Richer Pickings

Julian Richer is a master of customer service. And it shows – his Richer Sounds outfit has quadrupled its profits in the past five years. Now 20 major retailers including Asda, Halifax and Sears havesigned him up as a consultant.

Drive into the car park at Asda House in Leeds and you are likely to come across a flash Jaguar parked in a VIP position behind gold cones. No, this isn’t chief executive Archie Norman on a weird ego trip. That car will be driven around by an ordinary member of staff.

He or she will have earned this privilege (for just a month) by coming up with an idea that produces the largest uplift in sales or margins. “It’s a little bit of fun. But it is proving really, really popular,” says a spokeswoman.

It’s also classic Julian Richer, the man behind Richer Sounds, a tiny but dazzling UK hi-fi retailer whose “legendary” customer service has got the giants of the retail industry flocking to hear his advice.

Richer Sounds is “staggering”, says Richard Perks, an analyst at Verdict Research. “What this company is doing with its outlets is amazing.”

While chains such as Dixons regularly report sales of around 625 to 650 a sq ft, Richer Sounds comes in at nearly ten times higher: 5,780.

Its “flagship” store, a poky little place near London Bridge station covered with day-glo stickers, is a regular item in the Guinness Book of Records. At more than 17,000 per sq ft, its sales densities are the highest in the world.

Clearly there’s something different about this company. Unlike most other retailers, it has sailed through the recession with ease, doubling sales and quadrupling profits over the past five years. In 1989, its operating margin was 3.4 per cent. In the year to January 1995, says Verdict, it was 12.7 per cent.

But how has it achieved such figures? Its 36-year-old pony-tailed founder Julian Richer first showed his entrepreneurial flair in 1974 during the miners’ strike. When the country was plunged into darkness he bought candles at 3 a case and sold them on for 15. He also began trading secondhand hi-fis while at school, eschewing university to set up his first shop at 19.

A key factor in Richer’s success is that he has flouted retailing’s first three rules: location, location, location. Instead, his shops are away from prime sites and are cheap. Rent and rates account for less than two per cent of its turnover, compared with ten per cent plus for most major retailers.

Richer has also ignored the temptation to grow too fast too soon. With fewer than 200 staff, and just over 20 stores, he’s nothing but a pin-prick on the UK retailing scene. “I’m like Richard Branson, only poorer,” says Richer who is variously described as likeable, “blokeish” and hugely enthusiastic but he adds “I am not really that ambitious”. Yet, in the past year 20 major corporations, including Asda, the Halifax and Sears, have signed him up as a consultant.

They want him to reveal the secrets of customer service, customer satisfaction and employee motivation. Asda’s spokeswoman says: “We want to keep shoppers happy and get staff selling. Julian has proved that he is king in that field.”

The Richer Sounds formula is to make a profit “by working hard at giving our customers service and value second to none and looking after our people”.

The posh cars – two Bentleys and a convertible XJS – are just a part of a treasure trove of schemes designed to involve staff and delight customers.

Hot drinks are offered free, even to those who are obviously not buying. If it’s raining, customers may be handed a free umbrella while mystery shoppers regularly test staff on their overall helpfulness, such as how enthusiastically they direct a passer-by to the nearest branch of Tesco.

Staff are expected to know everything about the products they are selling and to be attentive to customer special needs. Are there kids in tow? Are they insecure novices? After a sale

is made there is a follow-up phone call to ensure the product is installed and working satisfactorily.

“Very often you go into a store and everybody is friendly until you’ve parted with your money. But getting the money is just the first stage,” says managing director David Robinson. “From then on, you are trying to build a customer for life. The key is that you go away remembering the person who served you. That is what legendary customer service is about.”

Achieving that depends entirely on staff. Every time an item is sold, a questionnaire on the quality of the service is included. Responses are sent direct to Richer, and staff bonuses – 3 for “excellent” and an equivalent fine for “poor” – are dished out accordingly. A suggestion scheme offers the providers of the top two suggestions each quarter a trip on the Orient Express, a day at Brands Hatch, or time at a health farm.

Alternatively, staff are paid a fiver once a month to go down to the pub to sit quietly over a drink and think about ways of improving the stores. Another scheme offers half-price flights to anywhere in the US, provided the staff member comes back with a page of thoughts on US retailing techniques.

Then there’s motivation. Wages at Richer Sound are higher than other retailers. And there are perks, such as a profitshare scheme, subsidised Private Patients Plan healthcare for staff and their families, and a choice of five free holiday flats and homes for staff. “The accountant said ‘why do it? You don’t need to do it. It’s just a cost’,” recalls Robinson. “But by giving more than we need we get a lot more back.”

Richer and 31-year-old Robinson, who’s been working with Richer since he was 17, were turning customers into brand ambassadors a long time before it became fashionable.

But now that others are beginning to take up their ideas, will excellent customer service become a victim of diminishing returns?

Richer says: “Marketing is all about creating expectations and that gives your customers a stick to beat you with.

“Too many companies hire some smart-arses in Covent

Garden to come up with some campaign that creates expectations they haven’t got a hope in hell of meeting… you should tone down your promises. You must never advertise the fact that

you aim to deliver excellent customer service.”

He adds: “However much people wake up to it, it takes a

long time to get it right because

it involves every member of

staff. You’ve got to keep at

it every day. It is one of the hardest differentiating factors to

get right.”

But can ideas which rely so much on the personal touch really be applied to vast organisations such as Asda or Sears?

One sceptic is Perks. Richer Sounds, he says, flourishes on short lines of communication and the personal involvement of Julian Richer. If you are a vast retail network “you can’t go out and recruit a hundred Julian Richers, but that’s what you need”. Simply transferring things that are done at Richer Sounds risks descending into mere gimmickry, he warns.

Richer agrees it could be a problem. “When I talk to a big company, the first thing I say is ‘don’t copy what I do’. It’s the spirit of customer service and valuing people that really count, not the letter.”

With sales of just 21m in a total electrical goods market of 11.2bn, Richer Sounds is tiny. It’s only true significance is whether the ideas and attitudes embodied in what it calls “The Richer Way” can really reverberate right into the core of giant, public corporations. There’s no doubt the formula works for the small, private “family” business. Whether it will work just as well for big business is an interesting question.