Buying back the farm. It is a strong emotional drive and in business, potentially, an exploitable strategic advantage.
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Entrepreneur: Rick Hart
Company: Rick Hart Group
Business type: Retail electrical and kitchen appliances
Founded: Late 1990s
Employees:
Turnover: $80M+
Head office: Western Australia
Contact details: +61 8 9445 5000
The Rick Hart Story
Parochialism, while much under-utilised in Australia, is alive and well among the people.
Rick Hart, the name sake and Chairman of Western Australian electrical and kitchen appliance retailing network understands the underlying sentiments and has a great story to tell.
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Key learning points:
- Set your yourself apart - Establish and sustain a unique product/service characteristic.
- Strategy - Develop a specific strategy and don’t be distracted by those of larger competitors.
- Pick your staff well - Seek out, invest in and develop good people.
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In the late 1990’s he withdrew his electrical retail stores from the Retravision group. That departure represented some 25% of the national buying group’s presence in metropolitan Perth. It was felt the national entity was restricting the potential of the well branded Rick Hart stores.
The strongly marketed and advertised, now independent chain of Rick Hart stores, traded well and grew in number. An offer for 75% of the business was received and eventually accepted from a publicly listed South African company, whose 900 stores throughout Africa turned over around $1billion per annum. The fit was good and considerable upside potential was identified from the synergy between the two groups. Plans were developed for a national expansion throughout Australia.
Within 18 months of the sale to the overseas group, the South African economy collapsed and negotiations began for a buy-back arrangement.
An ambitious, publicly listed Strathfield group, with its strong presence in mobile telephones, seized the opportunity.
Rick was still actively involved in the strategic and day-to-day management of the business, ensuring that management of the Rick Hart group was maintained. The core products and competencies were respected and the business was kept on track.
However, there was incompatibility between the two ownership entities. Strathfield decided on, and subsequently announced publicly, its intention to sell its majority shareholding.
Retravision in Western Australia showed interest.
Within the Hart family there was much interest in and emotion for the company. The children were now involved in the business. The future of both appeared to be intertwined. The deal was done and the family bought back the farm, with total ownership.
In 2004, the group consists of 11 metropolitan company owned stores and two franchise operations in the regional centres of Broome and Katanning. Annual turnover exceeds $80 million.
A deft defensive strategy centres around the “Not the Full Quid” seconds outlets, which also retail superceded and obsolete stock. The primary target audience is a lower socio-economic consumer than that serviced by Rick Hart stores. In the latter instance, the key customer group is 25-55 year old females.
A new Rick Hart flagship concept store model of some 2,000 square metres is being introduced to the marketplace in strategic hub locations, to service the entire Perth metropolitan area.
Ambitions for the group do not extend beyond Western Australia. A strong local presence, together with the innovation of an enhanced profile of Rick Hart, the person, in the advertising and marketing will be the cornerstone of the future campaigns.
This conspicuous presence is complemented with Rick’s chairmanship of the newest Australian Football League team, the Fremantle Dockers. In Western Australia, the team’s supporters are the most vocal and parochial of the two local AFL teams.
A claim for fame
Rick is very empathic about what differentiates this group of stores from the competitors, and what is appreciated mostly by consumers.
They are the range of kitchen appliances and the product knowledge of staff members.
In recent times supplier branding has been less evident and impactful. Understandably, the consuming public has become confused. Consumers today place heavy reliance on the recommendations and advice of well trained retail sales professionals.
Moreover, with increasing evidence of the “cocooning“ trend among families, couples and individuals, the kitchen remains the fulcrum of and meeting place in the home. Nothing much has changed over 20 years when Rick Hart first decided to orient the dominant store market positioning in kitchen appliances.
Greatest challenge
One thing which is not unique to the group is its greatest challenge. That is, the need to and difficulty of attracting and retaining good quality staff members.
Retailing is not a career preference for many people. It is a key issue for a company with around 210 employees, 60% of whom are female.
The group works closely with the Technical and Further Education (TAFE) retail departments.
Staff incentive schemes are utilised to attract and reward good retailers, young people in particular. It encourages and enables effective directional selling by staff members to recommended brands, models and product types.
The future
The Rick Hart group is and intends to remain with the NARTA national buying group, whose negotiating power offers a price competitiveness of several percentage points for its national network of some 30 strongly independently branded retail operations.
The retail sector has improved in recent times and this is forecast to persist. Reliance on volume rebates will tend to be a thing of the past.
The changing nature of the highly competitive marketplace will dictate a move to a paperless operation and online, real time interface between suppliers and retailers.
Rick foresees a rationalisation of the retailer composition, with increased specialisation and greater consistency between the style, product range and layout of stores within trading groups.
Franchising is not an option which will be pursued by the Rick Hart group in the immediate future. Focus will be retained on a strong commitment to the training of staff members, which at present can involve 3 nights each week. Having people available to provide excellent service and product knowledge and able to negotiate the maze of information will be fundamental.
And the key measures of performance? Monitoring stock-turns and the average unit value of sale will be imperative.