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2012 Hall of Fame: Babak Ghaznavi

Babak Ghaznavi, President of Paul’s TV

January 2012 By Jeff O'Heir
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If the saying "What doesn't kill you makes you stronger" applies to anyone, it applies to Babak Ghaznavi, president of Paul's TV.

When Ghaznavi was 14, his father, who was working at a petrochemical company in Iran, wanted a better life for his son. Not knowing much about America or its education system, he randomly chose a military school in Missouri and sent Ghaznavi there. The place had its fair share of troublemakers who saw Ghaznavi, who couldn't speak English and was small for his age, as a prime target for their taunts and bullying. Ghaznavi took his lumps, but he was a quick study and learned to navigate his way through the tough environment. It took him only two years to graduate.

"That has a lot to do with who I've become today," he said, regarding his ability to cope with adversity, turn a problem into a success and work hard for the best result. "I'm a survivor."

Ghaznavi is more than a survivor. Since becoming president of Paul's TV in 2006 and CEO last year, Ghazvani has helped grow the business to 60 outlets; formed key relationships with furniture stores, where Paul's has set up satellite shops; added key lines; and established a strong e-commerce presence.

Ghaznavi is one of those rare CE executives who is very good at a lot of things: marketing; merchandising; building industry relationships; inventory management; and hiring, managing, retaining and teaching employees.

Most of all, though, he's a great salesman. While studying computer science in 1984, he took a holiday job as a temporary sales associate at Circuit City in Bethesda, Md. He soon went full-time and earned $4,000 his first month and $6,000 his second. After five months, he bought his first house. He was 21.

"When it comes to sales, you either have it or you don't. You have to have the gut instinct to connect with other people to find their needs," he said. "I was lucky enough to be born with it."

Ghaznavi also seems as if he was born with innate management skills. Circuit City gave him his first management position in 1986 at its West Los Angeles store, where Ghaznavi helped make it one of the highest revenue generators in the chain. Thrown into the fire, he quickly learned some important lessons that has helped him get to where he is today: communicate clear expectations to the staff and provide them with the tools they need to succeed; create the most effective work schedules; make sure every product on display works properly; and, perhaps most important, how to manage inventory.

"Without the right inventory, you can lose a customer," he said. "The customer doesn't want to wait for it."

During his nine years at Circuit City, Ghaznavi was moved to nine different stores, always to make improvements. "I liked it because I worked for different store managers and learned from them what to do and what not to do," he said. "It taught me a lot."

The lessons were well-learned.

"He is a guy that has constantly been able to show leadership at all levels," said Dave Gentry, whom Ghaznavi hired when he was sent to open Circuit City's store in San Francisco. "Babak has that Midas touch. He understands all aspects of the business what drives the consumer, add value and still make money at it."

But, as everyone in retail knows, sometimes you have to lose money to gain a customer and beat the competition. One example of that stands out. Shortly after Ghaznavi was tapped to open a flagship Circuit City in San Francisco, he sold a TV for $499 to a customer who immediately went across the street to a Good Guys store, got a better deal and returned for his money back. Ghaznavi beat the price but the guy came back saying that the Good Guys offered an even better deal. Fed up, Ghaznavi sold him the TV for a penny, wrote on the invoice "Don't Mess With Me!" and had the customer show it to the manager of Good Guys. A few days later, the Good Guys manager offered Ghaznavi a job as district manager. "I was always taught to be competitive," he said

When the Good Guys folded 13 years later, Paul's TV hired him as a consultant and quickly made him a vice president (today, he's also one of the owners). It was 2006 and flat-panel TVs were starting to become a commodity. He added lines, cut advertising expenses and renegotiated media buys, stopped Paul's practice of giving away accessories, brought on Monster's line of cables and other products, adjusted back-office operations, centralized the warehouse, remodeled the store, and increased vendor support.

The strategies worked but by 2009 TV prices were steadily dropping and brick-and-mortars were losing business to e-tailers.

In what many consider Ghaznavi's masterstroke, Paul's TV began partnering with furniture companies, a move that expanded Paul's TV's business from Los Angeles throughout the rest of the country.

The timing was right. Paul's TV was able to fill eventual voids left by the closures of Circuit City, Ultimate Electronics, Berny's and Tweeter, to name a few, and hire their skilled employees to staff the new stores. Paul's TV's furniture partners include Art Van in Michigan, Haynes in Virginia and Jordan's in New England, Furniture Row in Colorado, and Living Spaces in California.

During the last few years, Paul's TV has increased sales of accessories, warranties, installation services and, of course, audio, a category that still carries respectable margins, Ghaznavi said. Non-TV products now account for about 30 percent of Paul's revenue and ales per-square-foot in the stores rank about fifth among retailers in the U.S.

"The more home-theater experience you sell, the happier the customer is, especially if we install it; you never see the product come back," he said. DS



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