Lean operation keeps A&B in the running

A&B Sound has seen lots of competition come and go in its years as a home-grown retailer offering customers video, audio and consumer electronics products in Vancouver.As newcomer category killers such as Wal-Mart enter the Vancouver market, a&b intends to use...

A&B Sound has seen lots of competition come and go in its years as a home-grown retailer offering customers video, audio and consumer electronics products in Vancouver.

As newcomer category killers such as Wal-Mart enter the Vancouver market, a&b intends to use the same successful strategy it has used against power retailers such as Future Shop for the past decade.

The family-run chain is aware its success hinges on being able to run lean and long enough for the national and regional competitors to lose heart.

As proof that its strategy is working, A&B Sound is growing 25% annually, while much of the former competition has left town.

Now in its 36th year, the privately held retailer plans to add two stores each year over the next five years.

In December, the company will open its third Alberta store and second store in Edmonton, bringing the total number of stores to 11.

In spite of the newer competition, the company’s 830-plus staff operates with a family recipe for low prices, quality products and extraordinary service.

Today, the company is run by son Nick Steiner, born around the same time his parents started A&B Sound.

Often outgunned and outmanned, the family is well versed in how to compete with larger enterprises.

‘We’re distinct,’ says Bob Hitchcock, director of marketing for A&B Sound. ‘We are an independent, family-owned company, so we can give greater attention to detail.’

What A&B Sound lacks in marketing muscle, it makes up for through its agility and aggressiveness by offering premium products power retailers cannot.

Future Shop, for instance, carries discounted low-end products of major brands.

To reinforce its position at the top end of its video/audio selection – representing one-third of the company’s business – A&B Sound recently added $50,0000 custom-engineered home theatres, along with a range of pricey add-ons for home entertainment from brand name electronics manufacturers.

‘Hyper-competitive’ pricing

In its tape and cd business, A&B Sound is pledged to offer ‘hyper-competitive’ pricing on one of the world’s largest selections of compact discs, pre-recorded cassettes, videos and books.

Recently, A&B Sound opened the latest challenge to Future Shop by featuring a spate of newspaper inserts offering large discounts on its wide selection of cds, timed to undercut Future Shop’s long-awaited entrance into the local cd and tape market.

The home and car audio market represents about 50% of its business and remains strong, largely on the basis of a&b’s installation and engineering service at nine of the company stores.

Its ability to service a product after sale is a definite plus over what power retailers can provide in terms of service, Hitchcock says.

a&b is preparing for yet another assault on its home computer business from Computer City, a subsidiary of Tandy, which is moving into Vancouver at the end of November.

‘Anybody coming into Vancouver right now who expects to compete on price is in for a big surprise,’ Hitchcock says.

‘Any retailer has to compete on quality and breadth of product, and that takes a long time to develop,’ he says.

For the past decade, a&b has held off Future Shop, its toughest competitor, with 13 stores in b.c.

Recently, the companies have gone head to head, hoping to eliminate the other in a fight to the finish this past year.

Future Shop fired the first shot with a suit against A&B Sound for publishing its ‘Pinocchio’ advertisement.

The a&b ad challenged Future Shop’s claims in its advertising. Future Shop wanted a&b to stop running comparison ads using the Future Shop name.

The court ruled in a&b’s favor, allowing it to use Future Shop’s name in its ad, but frowned on a&b’s hard-hitting style of advertising.

a&b, in turn, countersued Future Shop, claiming its ads were fraudulent and misleading. That suit has since been dropped by A&B Sound, according to Hitchcock.

Style of sale

A major difference between the two companies is the style of the sale.

Future Shop favors aggressive price-conscious tactics, while A&B Sound stresses customer loyalty and a friendliness in its sales approach.

In turn, a&b looks for experienced, mature individuals with diverse backgrounds who can cater to the needs of loyal b.c. customers who have grown up with A&B Sound.

Repeat customers are the backbone of a&b’s success.

a&b expects to surpass its record 3.5 million transactions in 1993 and reach its target of $190 million in sales in 1994, 80% of which comes from repeat customers, Hitchcock says.

‘They began with us buying a television or cd, then a car stereo and a television, and, today, they are looking at a home theatre because they have built up a trust in us over the years,’ he says.

‘Most of our customers have simply grown up with us.’

To bolster its customer base, the company has targetted recent immigrants and the 250,000 Chinese in the Lower Mainland through Chinese-language radio, television and newspapers, stressing the value of a&b products and service.

One of its strongest-selling stores on southwest Marine Drive services many Chinese travelling between Vancouver and the Richmond suburb.

Hitchcock says Chinese customers are particularly interested in A&B Sound’s reputation for quality and service.

‘They really appreciate delivery, installation and after-sales support,’ he says.

A&B Sound, typical of many family-run retailers, is secretive about how much it spends on its in-house advertising and promotion.

The company is using a mix of radio spots and remotes, direct mail, newspaper ads and inserts.

Hitchcock says a&b will not counter Future Shop’s mid-month total liquidation sale-of-the-week message.

‘What we offer instead, are honest sale prices well below the retail price,’ Hitchcock says.

‘We’re confident we offer the lowest price consistently, so we don’t have to stress sales every two weeks,’ he says.