Harvet Electronics Enters Its 75th Year With Eye Toward Future

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Franklin Karp has seen the future of super-premium CE retailing, and it is flat-panel TV.

The president of Harvey Electronics, New York's legendary luxury A/V chain, was standing in a plush soundroom deep within his newly renovated flagship store in midtown Manhattan, where 11 plasma units are on display. "We sold 400 plasma units last year and we've already sold 700 this year," he said. "We already see a decline in our CRT and rear projection business. Flat panel is about fashion, and we are committed to the category."

Segueing from plasma, Karp also mentions plans to mark the company's 75th birthday this year, making it one of the nation's oldest active CE dealerships. But he clearly prefers to focus on Harvey's future than to dwell on its past.

It is that forward focus, however, that has allowed Harvey to survive bankruptcy, retail consolidation, an IPO, price compression and the cutthroat New York market where Harvey Sampson Sr. founded the Radio Row business in 1927.

"We're surfing," Karp continued. "We have to catch the first wave because our customers are early adopters, and we're always looking for the next wave to keep the ticket up and attach services."

The strategy — combined with a motivated sales force and the metro New York market's high concentration of wealthy consumers — has apparently paid off. In an era of $69 DVD players, Harvey boasts an average DVD ticket of $400, exceeding the national average. What's more, some 6 percent of its business is in high end furniture, and fully 44 percent of its revenue is derived from white glove custom installation sales.

"We're a hybrid," Karp said. "We're in the service business, not the electronics business. We're still a retailer, but we're doing it in an atmosphere that's conducive to attachment. Our sales guys will hold a customer's hand and take the time to show why a Martin Logan home theater system is better than HtiB."

And attachment is the key for this self-described audio dealer, which views video as a profitable adjunct to hi-fi. "Audio is the backbone of the company — we're about quality audio," Karp said. "The fact that we embraced video" — and flat panel in particular — "plays into what we do: selling better, more expensive products." Looking ahead as always, Karp plans to target the female market, as women make 58 percent of his customers' buying decisions. To underscore the point, he cited his 4,000 square foot store-within-a-store at ABC Carpet & Home, a Manhattan home furnishings emporium. There, sales of Sharp's 20-inch LCD TV outpace those at the flagship shop by a ratio of two to one, owing to their slim, fashion forward design.

"They're an elegant solution to ugly TV and cramped New York apartments," Karp explained. "We're not in the replacement business, we're in the displacement business."

To make the stores more female friendly, the newest units and remodels feature hardwood floors, wide, inviting aisles and, at the insistence of Mrs. Karp, clean bathrooms. A new marketing effort is also in the works to bring more women through the door.

Further down the road, Karp believes that the New York market could support four to five more Harvey locations, and that the chain should eventually expand beyond its Big Apple roots, protected by its luxury retail niche.

"Look, you can buy a diamond at Tiffany's and you can buy one at Zales," he said. "The big box guys make us look very good. There are some things they cannot execute, especially in high-end products. The high-end can thrive. It's the middle that's a very dangerous place to be."

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