D&H’s Izzy SchwabJanuary 1, 2009 By Nancy Klosek
The philosophic underpinnings of retail have always been fairly straightforward: you see a need, you fill a need, and you hope to make some money along the way. But the secret to profitable distribution has, especially in the last couple of decades, been more of a moving target.
Israel “Izzy” Schwab, CEO of D&H Distributing, one of the most successful distribution operations in the CE and IT industries, will tell you a good chunk of his success is based on “bluffing it” half the time.” The truth is, though, Schwab has made a career out of first-to-market adaptability and calculated go-with-your-gut risks.
A chapter from the late 80s may tell Schwab’s story best. At that time, the CE and white-goods channels in the U.S. were ruled by twin behemoths RCA and Whirlpool. Those two trusted manufacturers had hand-chosen local distributors in every region of the country and forbade those distributors from handling competitive products. The vendors were calling the shots. But retail models had been evolving in the 70s and 80s with the rise of chain stores, and Schwab saw those changes as an opportunity to take his distribution services to the next level.
“I decided to start handling all sorts of oddball products,” said Schwab. “Calculators, house wares, security equipment, kitchen cabinets. We were even cutting kitchen counters out of Formica. But taking on those products is probably why we’re still here today.”
While most distributors focused on serving their local markets, Schwab offered his creative hodgepodge of merchandise to both chain stores and independent retailers around the country. So when RCA dropped a bombshell announcement in 1988 that it would no longer work with its distributor partners, taking its business direct to retailers, D&H was one of the only distributors in the country that had eggs in other baskets.
“Izzy had foresight,” said Dan Schwab, Izzy’s 39-year-old son who serves, with his brother Michael, as co-president of D&H. “Both RCA and Whirlpool eventually cut distribution. They felt they could go direct. That was 90 percent of the business at the time. Out of 50 RCA distributors, only two survived.”
By crafting a national distribution model focused on offering emerging technologies, Izzy Schwab was able to adapt to the fast-paced changes in the CE industry again and again over the next 20 years. Today, D&H does business with all of the top-100 CE retailers in North America and Canada, with company revenues exceeding $2 billion annually.