The business structure behind this developmental toy store franchise makes sure children and parents walk away happy with their purchase. Plenty of evidence abounds about just how much the retail industry suffered through the recession. But for Karl’s TV, Audio, Appliances and Furniture, the ability to navigate through a difficult time period comes down to the same things that have carried it since it was founded in 1956: the quality products, personal attention, and value that big box chain stores simply can’t provide.
A small, independent chain headquartered in Gregory, SD, Karl’s has 22 locations around the Midwest in Wyoming, Wisconsin, Nebraska, Minnesota, Iowa, and South Dakota. Karl’s team of 300 employees and roughly $52 million in revenue are, in part, due to its longstanding tradition of diversified growth. Over the years, it has continuously expanded its product line, building on a foundation laid down by TV repairs to include appliances, electronics, and furniture.
Expansion has also included opening new locations and building relationships with manufacturers. Karl’s enjoys close relationships with vendors like LG, Sony, Toshiba, Whirlpool, GE, and Frigidaire, and it opened its last store in Eau Claire, Wis. in the fall of 2009.
Elmer Karl, founder and president, said the company’s key to success lies in providing a first class experience and high quality service. Today’s consumers can browse the Karl’s website for product information and store locations, but it is the in-store expertise that helps differentiate the company from its competitors.
“Some companies are just sellers, and they don’t have the right product knowledge or a service department. I’ve always felt that if you are going to sell a product, you should have the facilities to serve that product,” said Karl. “We have service departments in all of our locations. In addition, we periodically update our stores to make sure the products are presented right and the customers can be properly served after the sale. We simply strive to offer better value than anyone else.”
The power of loyalty
That personal service and extraordinary product knowledge allows Karl’s to remain strong entity by creating a loyal customer base. The consumers in and around Karl’s service area have gotten to know Karl himself as he is face of the brand in TV commercials, print ads, and online content. That way, they know they are buying from a reliable human being and his team, not a big corporate logo. That mentality trickles down to all of the company’s employees through training efforts.
“We have sales training and product training meetings at locations where several of our stores can attend at once in person or via conference call. That way they can give consumers all the information they need on a product, and they know what they are getting for their dollar,” said Karl. “Recently, we’ve started to see some improvements in our markets. 2008 was a good year for us, in 2009 we saw a dip, and now things are coming back. We’re not quite up to where we were in 2008, but we’re seeing good progress.”
Loyalty goes beyond the customers to include staff. Karl’s has been an ESOP since 1984, giving the employees a stake in the company’s prosperity. Karl said the ESOP has contributed to the building of a stable staff with many people who have been with the company for a decade or more, as well as given people a sense of ownership and ensuring proper succession plans are in place.
Part of the company’s physical footprint expansion has come through acquisition, and Karl’s goes out of its way to integrate those acquisitions into the portfolio while retaining existing staff as often as possible. That goes a long way toward building that loyalty with new people, saving the trouble of having to make new hires, and allowing the company to rely on the skill sets of the sales and service people already in place.
“We’re looking at a couple of expansion opportunities right now, and we have a couple of locations that we will be remodeling,” Karl said. “Upgrading what we have and looking for the right places to expand are certainly part of our future.”
Keys to growth
And, as previously mentioned, Karl’s longstanding ties to its many vendors, who represent names and products consumers have come to rely on, have resulted in stable connections between Karl’s and its vendors. Karl said it is a win-win situation because the loyalty to vendors results in loyalty from vendors. By supporting their brands, Karl’s is in a better position to make the appropriate buying decisions to compete with bigger chains.
“Vendors do business with us because we have a good footprint and we can generate the volume they require. We support them, and they support us,” said Karl.
As the country slowly pulls its way out of the icy grip of recession, Karl’s is sure to continue focusing on the basic principles that have guided it so well for so long. By taking a long-term approach to strategic and steady growth that hinges on the customer’s experience and a diverse product line, Karl’s could very well have another 50 years of success in its future.
“We will focus on maintaining and increasing the volume we are doing and keeping our margins as strong as we can, and we hope we won’t have to do much cost cutting to keep our bottom line around where it is at now,” said Karl. “If we can keep our margins steady and increase our volumes, we’ll have a really good year in 2011.”