ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, October 6, 1996 TAG: 9610040074
SECTION: BUSINESS PAGE: 1 EDITION: METRO
DATELINE: RALEIGH, N.C.
SOURCE: MEGAN SCHNABEL STAFF WRITER
It wouldn't be so outrageous to hear that a chic new restaurant in a growing city was booked up for dinner a month in advance.
But folks in Raleigh, N.C., have been adding their names to a four- to six-week waiting list that isn't for a haute cuisine dinner, or even for overpriced cocktails at a new nightclub.
It's for hors d'oeuvres - at an appliance store.
At the Crenshaw Electronics & Appliances store on Glenwood Avenue, on Raleigh's northwest side, employees hold mini-cooking classes once or twice a month in a fully equipped kitchen at the back of the company's showroom.
The classes are designed to demonstrate several high-end appliance lines to customers who are building new homes or remodeling their kitchens. It is almost like going to a Japanese steakhouse for the night, said Deborah Fedrick, a Crenshaw district manager.
Customers may learn how to prepare - and, of course, get to sample - deep-fried shrimp, or broiled water chestnuts wrapped in bacon, or croissants. From time to time, the staff even cooks up Bananas Foster, flaming brandy and all.
It's been a successful selling strategy, Fedrick said. Waiting lists for the miniclasses, which are held on weeknights, are four to six weeks long. The sessions have become so popular, she said, that they've had to limit attendance only to customers who are selecting new appliances, turning away those who've already made purchases. Crenshaw would love to invite all its customers, but there simply isn't room, she said.
"We try to do a lot of educating," she said. "No matter how much money you have to spend, you want information."
Crenshaw, which in May bought the Roanoke-based Holdren's chain, is betting a similar program might work in its new Virginia markets. The company is in the process of remodeling its new Valley View store to make room for a similar kitchen and other additions.
But it may not draw the same kind of enthusiasm in Roanoke as it does in Raleigh.
Crenshaw has been embroiled in a controversy ever since it arrived in Virginia. Crenshaw, a privately owned company with seven stores in North Carolina, purchased only the assets of the former Holdren's chains, not its liabilities. That means it didn't take responsibility for any of Holdren's Inc.'s debts - including thousands of dollars worth of extended service contracts that Holdren's has sold over the years to buyers of its appliances. The decision not to honor the contracts has left Holdren's former customers angry, and many have vowed not to shop at the Crenshaw stores.
Although Crenshaw operates stores in four of the five former Holdren's locations, the company's officials said they don't want to be Holdren's; that's one reason they didn't retain the former company's name. But even in the midst of the negative publicity, the company thinks its brand of homegrown business can fill part of the hole left by the departure of Holdren's.
"We want to come in here and run a fresh Crenshaw's," said company vice president Steve Vaughn, who has been splitting his time between Roanoke and Raleigh. "What we're trying to do is build a whole clean slate."
* * *
In some ways, Crenshaw is a lot like the Holdren's chain of years ago.
Crenshaw stores attract second- and third-generation customers and its salespeople recognize them by name. They know how the products work as well as how to sell them. They rely heavily on word-of-mouth referrals to increase the customer base.
The Crenshaw store on Raleigh's Glenwood Avenue is typical of the chain's design. It looks like just about any hometown appliance showroom you'd see in just about any community. The floor is tile, the walls are painted blue-green cinderblock, the lighting is fluorescent.
Most of the company's North Carolina stores are in strip shopping centers, and they're all smaller than the 40,000-square-foot former Holdren's beside Roanoke's Valley View Mall.
Because of its size, the Roanoke store will venture from the chain's strict appliances-and-electronics format. Once the extensive renovations are complete - the customer service island will be torn out, the home- theater room renovated, the in-store kitchen expanded - the store will include 15,000 square feet of furniture, possibly a La-Z-Boy gallery, plus samples from other manufacturers.
Crenshaw stores sell merchandise that ranges from basic to top-of-the-line, at prices from relatively inexpensive to totals that stretch credit-card limits. Brands include Amana, General Electric, Gaggenau, Sony.
While the employees won't turn you away if you come looking for a 19-inch TV, the company knows that most shoppers don't go to a place like Crenshaw for low-end appliance or small televisions. More than likely, they'll first check the prices at Circuit City or Best Buy or Sears, big-volume national chains that sell thousands of these "commodity" products at prices lower than Crenshaw could offer.
That's why, Vaughn said, Crenshaw focuses its energy on promoting its big-screen TVs, its moderate- to high-end appliances, its home-theater setups - products that lend themselves to a level of customer service the big chains can't provide and also give the retailer a higher profit margin on each item sold to compensate for lower volume of sales.
It's a smart strategy, said Marvin Lurie of the National Association of Retail Dealers of America. The Lombard, Ill.-based group has 2,500 members, almost all of whom are independents.
Small independent dealers nationwide who have found a niche are "thriving very well indeed," Lurie said. "The independent can spend the floor time with a customer to help the customer buy something other than a commodity product," he said.
That's the idea behind Crenshaw's in-store kitchens and home-theater rooms, concepts the company is bringing to its Valley View store and possibly its other Virginia locations: Christiansburg, Lynchburg and Martinsville.
"We like to bring some excitement to business - make it live," Vaughn said.
The home-theater rooms will show off big-ticket audio and video equipment, and salespeople will help customers design systems for their own homes. Crenshaw is also working with home builders to include prewired, preinstalled home-theater packages as standard features in new houses.
Crenshaw plans to install demonstration kitchens in most of its locations, in both North Carolina and Virginia. The existing kitchens are equipped with top-of-the-line, European-engineered appliances that sell for $3,000 or more. They're fun to demonstrate and to sell, Fedrick said, but sales of upscale lines represent only a portion of Crenshaw's business. As the company adds kitchens to its other locations, it will install moderately priced appliance brands that will appeal to a larger group of customers.
Crenshaw doesn't hesitate to compare its prices to those offered by larger stores. The company, like many independents, belongs to a nationwide buying group with the clout to negotiate prices with manufacturers and take advantage of overstocks, Vaughn said.
Pink "Last One" tickets adorn many of the floor samples at the Raleigh-Durham stores, part of the company's commitment to turning over its inventory regularly. One of Holdren's problems, Vaughn said, was that it kept old products on the floor instead of reducing prices and clearing them out to make room for new goods.
* * *
Longtime Holdren's customers had been speculating for months on the health of the appliance and electronics retailer. Selection in the stores seemed to be dwindling, customer service was faltering. Many wondered how long the company would survive.
In May, Holdren's sold its assets, for $2.3 million, to the North Carolina company. Crenshaw did not take over Holdren's $3.1 million in liabilities.
Vaughn defended the company's decision to purchase only Holdren's assets and not the corporation itself.
"Basically, it's like a Wal-Mart coming in to where a Kmart was," he said at the time. "We really can't be responsible for somebody else's liabilities."
Holdren's was in financial trouble, Vaughn said more recently, and if Crenshaw hadn't moved to buy the company's assets, it likely would have gone out of business anyway. Or, he said, another buyer might have swooped in, purchased Holdren's merchandise - as Crenshaw did - but then left again, leaving behind a vacant building.
"Without Crenshaw's coming in, these customers would be worse off than they are," he said.
During the first month or so following the sale, Vaughn said, Crenshaw attempted to honor the service contracts as a "good-will gesture." But after paying out $37,000 to Holdren's contract holders in July alone, the company realized the amount of the repair bills was "astronomical," he said, and couldn't realistically be absorbed.
Crenshaw continues to negotiate with the Virginia Office of Consumer Affairs and the Holdren's owners to devise a plan to appease customers, he said. The question now, he said, is who would pay for it.
He said he thinks Southwest Virginia customers upset by the sale of Holdren's will, eventually, check out Crenshaw.
But some Roanoke Valley independent dealers aren't so sure.
"It's gonna be rough on them because of what happened," said Bob Ward, owner of Ward's Home Appliance Centers in Roanoke and Vinton, who has been in business for 25 years. His business has picked up since Holdren's was sold and Crenshaw closed the Vinton store, he said.
But the former Holdren's location on Lee Avenue won't be vacant for long. Chapman McGuire, owner of Tarpley's & Mac's Appliances and TV in Salem, said he and his partner are opening a store of their own in the old Holdren's spot. "When they left, they left a big void in that market area," he said.
McGuire, who worked for Holdren's for 29 years, said he isn't sure how well Crenshaw will do in this market.
"They probably would have been OK if this extended warranty situation hadn't surfaced when it did," he said. But he's talked to quite a few former Holdren's customers, he said, and many of them have told him they won't shop at Crenshaw. Their reason, for the most part: service contracts.
Crenshaw's entry into Virginia is part of the company's longer-term plan to extend its reach in the Southeast. Last October, it bought five Ed Kelly's appliance and electronics stores in North Carolina's Triad - Greensboro-High Point-Winston-Salem - in a move to enter the central North Carolina market. Some seven months later, the Holdren's deal was cemented.
The company still considers the Western Virginia stores a profitable proposition, Vaughn said. It may eventually expand into Danville and Charlottesville, where Holdren's operated until several years ago, he said.
If Crenshaw hadn't seen potential in Virginia, Vaughn said, "we'd have packed up what merchandise we own and taken it back to North Carolina."
LENGTH: Long : 192 lines ILLUSTRATION: PHOTO: DON PETERSEN/Staff. 1. "We want to come in here and runby CNBa fresh Crenshaw's," said company Vice President Steve Vaughn, who
has been splitting his time between Roanoke and Raleigh. "What we're
trying to do is build a whole clean
slate." 2. In-store cooking demonstrations have become so popular at
the Crenshaw showroom in Raleigh that customers must make
reservations weeks in advance, said District Manager Deborah
Fedrick. 3. The Crenshaw store in downtown Cary, N.C., opened 60
years ago, and it attracks second- and third-generation customers.
color.