2011 was a good year for RGB, which, in addition to winning the title of the Best Large Independent Retailer, Consumer Electronics and Domestic Appliances, in the Independent Business Awards 2011, won other industry accolades. RGB directors, Dennis and Jason Digwa, tell Anna Ryland what it takes to get to the top in electrical retailing.
The white, catamaran-like RGB store is a distinctive landmark on Iford High Street in Essex. Located in the refurbished listed building which used to house a Ford garage, it has all the features and advantages of a destination store: 100,000 sq feet of retail space, ample car parking and interactive zones for the leading CE and DA brands.
It is result of a huge capital investment of the Digwa family and a year of intensive efforts during which the brothers spent every waking moment on site supervising the transformation of the 1930s building into a super modern retail store with ‘wow’ factor.
RGB Hi Fi & Video was founded in 1990 in Dagenham by Peter Digwa, Jason’s and Dennis’ father. The business moved to Iford in 2000, a mile away from the current location of the store. “We traded there for eight years and in 2008 an opportunity arose to buy the 35,000 sq feet premises of a former Ford garage,” explains Jason.
Peter Digwa ensured that his sons have a thorough understanding of the family business. “I started from making the tea for my dad,” reminisces Dennis. “Then I moved between all departments – to get the experience of all aspects of the business, from the service department to accounts.”
“I used to come to the shop after school. I was fascinated with consumer electronics and particularly camcorders. When I started working on the sales floor I got that buzz from it and I decided this was for me. Every time I come to work I have a fire in my belly and enjoy tackling whatever the day may bring. Probably the day I don’t feel that, I will hang up my boots and retire, says Jason.”
Dennis looks after the domestic appliances while Jason is responsible for the CE side of the business. Four other family members also work there. “Dad is still involved in the business and he comes in two or three times a week to keep an eye on the company, making sure that his pension is safe.”
RGB has a second shop in Loughton but the Iford store is the company’s flagship with a number of unique features. “All our products are live,” says Dennis proudly. “There are 70 miles of cables under the floor. Each brand has its own interactive zone. The store is spacious and the customers can stand at least six feet from the product to have a good look at it.” The store also has an interactive home cinema room, every element of which (including interior design) can be purchased and fitted in customers’ home in exactly the same way.”
An important USP of the store is its customer parking for 15 cars. “Parking is key as many of our customers come with their families. They take more time in the store and spend more because they are not in a hurry which they would have been having parked on a meter,” explains Jason.
An open, light and very modern design of the store is the result of combined efforts of four shop fitting teams and many hours of discussions within the family. “When we were designing the store we were trying to address all potential customer objections: why not buy from us? Is the store too dark, too gloomy, not interactive enough?” says Dennis.
An example of innovative marketing is the information boards with the heading: Why buy from us? They include such information as: established for 20 years, IER, ERT AND AAA award winners, dedicated customer service department with trained engineer on site, a stockist of the latest technology, members of Euronics and retra and Euronics etc.
The RGB store has a service department on site which deals with aftercare work – the same day or next day after the sale. “It comes to us as a cost but it gives the customers piece of mind and reassurance of our professionalism,” says Jason.
There are 30 staff working in two RGB stores: in Loughton and Iford.
“We have an excellent team – it is a key part of our success,” says Jason. The average age is 35 years, with the oldest member of staff being 43. “This is a reflection of the profile of our store and the technology we sell. Young people feel more passionate about the technology. However the manager of the Loughton store has been with us from the beginning.
“Particularly during a recession it’s very important to keep the buzz in the company and stimulate the staff. If you don’t portray the energy, this will be passed on to your staff and subsequently to customers.”
“It is very important that the staff feels free to talk to us – about anything. We listen to them and together we get ideas for improvements. Quarterly we give our staff incentives – usually product prizes. We also encourage our staff to set up products from scratch – this allows them to explore product features and gives them confidence selling them,” explains Dennis.
“We are a mid- to top-end retailer,” says Jason. The main CE brands they deal with are Sony, Samsung, Panasonic, LG, Pioneer, Toshiba and Bose. Their domestic appliance brands are: Bosch, Siemens, LG, Samsung, Neff, Stoves, Belling and Bloomberg. “Our product offer is wide but we have to be wary of not selling too many brands as this can confuse the customers.”
White goods account for 30-35% of profit of the business. Jason sees this proportion growing to 50% and further. The Digwas believe that selling white goods requires different resources and skills than selling brown goods.
“Bringing white goods to the store has widened its appeal. Suddenly we had whole families coming to our store,” explains Jason. “But selling white goods cannot be a half-hearted effort. With white goods you have to have a good display and instant availability. If the range or availability are poor, customers will see through this,” argues Dennis. “ We strive to provide same day delivery; otherwise it is next delivery.”
“Yet white goods require more commitment from a retailer,” stresses Jason. “The delivery usually requires two people, installation may take some time. Because of these additional costs, margins must be retained on white goods.”
“We target what I call the John Lewis customer: the customer with generally more disposable income, who is between 30 and 45 years old,” says Jason. “Many of our customers are people we dealt with since day one in Dagenham. The store in Iford gave us customers with mixed demographics: the young, middle aged and older people. We have a good mix of Asian customers and other nationalities.”
“We monitor where our customers come from and one of the strongest categories for us is ‘recommended by a friend’,” explains Dennis. “We believe that if you look after your customers they not only come back to you but they will also recommend you to their friends and family. There is a street in Iford on which 68 of our customers live. What most people want is good service at a fair price. We are probably the only company in the UK which scored 100% for both shops in Bose’s mystery shopping survey.
“We are constantly trying to find ways of giving customers better service,” says Jason.
The tough questions
“2011 was a particularly hard year,” admits Jason. “We had to work twice as hard to get the same results as the year before. You have to keep a close eye on your costs. Even if you’re matching a price you have to see what it includes before making an offer,” says Jason.
We studied GfK figures and we knew that we will sell fewer TVs, so we changed the strategy to make profit somewhere else. For example, we are now selling more packages.”
Jason believes that the dominance of Amazon is a big threat for the independent sector. “Multiples are reacting to Amazon activity and selling products below the cost. The suppliers take part of the blame for this situation. If manufacturers won’t protect independents and maintain a level playing field, our sector will disappear all together. For example we cannot compete when Panasonic chooses to sell its 65in TVs through Currys £300 cheaper than through us.”
“The greatest challenge at the moment is falling footfall. Manufacturers should give us more tools to help us get customers through the door, such as bespoke promotions.”
Some manufactures sell direct from their own websites. “Why do you need retailers at all in this situation?” asks Jason. He also describes an example of a manufacturer which charges independents to be on their website. “ When customers look for retailers in their area, the manufacturer’s search facility brings up the names of retailers who paid for their presence on this website.”
The brothers passionately object to the practice of some retailers selling their products on Amazon’s Marketplace. “It took us so many years to build our business, why would we put it on Amazon? Although they offered us a free entry we won’t do this on principle. Amazon collects and analyses this sales data to inform its own sales operations. Why should we be fuelling the enemy?”