buyer and lead merchandiser.

Abt's huge new 358,000-square-foot Glenview store and attached warehouse opened in May 2002. Besides the aquarium, other features have been built into the store to entertain and delight customers. These features include a vast central courtyard/atrium with a dancing fountain, a museum of antique appliances and a two-ton granite globe that floats in a thin stream of water so customers can rotate it easily with their hands. High on a wall behind the fountain, a series of plasma panels aligned like the blades of a windmill display changing video loops of artistic images as they rotate. Additionally, a gourmet shop off the atrium offers top-of-the-line kitchen accessories and classes ranging from cooking romantic dinners to honing kitchen knife skills. "My father is a fan of Steve Wynn, one of the prime builders of today's Las Vegas, including the Bellagio and Mirage Hotels," Jon Abt relates. "He wanted to incorporate some of Wynn's showmanship in our store because it supports our goal of giving customers a unique physical experience," Abt explains. "Our staff provide the unique sales and service experience." The new store's layout is basically the same as it was in the previous, smaller store in Morton Grove, Ill. Consumers turn right from the main entryway for consumer electronics products and left for appliances. "Although we more than doubled our total footprint, we only added about 20,000 square feet to our retail space," Abt explains. "We didn't want to make our store so big that it felt like a cold, impersonal warehouse." Nevertheless, the retail space still is considerable in size, approximately 60,000 square feet. Service areas in the building include an on-site repair center, in which Abt technicians service virtually every product the store sells, and the e-commerce division. Up to 12 cars at once can be handled in the mobile electronics installation bay. Abt added this category to its product lineup in 1999 and finds that it makes a positive contribution to sales. The lion's share of the building's space is armarked for warehousing and distribution. At 250,000 square feet, the new warehouse is four times bigger than the old one. It was the need to enlarge and improve the flow of shipments in and out of the warehouse that provided a key reason for the move. For example, now five lines ship out UPS packages daily instead of one, and the number of loading docks has increased from 12 to 80. The Abt fleet of more than 130 vehicles makes approximately 6,000 service calls and deliveries each week. More parking spaces also are available at the new store for customers and employees.

The remarkable story of Abt Electronics started with an investment of $800 in 1936. That is the amount Jewel Abt gave her husband, David, to start a business. Abt Radio and its three employees began selling small consumer electronics from a storefront in Chicago. Four moves, 68 years and two generations of Abts later, Abt Electronics and its 1,000 employees sell more than 100 brands of appliances and consumer electronics from its 29-acre location in suburban Chicago. How has this family-owned business not only survived but thrived in the face of fierce competition from local powerhouse Sears Roebuck and Co., Hoffman Estates, Ill., and deep-pocketed national chains? "I'd have to say that one of the most significant reasons for our success is the deceptively simple philosophy that has guided our business from the beginning," Abt declares. "Abt has always believed in taking care of customers, one at a time, day in and day out. "Our theme line is, `The answer is yes to any reasonable request,'" he explains. "We empower our employees to make decisions and do whatever it takes to satisfy a customer without having to call in a manager. "By creating a unique and satisfying experience for customers, we believe we give them a good reason to come back when they need additional products," he maintains. Statistics indicate that this philosophy works. Repeat and referred customers account for 90 percent of Abt's business. This enables the company to minimize use of expensive advertising. The company estimates consistent sales volume growth of 10 percent annually.

As every NARDA member knows, believing in taking care of customers and actually taking care of them can be two entirely different things. Really delivering customer service requires an almost fanatical devotion to it and the ability to instill this in every employee. Abt has both qualities in spades. The company's hiring practices are focused on finding the right person for the right job. "We've been able to attract outstanding, experienced people to the company, and we do everything we can to keep them," Abt asserts. "That explains why so many employees have been with Abt for years—some for two and three decades or longer." The store's hours are long: 9 a.m. to 9 p.m. weekdays, 9 a.m. to 6 p.m. Saturdays and 10:45 a.m. to 5:30 p.m. Sundays. Live on-line customer service and sales department hours are even longer: 8 a.m. to 10 p.m. weekdays, 8 a.m. to 6 p.m. Saturdays and 10 a.m. to 5:30 p.m. Sundays. Warehouse operations start in the wee hours of the morning. On breaks, or before and after their shifts, employees can take advantage of an on-site fitness center that includes a basketball racquetball courts and men's and women's locker rooms. A spacious cafeteria also is available for employee use. "We empower employees to do what's right for the customer and to be the one who says yes to customers' reasonable requests," Abt emphasizes. "Every division in our peration has an extensive training program for new hires, so they understand how we operate, what we expect and how important their role is in making our philosophy real for customers before they hit the floor or answer the phone," he stresses. Jon is quick to point out that, like their grandparents and father, the new generation of Abts clearly understand that superior service alone is not sufficient to attract and keep loyal customers. Pricing also is important. "You have to be competitive, especially in consumer electronics, and we are," Abt stresses. "We shop the competition regularly to keep an eye on pricing trends. And we give our salespeople flexibility to deal on price when it can make the difference between clinching a sale or losing it." Abt's salespeople are paid on salary and receive spiffs and bonuses for sales volume and profit margin.

In recent years, Abt has increased its focus on higher-end appliances and consumer electronics, a niche in which the company can distinguish itself from the big-box, low-price retailers and benefit from higher margins. While helping the store attract such well-known personalities as basketball great Michael Jordan and talk show host Oprah Winfrey as customers, these products pique the interest of a wide array of shoppers."People find it fun to come to the store not only to check out refrigerators or TVs, but also to look at the latest and greatest audio components, home theater layouts and kitchen equipment," notes Abt. Ringing the courtyard fountain in the Abt store are small, inviting audio, home theater and kitchen shops. Builtout vignettes showcase high-end products from manufacturers that include Bang & Olufsen, Bose, Gaggenau, La Cornue, Sub-Zero and Traulsen. One home theater display lists a menu of components totaling more than $200,000. Realizing that price is out of reach for many of its shoppers, Abt offers a less costly alternative in another shop. The Abt Showcase Home Theater package, available for $42,000, can be purchased with all the front-projection video and audio equipment in the room, even the walls and seating! Abt has 15 installation crews for all types and sizes of custom home theaters ranging from $500 to more than $700,000. The company's success with highend products and installations is clearly visible throughout the Chicago area. Abt delivery trucks have become almost a fixture in more affluent neighborhoods!

Innovation is a hallmark of the Abt style of business. For three generations, the Abt family has been alert to new ideas and trends in retailing and open to adapting those to their operation. In 1995, they began to make their presence felt on the Internet. "We began with three static, information-heavy Web pages, with store hours, directions and a list of products," describes Abt. "By the 1996 holiday season, we had turned it into an e-commerce site, one in which customers could transact business." One of the industry's first e-commerce sites, www.abt.com became one of only a handful of authorized on-line retailers for brands such as Nakamichi, Onkyo, Panasonic, Sony and Toshiba. The site continues to evolve and attract consumers. Abt estimates it averages approximately 40 million clicks monthly and one million unique visitors. Unique visitors are a better indicator of the number of individuals looking at a site. To attract customers, the company uses significant on-line advertising on shopping sites, portals and search entities. Manufacturers help promote the Abt site as well. Once outsourced to vendors, the entire Web operation is now a full division of the company. Sales, customer service, site design, shipping and order processing are handled by 45 employees. On-line product sales accounted for 12 percent to 15 percent of the company's total 2003 sales. "Since the advent of e-commerce, there have been two ways to expand a business," summarizes Abt. "The traditional way—by bricks, and the new way—by clicks. "We have a strong bricks presence," he points out. "Our store is well-known in this market. We don't really want any more brick—having just one location gives us more control over the business. Using e-commerce, we have been able to expand significantly by substituting clicks for more bricks." According to Abt and Bill Wolfe, Abt's chief information officer, the Web site is not cannibalizing business from the store. "Less than 10 percent of our on-line sales are to customers in our local delivery area, which is Illinois, Indiana, Wisconsin and Michigan," Wolfe reports. "Our on-line buyers are nationwide." Customer testimonials on the Web site come from all over the United States, including New York, Florida, Pennsylvania, Virginia, California, Texas, Maryland and points beyond. One Colorado customer sent in a rave review complete with photos about Abt's packaging, which protected his new DVD player from a curious bear who purloined the package from the customer's front porch! Although no one-size-fits-all formula exists for success in e-commerce, two elements have been key to Abt's site. "First, customers like the fact that Abt Electronics is an actual store," notes Abt. "They are able to purchase the same products on-line as they could in person. There's something reassuring about that." To reinforce this point, the site offers visitors a virtual tour of the store. The second element is ease of use. "Customers tell us all the time how easy it is to find things on our site and buy them," continues Wolfe. "The presentation of information must be carefully thought out."

Where does Abt Electronics go from here? "Frankly, we intend to continue what we're doing, which is satisfying customers," concludes Abt. "Customer service never goes out of style. "Delivering impeccable service is how we've maintained and grown our business for almost seven decades," he insists. "It's how we'll keep doing that for, we hope, many more years to come."