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H.H. Gregg is exiting the repair business.
In an effort to focus on its core retail competencies, the regional majap and CE powerhouse is outsourcing its product service and repair operations to national and regional product service providers, including GE, the chain reported.
Under terms of its agreement with GE, which went into effect Oct. 27, Gregg will pay the manufacturer $21.5 million to assume all product service obligations under extended service plans (ESPs) sold by the retail chain from Sept. 15 onward.
“Reviewing the state of the service business, we decided it was necessary to focus on our core retail business,” said Dennis May, Gregg's president/COO. “Now is the time for us to either make a significant investment in new service technologies or outsource that business to people who do it best. In the end, we're retailers, not servicers, which helped us make this difficult decision.”
May added that “very strict programs” have been put in place to make the transition seamless for consumers, while the status of existing warranties will remain unchanged.
The announcement follows reports that Gregg had recently laid off 167 technicians from its service division. “As we looked at aspects of our business that aren't our core competency, we realized that people who specialize in that business can do the job more effectively and efficiently,” chairman Jerry Throgmartin explained to employees.
Gregg follows a growing number of white-goods dealers that are pulling the plug on their repair businesses, which are often money-losing operations maintained for the convenience of the customer. That in turn is leading to what some retailers and vendors are describing as a crisis in service as the ranks of qualified independent repairmen continue to shrink, forcing dealers to turn to competitors or manufacturers outside their vendor mix to provide repairs for customers.
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