Harry Elias, JVC Of America Celebrate 35 Years Together

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He is a relentless salesman and a student of CE retailing, having started in the business as one. This industry veteran truly understands the challenges of consumer electronics retailing and knows that it is profitability, and not just sales volume, that really makes this industry go.

He works tirelessly, both for his company and donating time to industry charities. He knows the chairmen and CEOs of all the top retailers in the business (and probably knows the locations of some of their stores better than those same CEOs).

For all these reasons, and plenty more, JVC Company of America executive VP and chief operating officer Harry Elias is an icon in the consumer electronics industry. In a business where some executives have the staying power of cherry blossoms on a hot spring day, Harry (as everyone calls him) celebrated his 35th year with JVC last month.

To mark the occasion I recently had lunch with him to discuss his career, JVC and the current and future prospects for the consumer electronics industry. Here's what Harry had to say.

Harry, does it feel like 35 years? How did you join JVC in the first place?

Honestly it doesn't seem like it. It's hard to believe. The years seem to go by very quickly. I started out as a retailer in Brooklyn, I had my own store on Nostrand Avenue and Fulton Street in Brooklyn called Houseland. My store was destroyed and looted during a riot. After that I decided I was going to go to Florida and open another store.

My local JVC salesman told me that they promoted him to head the New York City area and that the Brooklyn territory was open. He said it would be great for me. At first I didn't accept it. I didn't know if I could carry a bag and work outside. But my wife Gladys loved the idea of me working five days a week, 9-to-5.

It was a commission job only. The first two weeks I didn't sell anything. I got nothing but complaints from my friendly dealers. Not one single order. I was getting ready to quit. But by the third week one of my accounts placed a $3,000 order, I got 2 percent, 60 bucks. At the end of that day I did about $8,000 in business and I made 160 bucks that day. From that day on I was on my way.

During that time JVC was not a well-known brand name. How did you try to make up the difference?

Service was the key. I used to deliver most of the merchandise the same day, because I was afraid they were going to cancel the order! I figured Panasonic and Sony would get it. Some dealers would keep me waiting an hour or so, because the guy from RCA or Zenith would be in. I used to go to the credit manager in Maspeth, Queens, show the orders, pack my car, go back to Brooklyn and deliver the product. One piece, two pieces, I didn't mind.

I'd tell them, "Don't mail your check in. I know when it's due. I'll come over to pick it up." So I'd save them a stamp, but by doing that I'd pick up a check and get another order. It was personal service to have people believe in you because, back then, nobody knew JVC.

Some of these guys knew me, but they still gave me a hard time!

As I said earlier, you make the delivery, get the check even in rain, snow, sleet, driving from my home in Hauppauge, L.I., slipping and sliding on the Long Island Expressway to Brooklyn. My wife Gladys would ask me to stay home, and I told her, "If I stay home I don't make money!" Dealers wouldn't give me an order on the phone. I was JVC, the unknown brand!

How did you begin your move up the corporate ladder at JVC?

After two years there was an opening to become the New York City sales area [representative], and to this day I can't tell you why I took it. At that point I was still a commission-only salesman making around $21,000 a year. Management offered me the job and told me that the salary would be $15,000. I said, "What other compensation would I get?" They said, "That's it." I told them that being a manager is fine, but money is money and it was a $6,000 pay cut. They came back and said, "But Harry, you'll get a salary now, and you'll become a manager." I called home and told my wife that I took the job, but didn't tell her about the money.

Well as I'm driving home I say to myself, "No other Jewish guy from Brooklyn would ever accept a deal like this." I get home, I open the door, the kids are all excited and Gladys has a bottle of wine ready to open. In her own mind she's already spent my new "raise." I didn't look too good, so after a few minutes she asks me what's wrong. I tell her about the salary. She's silent for a couple of seconds and says, "I'm a Puerto Rican from New York and up until now I used to think that Jews were smart. No Puerto Rican in his right mind would take that deal!"

At any rate I think things eventually turned out pretty well.

What do you think are the most important products that have been introduced by the industry during your 35 years with JVC?

Going back years ago TV was, and still is, the consistent product for the industry. Audio was very important too, especially in the early days with stereo components and two-channel audio. During the '70s the industry tried to introduce four-channel sound, quadraphonic sound, but it never got off the ground back then. Two-channel audio was the big thing.

The present and the future in this industry is digital products. Look what we have now: plasma TV, wall TV, digital TV, digital audio, you can go on and on. If you go back five or ten years ago there was a real lull, nothing new or exciting was being introduced.

How has retail distribution changed during your time at JVC? What have been the most pivotal changes you have seen?

As far as the retail situation, if we look at the industry in the late '80s many of our industry's retailers became public companies. Prior to that there was no marriage between Wall Street and CE retailing. But then our industry went to Wall Street because they wanted to expand and grow. It was bad because Wall Street began dictating to the industry that they have to do more revenue, open more stores, even if they were not ready. That was unfortunate. We went through a period of three or four years of many bankruptcies and closings. Highland, Montgomery Ward, Newmark & Lewis, Steinberg's, Silo's and many others, all big retail operations for us, and for our competitors. Retailers who generated hundreds of millions of dollars in sales were gone.

But the retailers who exist today, such as the PRO Buying Group members, they said to themselves, "We are not going to fight those big guys and lose." They found their niche in the high end of the market, upper end of market. They are selling products to customers they can cater to and sell [to] profitably.

How did many of these retailers change their strategies?

Buying groups like BrandSource/AVB, Nationwide TV & Appliances, many independent retailers realized there were other brands out there that they could make a profit on. Years ago many guys only bought RCA and Zenith. It took a long time to convert some of them to our brand.

Are the qualities of a good retailer or retail chain the same in 2002 as they were in the late '60s?

During the late '60s CE retailers had a loyal customer base. You sold the whole family: mom, dad, the kids and in-laws. Then the industry progressed, new retail operations and formats entered markets that started drawing those customers away with massive advertising.

But today I still believe in the old philosophy. Retailers must have great service to keep and maintain their customer base. They must display the products much more intelligently, must gain their customers' confidence. Technologically there is so much going on it can make the customer dizzy. You need a very well trained sales staff. And you know I believe, I always say, that the key is gaining the respect and confidence of the customer. The way JVC has to gain respect of our dealer network, is the same.

The foundation of retailing in this business during the late '60s is the same today, the qualities are the same, for success, except it is on a much greater scale. Today the customer will go back to the store, if they are treated right, get good information and the retailer provides good value. Most retailers today realize that price is not the only issue. It is part of the package, but the presentation and confidence of the consumer must be there. Then they bring in friends and family, because they trust the retailers.

How will retailing change in the next five to ten years? Do you see a time where manufacturers will compete against retailers and open their own stores and Web sites?

As far as manufacturers competing with retailers, I don't believe in it. I'm very much against it. A good retailer should do what he does best. The same is true with manufacturers. For a manufacturer to compete with a retailer is like choking part of your family. I don't think that's the right way to go. I don't think it's going to become a trend. I know Sony has a couple of stores, but I don't think that will become a trend.

What do you think of the current status of the consumer electronics industry at retail?

Today the consumer is paying more for [the industry's] products. The average ticket is much higher than in the past due to digital technology. That's good, but will prices stay there?

The industry is healthier today than it has ever been in many aspects. Inventories are a little too low now, since we all panicked after Sept. 11. Most manufacturers are short on some products.

The manufacturers are wiser as to whom they do business with. Retailers are wiser after seeing all of the bankruptcies during the past few years. Retailers are much more careful of how they buy and how they merchandise their stores. The ones that are around now survived … they know. Look at some of the operations with just one or two stores. Nebraska Furniture Mart, Abt, Brands Mart with five stores. They are all very focused, have tremendous [brand] images with the consumer to bring into their stores and doing a lot of business. And I don't see them going national.

What turns you on in this business, what gets you up in every morning after 35 years?

Every day I have a challenge or I build a challenge for myself. Not a day goes buy that I don't have a challenge. That keeps me going.

After being with JVC for 35 years and knowing what we did in the U.S. then, and what we do now, and what we had to work with back then since we didn't have any massive budgets like some others, is a tremendous fulfillment for me. I don't think some of the [JVC Company of America] presidents I worked with can feel in their hearts what I feel, since many go back to Japan after five years. It hasn't been an easy road, it has been a difficult one. I hung in there and fought the battles with our people at my side, and help build the good team I'm still surrounded by.

And finally how would you describe your basic business philosophy?

I always believed in fewer people, better people. Keep it simple. You don't need layers and layers of management. I'm against politically oriented companies. Some have that problem. We actually have a strong company culture at JVC. If you look at our people, many of our executives have been here 10, 15 years and more. Everyone seems to help each other here, which is great.

I believe one of the major responsibilities that JVC has is to keep our dealers alive. Whether it is training, programs, we are committed to that. They are the storekeepers. We are manufacturers. As manufacturers we have to keep those people alive and well. After all we are dealing with human beings here, if I do a handshake, I have to back it up. When I talk to them, they know I am talking from my heart.

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