Never mind the Thomas Wolfe line that you can’t go home again.
For Ronald Unkefer, who retakes the reins of The Good Guys next week as chairman-CEO after a four-year absence, going back is imperative.
“On an emotional level, I didn’t want to see a company that I built from scratch, and that has $1 billion in sales, whither away,” he told TWICE.
“On a business level, I saw an opportunity with a company that has $1 billion in sales but a market capitalization of $45 million.”
Unkefer is gambling nearly $5 million of his own money – giving him a 10% stake – that he can not only stem losses at the West Coast powerhouse, but return the specialty chain to profitability.
“I had a 20-plus-year run of profits and a track record of 25% to 30% a year growth,” he said. While he doesn’t expect to repeat that feat given the greater margin pressures facing CE retailers today, he fully anticipates double-digit increases, and soon.
Given his entrepreneurial prowess, The Good Guys may be a good bet. Indeed, Unkefer started the San Francisco-based business in 1973 with a $5,000 loan from a friend and parlayed that into $890 million in annual sales by the time he left in 1995. In the interim, he’s been busy buying and selling radio stations in San Francisco and Dallas and has been providing seed money to high-technology Internet start-ups through his involvement in venture capital firm First Ventures.
So what’s his game plan for The Good Guys? Corrective surgery, rather than a heart transplant, he says. “The store still has a tremendous brand franchise and a strong, loyal customer base. Sales haven’t dropped off, they’ve just flattened, and the customer has stayed. They’ve simply forgotten how to make money.”
To accomplish that, Unkefer wants to return the chain to its original role as the Rolls Royce of CE retail. “With general merchandise stores, you begin with warehouse clubs and work your way up to a Wal-Mart, a Macy’s and then a Nordstrom’s. What’s missing in consumer electronics retailing is that top level, that Nordstrom’s.”
Unkefer said that The Good Guys’ past success was tied to its ability to differentiate itself from competitors like Circuit City and Pacific Stereo with a “wider assortment of very good, high-quality brands.” He intends to leverage that high-end assortment with the value-add of greater service.
“As you go up the line in consumer electronics, the equipment becomes more difficult to operate and you have to have the next level of knowledge and service,” Unkefer explained. “The higher the technology, the more it plays into The Good Guys’ strengths. If it were just about price, then buy.com would have most of the business, and Sam’s Clubs would have the rest.”
Unkefer plans to relocate to San Francisco from Dallas in January, but considers the time spent away from the store a plus because “it helped to be out of the industry to bring some perspective back.”
Recruitment will be a “top priority” upon his return to the corner office. “We’ll have a great skill set within the company,” he promised. “There’s some there now, but we need new talent.”