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4:18pm EDT February 1, 2004
In the highly competitive appliance industry, H.H. Gregg is a steadily growing presence, due in large part to its third-generation CEO Jerry Throgmartin, whose mantra is putting the customer first.

"Everyone [at H.H. Gregg] has the mindset of trying to devise strategies that are consistent with what the customer wants from us," says Throgmartin, who as a college student began working at the company his grandfather, Henry Harold Gregg, founded in 1955.

But for Throgmartin, the importance of listening to customers goes deeper than simply trying to beat the competition by leading the way in what he

calls "the revolution in service."

Shortly after he was named store manager of H.H. Gregg's first superstore in 1979, then-24-year-old Throgmartin was diagnosed with lymphoma, a form of cancer that requires a bone marrow transplant. The diagnosis took the family by surprise, and Throgmartin spent the next two years visiting doctors at the Indiana University Medical Center before receiving an experimental transplantation procedure at a Houston medical facility.

That experience opened Throgmartin's eyes to the importance of doing all you can to satisfy a customer. And, while he is reluctant to go into detail about what happened, his actions speak louder than words.

In 2000, he pledged $500,000 on behalf of H.H. Gregg to the Indiana University Cancer Center to endow the H.H. Gregg Professorship in Oncology for cancer research. And he serves as chairman of the IU Cancer Center Development Board.

A lot has changed over the past 24 years, not just for Throgmartin but also for his company. Back in 1978, when he came on board as a salesman, H.H. Gregg ran just five stores in Indianapolis, Kokomo and Anderson. And, there were no national superstores of any kind, to speak of.

"When I got in the business, the market was dominated by small independents," he says. "We kind of flew by the seat of our pants. There was very little planning."

Those days are long gone. Today, the industry is dominated by large regional and national chains such as Best Buy, Circuit City and Wal-Mart, and strategic planning has become a crucial component of success.

"Every day we wake up and have to compete," says Throgmartin.

And although the industry is price-driven, the company has found its niche as a full-service, consumer-oriented operator.

"Most of the national stores are limited serve or self serve," says Throgmartin. "There's not a lot of sales assistance or service."

H.H. Gregg offers consumers a wide range of services, starting with the sale, the delivery and service of the product after the sale. While this business model carries operational challenges, it distinguishes the company from its leading competitors. It's also well received by today's consumer, who, thanks to the Internet, is more informed - and demanding - than in the past.

"Consumers today are more shopping-savvy," Throgmartin says. "They want to make sure they're getting a good deal."

H.H. Gregg provides its customers with good deals by carefully monitoring overhead, keeping costs under control and maximizing efficiencies while its CEO plots the company's next steps.

 

Standing out from the crowd The "revolution," as Throgmartin calls it, began during the mid-1980s, when national electronics and appliance chains arrived in H.H. Gregg's Indianapolis backyard.

Facing the deeper corporate pockets of companies such as Fretter Inc. and Highland Superstores Inc., Throgmartin, his father, Don, and his grandfather had to develop a strategy that separated them from the competition.

They recognized that as a smaller store, survival was dependent on identifying H.H. Gregg's key strengths and building upon them. They decided if they could build upon their commitment to the customer - an area the three believed was the company's greatest asset - H.H. Gregg would outlast the competition.

"As the company grew, we demanded that the new people we brought on had the

same level of commitment as us, and understood what we were about," Throgmartin says. "At the end of the day, it's our people that give us a competitive edge. We have a very good culture here, and the way we do business reflects that."

By the mid-1990s, Don and Henry Harold had retired from day-to-day operations, leaving Throgmartin as CEO. And the culture the three of them had instilled within the company and its employees had paid off.

In 1998, H.H. Gregg operated 18 stores in Indiana, Tennessee and Kentucky. Three years later, the chain launched operations in Ohio and stood at 41 locations. Today, with 54 stores in five states (the company expanded into Georgia in 2002) and annual revenue at more than $680 million, that core value of commitment to the customer is communicated companywide consistently and constantly.

"We talk about customer satisfaction frequently," Throgmartin says. "And with all the employees we hire, we train and convince them that their success is dependent on customer satisfaction. If a person believes that, he or she will perform better. Really good people's attitudes rub off on others. As long as we maintain that culture, we'll be successful."

To reinforce this, Throgmartin created a program in which 25 percent of employee bonuses are tied to customer satisfaction ratings, which come from monthly customer surveys and supervisor roundtable meetings. These meetings also have led to the development of new corporate policies, including H.H. Gregg's delivery policy.

Most consumers would like to know to the minute when their appliances will arrive at their doorstep. And while Throgmartin acknowledges that it's an expectation currently impossible to meet, the company calls the customer 40 minutes in advance of delivery and meets him or her at the home.

"That's as close to a formalized delivery appointment that we can get," Throgmartin says. "You just never know what you're going to find when you arrive at the customer's home. We feel it is better to underpromise and overdeliver."

H.H. Gregg's sales approach also differs from that of its competitors.

"We are competitively priced and offer a shopping experience that appeals to a large number of people," he says. "Our salespeople are knowledgeable of the products, can relate that experience to the consumer and be informative.

(They) don't have to be pushy."

 

Steady as she grows

As the 35th largest regional appliance retailer in the country, according to TWICE (This Week in Consumer Electronics) magazine, Throgmartin is growing H.H. Gregg according to a carefully thought out plan.

"We first want to maximize our infrastructure before expanding outside our current boundaries," he says. "We like to put multiple locations within a market to leverage our advertising and distribution center."

This strategy explains the company's explosion into Ohio, where it now operates 22 stores, the most in any state. Throgmartin says once he believes a market has reached maximum capacity in this fashion, it's time to look for new markets to explore.

Among the criteria for a new market, all stores need to be within a day's drive of the nearest distribution center.

"It allows us to leverage our inventory," Throgmartin says. "We don't have to carry a lot in the stores and replenish stock."

And because H.H. Gregg now has a distribution center in Atlanta to support its eight Georgia locations, Throgmartin says the company plans to open stores in nearby eastern Tennessee and the Carolinas.

"We are planning good, steady growth," he says. "We plan to fill out our current markets and maximize those and Atlanta before we look at anything else."

Throgmartin predicts it could be three to five years before those markets reach their full potential, especially in the Atlanta/Carolinas region.

"We plan to open 10 to 15 stores in the Carolinas," he says. "It's a very exciting area with a lot of growth. There's a lot of work yet to be done there."

Another determining factor in Throgmartin's market strategy is whether another company already offers a full-service appliance store in the area. If there is none, the company will move forward.

"In the Columbus area, there was a large independent retailer that went out of business," he says. "We stepped in to fill that void."

Finally, store location is based on being near thriving retail centers. It's even better if a Sears or Best Buy is nearby, despite the fact that they are competitors.

"We look at where the nationals are and get close to them," Throgmartin says. "It makes it convenient for the customer to shop."

Expansion has been a significant though satisfying challenge, Throgmartin says, especially in the area of maintaining the company's supply chain.

"Moving product efficiently in a timely fashion will always be a challenge," he says. "Our goal is a just-in-time system with as few moving parts as possible."

All of this is done with Throgmartin's primary goal in mind -- pleasing the customers that keep H.H. Gregg in business.

"We have to compare where we are and where the customer wants us to be and change," he says. "Being good today doesn't make you good tomorrow."

How to reach: H.H. Gregg, (800) 284-7344 or www.hhgregg.com