In a revealing interview, the former supermarket exec tells editor Greg Andrews that the chain’s slow response to a rapidly changing CE market contributed to its current woes, as price compression and competition from Amazon hobbled its onetime core category.
To right the ship, Riesbeck is betting big time on appliances, which on average generate sales of $5 million per store (times 220 stores) — twice that of Sears and Best Buy, he said.
He’s also adding extra majap muscle by rolling out Fine Lines luxury shops to more stores this year, after seeing white-goods sales double within three years of their placement.
As to the category’s 4 percent drop in Q3 comps, Riesbeck attributed that to delays in consolidating the company’s Chicago and Indianapolis warehouses into a new facility in Kentucky. The moves should have been completed last summer, but will ultimately yield millions in annualized savings, he said.
Also central to his strategy is furniture. Although the category takes up 30 percent of floor space but only kicks in 6 percent of sales, Riesbeck sees plenty of upside now that the business has been wrested from his CE and appliance merchants and handed to recent hire Mabelle Lim, a former divisional merchandise manager at Pier I Imports.
As for CE, whose sales have been halved from $1 billion two years ago, Riesbeck is conceding the promotional ground to Amazon and other discounters, and will focus instead on higher-margin premium fare from Sony, LG, Klipsch and Bose. The move may cost the company another 30 percent in sales, “but with the growth of furniture and the growth of the appliance business, we are well set to weather the storm,” he told Andrews.
Hat tip to the Indianapolis Business Journal