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Fast Growth Retailers

In the unforgiving technology retail game, status quo simply doesn't cut it anymore. Some retailers are struggling and some are falling off the map completely. Amid all this turmoil, Hillard, Ohio-based retailer Micro Center has boosted its financials and is clobbering its competition.

In a very difficult retail climate that has some of the biggest brand names struggling to make their numbers, Micro Center spiked its revenue about 148 percent between 2005 and 2007. Industry estimates peg the privately held chain's revenue growth from $379 million to $940 million over the two-year period.

This performance has put Micro Center (Micro Electronics Inc.) at the top of CRN Fast Growth Retailers (see list this page) and earned it the award for retailer of the year to be presented at this week's RetailVision event, Everything Channel's and Vision Events' retail industry event.

How has the 21-store chain done it? By bringing customer service back to its roots, said Kevin Jones, Micro Center's vice president of merchandising, who will be accepting the award for retail executive of the year at the San Diego event. Micro Center sells three times the industry standard to a customer over the length of the customer relationship, he explained.

The key is that Micro Center doesn't focus on the sale, said Jones, but on the buyer—cultivating customers to make the first time someone steps into one of its store the first time of many. It's all about offering them the tools and solutions that best fit their lifestyle, whether that potential sale is for a $100 product or a $1,500 system, said Jones. And sometimes, he said, that requires sacrificing dollar value and focusing on customer value.

Said Jones: "If you continue to focus on the customer—even when it is painful—the customer will not let you down."

Cultivating Relationships
Micro Center is no stranger to kudos. Consumer Reports Magazine named Micro Center the best brick-and-mortar store to buy a computer in 2005, 2006 and 2007; and the second best in 2008 (the top spot went to Apple this year.)

For Jones, an 11-year veteran at the retailer, that stellar growth and recognition comes from Micro Center executives putting customers first, building solid relationships with existing customers and focusing less on getting new bodies through the door.

To Jones, knowing the customer is essential. He said Micro Center has forged unique relationships with technology-passionate consumers to create a one-on-one buying environment. Micro Center retains 20 years' worth of purchase histories, he said, while also keeping records of e-mail and home addresses for 90 percent or more of its customers.

Jones learned early on that listening to the customer, despite its rewards, doesn't always come easy.

Once, he explained, Micro Center ran an ad that included a $100 pricing error for a product that the retailer chose to honor, costing them tens of thousands of dollars. Another time, the retailer offered a joint promotion with a brokerage firm that gave Micro Center customers $400 off for anyone willing to set up a brokerage account with a $10,000 minimum purchase. When Micro Center learned it couldn't legally offer the deal, it still honored the promotion.

Jones said Micro Center never crunched the numbers to see what kind of hit they were taking. It didn't fit into the company's practice to put dollars over customers. "You can't be a part-time customer service organization," he said. "You can't say. 'I'm all about customer service, until it becomes more painful than what I can accept.'"

Micro Center's rapid growth started with a turnaround on the retail ethos, the culmination of a deep-dive investigation five years ago. The probe dissected sales histories and customer buying behaviors in what the company dubbed an "autopsy without blame." The key takeaway, Jones said, was learning to "listen to the customer when it is painful."

Said Jones: "We had kind of lost sight, we believe, of some of the market and the need to be competitively priced even though we offer a very robust service environment."

Essentially, Micro Center learned that its service environment was key and prices were higher than consumers thought reasonable. The information was used to create a stronger game plan based on selling products at the right price points and using old-fashioned customer service. The deep dive answered these questions: "Is this really a customer-centric mix? Or is this an economic mix that looks good for the books?"

Tough questions for Jones, 47, who started in retail nearly 30 years ago as a stock runner for Columbus, Ohio-based Sun Television and Appliance Inc. At Sun, Jones said, "service was discussed on occasion, but was really secondary."

NEXT: Not A Cakewalk Not A Cakewalk
But taking on big-box retailers with small-town customer service ethics isn't a cakewalk, Jones said. It comes with challenges, and it's a constant juggling act between fair pricing, value, brand selection, services and a host of other factors, all the while shaking the perception that Micro Center caters only to the high-end techie.

"We struggle with the fact that people don't expect the kind of service we offer with that kind of pricing. It's Nordstrom service with Big Lots pricing," he said.

Jones pointed to a recent investigative TV news spot during which a reporter took a broken laptop to various retailers. The laptop had been rigged to not work, but a quick fix could bring it back to life. Micro Center's competition offered the customer expensive fixes, ranging from a new operating system to a new hard drive. The Micro Center technician asked a series of questions and got to the root of the problem almost immediately.

"We have performance measurements on every area of our company," he said. "If you look at [Micro Center's competitors'] performance criteria—and I am just guessing from the outside looking in—it is about how much did you sell at that front end when you 'helped the customer.' It is about how much did you get out of the customer, how much profit was in it and what was the profitability for that transaction. My measurement criteria for that same front-end experience has nothing to do with profitability; not at all. It is, 'Did the customer get a good service experience and did they leave as happy as they could and satisfied as they could?' "

Lifelong Customers
All of that is done in pursuit of a lifelong customer, Jones said. It's about qualifying the customer, getting to know them, their needs and their level of expertise, then pulling all of that information together in an effort to help them make a well-informed purchasing decision.

"We spend a ton of time in the qualification," Jones said. "You know, where we spend very little time is asking for the sale. We probably could do a better job of that," he said, later adding, "You don't have to be talking to us about a $1,500 item for us to have a conversation with you. Most retailers don't put their resources towards helping someone with a sub-$100 purchase, frankly. We put as many resources in that as we do $1,500 purchases."

When all is said and done, the key to Micro Center's success is its willingness to listen, said Jones, whether to an existing customer, a potential customer or someone just breezing through to kick the tires. It's important to understand the customer, he said, so you can create a pleasurable experience for both the vendor and the client, opening the doors for a long-term relationship.

"By listening to our customer, Micro Center will be the best computer retailer in the world," Jones said. "Strictly by listening to our customer. There [are] no fancy secrets behind closed doors here. There is no magic formula. There is no magic dust. It is just truly being passionate about listening to the customer. You have to listen to the customer when it is painful and when it is exciting. A lot of companies just want to listen to the excitement and really like to put the pain under a rock. But you have to listen to the customer through pain and pleasurable conversations."

NEXT: 15 Fast Growth Retailers

RETAIL TALLY

THESE RETAILERS ARE POSTING RECORD-BREAKING SALES GROWTH THANKS TO SUPERIOR SERVICE AND REAL VALUE FOR CUSTOMERS
Company Two-Year Growth Rate Year Founded Company Type Profile Details
• ADORAMA

Top Executive:
19.51% 1978
Private

Dedicated to the photography industry, Adorama has recently expanded into consumer electronics.

• BEST BUY
Richfield, Minn.
www.bestbuy.com

Top Executive:

29.74% 1966
Public
A specialty retailer of consumer electronics, PCs, entertainment software and appliances.

• DATAVISION COMPUTER VIDEO INC.,
New York, N.Y.
www.datavis.com

Top Executive:

28.57% 1992
Private
An authorized dealer and service center for most major computer, consumer electronics and home theatre brands.
• EFORCITY
El Monte, Calif.
www.eforcity.com

Top Executive:

70.30% 2002
Private
Operates under multiple brands and carries a full suite of accessories for consumer electronics.
• J&R ELECTRONICS
New York, N.Y.
www.jr.com

Top Executive:

12.50% 1971
Private
A leading retailer of consumer electronics, computers, appliances, movies and music.
• MICRO CENTER
Hillard, Ohio
www.microcenter.com

Top Executive:

148.02% 1979
Private
Uses primarily direct mail to target a superior technically-astute customer.

• NEWEGG
City Of Industry, Calif.
www.newegg.com

Top Executive:

46.15% 2001
Private
An online computer hardware and software, consumer electronics, and communications product superstore.

• PC CONNECTION
Merrimack, N.H.
www.pcconnection.com

Top Executive:

23.62% 1982
Public
A direct marketer of IT products, including brand-name PCs, peripherals, software, and networking products.
• PC MALL INC.
Torrance, Calif.
www.pcmall.com

Top Executive:

21.88% 1987
Public
Catalog and Web site feature the top brands of computers, home electronics, computer accessories, and software.

• PC UNIVERSE
Boca Raton, Fla.
www.pcuniverse.com

Top Executive:

37.30% 1995
Public
A full-service multichannel reseller of IT products that operates a state-of-the art SMB-focused Web store.

• PROVANTAGE
North Canton, Ohio
www.provantage.com

Top Executive:

44.90% 1984
Private
Web site offers online order status, up-to-the-minute order tracking information, and an online product return center.

• RITZ INTERACTIVE
Irvine, Calif.
www.ritzinteractive.com

Top Executive:

56.23% 1999
Private
An e-commerce network of Web sites including WolfCamera.com, BoatersWorld.com, and RitzElectronics.com.
• STAPLES
Framingham, Mass.
www.staples.com

Top Executive:

20.49% 1985
Public
Serves customers through its mail order catalog, e-commerce and contract businesses.
• SWH ENTERPRSES (SUPER WAREHOUSE),
San Diego, Calif.,
www.superwarehouse.com

Top Executive:

27.13% 1998
Private
An online source of technology products and services to equip B2B, education and government customers internationally.
• VOIP SUPPLY
Buffalo, N.Y.,
www.voipsupply.com

Top Executive:

75.14% 2002
Private
A full-service online retailer of VoIP hardware and software with a call center to assist customers.

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