By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Can you put a price tag on customer service? Sixth Avenue Electronics can: $5,000,000. That's the approximate amount the nine-unit regional A/V specialty chain will pump into a new 35,000-square-foot facility devoted exclusively to their customers' service needs.
The building, currently under construction, is a 9 iron down the road from the N.J. institution's corporate headquarters on the crowded retail corridor of Route 22, and beginning this month it will house the chain's rapidly expanding automobile installation business, an authorized product repair shop, a state-of-the-art call center at the heart of the chain's e-commerce business, and a product returns processing department. It is a significant investment for the retailer, devoting so much pricey Jersey retail-strip real estate to a space without cash registers, but it is endemic to the company's mantra of keeping the customer happy, no matter what.
Sixth Avenue's stores balance the inventory of a big box with an array of upscale, vignette-based premium displays. By doing so, the privately held PRO Group dealer has carved out a niche and has become a regional powerhouse, ringing up $169 million in sales in 2005, good enough for 55th place on TWICE's most recent Top 100 CE Retailers list. The success of that balance is born of a management team that fully grasps the nuances of its market, and does not allow any detail of its operations to be overlooked.
With headquarters sitting on the same strip of highway as Circuit City, Best Buy, P.C. Richard & Son, Costco, BJ's, Wal-Mart, Target and Sears locations, among others, Sixth Avenue has carefully honed a differentiation strategy during its 22-year existence, much of it based on demographics. While the regional market may be crowded, it is not necessarily over-stored. New Jersey is the most densely populated state in the country and boasts one of the highest average per capita household income levels. In the battle for disposable income, Sixth Avenue has increasingly looked toward the high end of the market.
During a walk through the current headquarters and the new service facility with Sixth Avenue's executive management team, operations VP Tom Galanis broke down the chain's soup-to-nuts operation, making it apparent why more space is necessary.
Behind 20,000 square feet of retail selling floor, the current headquarters serves as the primary inventory hub for the chain's eight other locations. A separate chunk of inventory, devoted to the stand-alone e-commerce operation's fulfillment center, sits next to the Web site's call center and IT operations, where flat-panel color displays monitor site traffic, indicating how long each customer has been on the phone and how long callers have been waiting to speak to a service rep.
An authorized repair center shares space with the chain's returns department, where every single return is tested for flaws and is either shipped back to the manufacturer or, in cases of buyer remorse, moved to a retail location for open-box discount sales. About a dozen CEDIA-certified installers are in house, with a dozen vans that are dispatched for custom home installation jobs. There is office space for a design team that produces all the chain's newspaper circulars, catalogs and print ads, as well as staff and equipment for radio and TV commercial production. There is also an employee training center abutting the executive offices.
But at the heart of the decision to expand is a healthy custom installation market.
Indeed, a healthy chunk of the new facility, at least 7,000 square feet, will house the retailer's renowned, and very profitable, custom vehicle installation operation. “Our guys are the absolute best in the business but they were on top of each other,” sharing only a few service bays, said Don Barros, mobile electronics director. “It's nice that we can give them the space they need.”
The airy, warehouse-style service area with room for at least seven vehicles is an installer's dream. While each Sixth Avenue location has on-site facilities for basic installations, the new space will house the big-ticket custom jobs that the chain has cultivated through an expanded presence at most of the major custom “tuner” events, through word of mouth, and through strong vendor relationships. “One job tends to lead to another,” Barros said, as he pointed out a Mercedes convertible sporting a new in-dash GPS display and custom speaker rig in the back seat. “This gentleman has been a customer for years and has probably referred ten other jobs to us.”
Vendor demo cars are a source of pride for Barros, who has overseen the design of custom vehicles for suppliers such as Kenwood, Kicker and Pioneer. “Our vendors trust us completely,” Barros said. “They have asked us to design vehicles from top to bottom and send us whatever components we need, no questions asked.”
Ringing the main work floor are workrooms devoted to custom woodworking, a fiberglass molding shop and a comprehensive custom upholstery team. There are also plans for a clean room.
On the home installation side, Sixth Avenue will use the gained space in its headquarters to grow that business, with plans to hire additional sales, support and design personnel. The chain maintains an in-house construction design team, an example of whose work can be found in the selling floor's $250,000 custom home theater room, which showcases upscale theater seating, A/V media servers, a 1,080p HD projector that drops down from the ceiling and a 7.1-channel surround sound system, all controlled by a single LCD remote.
The chain's chairman, Billy Temiz and his brother, president Mike Temiz, agree that in the end, much of Sixth Avenue's success stems from the company's special relationship with its employees. “We pay our people very well,” said Mike. “Every employee, no matter what position, gets full health benefits, a 401K with a percentage match by the company, vacation time. There is plenty of opportunity to advance. Our employee retention is very high.”
Galanis pointed out that no one gets hired for any position without being interviewed by him and the Temiz brothers. Once hired, extensive training ensues. Dominic Serpico, a former college professor, heads up the training center and as many as 90 vendors a year hold educational sessions with new and current employees.
None of Sixth Avenue's practices are unique in their own right, but the Temiz team has settled on an operational formula that meshes perfectly with their forward-looking retail philosophy. “We are always looking for ways to improve the business,” said Billy. “Come back and see us in six months. We'll be doing something else to improve.”
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.