Retail Excellence: BrandSmart: Taking Back the CE Industry

The way Michael Perlman sees it, there probably has never been a worse time to be a traditional consumer electronics retailer: A relentlessly bad economy has battered sales and beaten back consumer confidence; anyone can find just about anything cheaper on the Internet (and, in most cases, skip the state sales tax while doing so); the general CE industry has practically handed customers over to Apple. The list goes on.

To ensure the immediate survival and future success of his BrandsMart USA chain (seven stores in Florida and four in Georgia), Perlman and his team a few years ago carefully analyzed every part of their electronics and appliance businesses—both brick-and-mortar and online—and came up with a game plan. “We went through a lot of self-analysis,” said Perlman, the company’s CEO. “The point is, we really didn’t have a choice.”

The team spent the last 12 months implementing most of the major aspects of that strategy, reinventing a business model that now helps to improve sales and profits in some of the hardest hit markets in the country. The success of those efforts has made the business stand out among its competition.

Along the way, BrandsMart has often taken the opposite approach than many of its competitors. One of the biggest was to change its historical image as a “price house,” and to develop a reputation as a retailer that is also based on value and backed with deep services.

As several of BrandsMart’s major competitors began shutting their in-store service departments in favor of outsourcing, Perlman decided to build his up (it employs about 300 people today), and to change the company’s advertising messages to promote it. “We’re not the people who just do the sales, but we’re also the customer’s hand holder,” he said, in describing the basic message behind the advertising campaign.

Part of that services push includes free delivery for all appliances more than $399, and for all TVs 46 inches and up. The service also features free installation of all Internet-connected TVs, which are delivered by a service technician whose truck is loaded with every logical AV add-on product. The strategy has increased the average ticket prices and has more than offset the cost of free delivery. What’s more important to Perlman than the chance of an immediate upsell is that the visit by the service technician ensures that the customer learns about all the features of an Internet-connected TV, and how to properly use them.

BrandsMart has also improved its customer service by making sure a representative answers every comment or complaint the company receives with an email or phone call. “The customers are shocked when they get a call back to help solve their problem,” Perlman said. “Absolutely shocked.”

That focus on service and customer education is needed to help save a broken CE industry, Perlman and many others say. The industry has failed to properly educate consumers about new technologies, and has essentially ceded the business to Apple.

“When you have a problem or a question with an Apple product, you take it to any Apple Store and they’ll show you how to use it, and the consumer ends up using all of the features,” he said. “Historically, in this industry, we’ve been our own worst enemies. We come out with all of these great products, but the consumer doesn’t use the features. We’ve basically handed Apple our customers by not going into people’s home and setting up the product and showing them how good they are.”

To help customers get a better understanding of particular products—and to make its larger spaces more interesting—BrandsMart established vendor-sponsored mini-stores (Bose and Sony so far) in its biggest locations. “The results have been phenomenal,” he said. “Sales in those categoires are through the roof.” Perlman plans to include the mini-stores in all BrandsMart locations in the next year or so, with hopes of maybe adding Microsoft and Apple stores.

The changes have not been limited to the brick-and-mortar stores. Perlman has hired Oracle to redesign BrandsMart’s entire e-commerce platform, which is expected to launch sometime around December.

Perlman also recently hired Nestor Suarez, former VP of Internet merchandising for Systemax Technology Group— which includes and—as his VP of e-commerce.

“We’re not looking to become a major e-commerce player, but we think our share in the Internet in our market should be bigger, or as big as our largest store,” Perlman said, adding that all of this year’s changes have established a solid foundation for a successful future.

“We don’t want the hit-and-run sale,” he said. “We want the sale and the business after it.”

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