hhgregg Named Best CE/Majap Chain
By Alan Wolf -- TWICE, 10/13/2008
Indianapolis — hhgregg, the nine-state appliance and electronics chain, has come a long way since the Gregg and Throgmartin families opened their first small appliance shop in 1955.
Today, stores are typically 30,000 square feet in size and carry a premium mix of 100 flat-panel TVs and some 400 appliance SKUs, including many working majap models.
There are also many more hhgregg locations, with the chain doubling its store count over the last four years and opening its 100th unit this past summer.
The growth curve sharpened in the late 1990s when the company embarked on an ambitious build-out plan that expanded the store base at an 18.3 percent unit compound annual growth rate.
In the process, the company has remained disciplined in its execution and committed to its model of personalized service through a commissioned, assisted sales floor, which has allowed it to compete effectively with national CE and home-improvement chains.
The retailer, which went public last year after a 2005 buyout by a private investment firm, said it is funding its store expansion solely through free cash flow. hhgregg typically enters a market with multiple stores to leverage its advertising expenses, regional management and delivery and distribution infrastructure, and then backfills the area with additional locations within 18 months to grow share and further leverage its fixed costs.
To avoid the fate of other rapid-growth chains that overextended their resources, hhgregg invests in training to ensure a pipeline of capable store managers, and upgraded its back-office infrastructure with a new inventory forecasting and replenishment system that can support further expansion.
The company believes the expansion strategy can sustain a 15 percent to 18 percent unit compound annual growth rate well into the next decade, ultimately leading to a nationwide chain of some 400 stores.
"hhgregg was founded on a culture of customer service, and for more than 50 years we have remained focused on delivering a superior customer purchase experience in our stores," chairman Jerry Throgmartin said in a statement issued to TWICE. "We believe people are looking for a different way to shop, and our consultative sales force is the cornerstone of our unique philosophy of competing on price but differentiating through service. Our knowledgeable sales associates have the ability to educate customers on high-end products. In turn, our customers are more inclined to purchase these feature-rich products [which has] contributed to hhgregg’s recent growth … including surpassing the 100th store-opening milestone."
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