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Beat the Competition: Hughes Electrical

to business electrical supplier. Its main customers are councils, schools, universities and electrical wholesalers. It has been awarded the contract of the preferred supplier of kitchen appliances (rent and sale) to the Olympics 2012. The department’s sales this year are predicted to reach two million units. Rental also plays an important role in the company’s operations. It accounts for 17% of its income, and 35% of profit. The customers of Hughes’ rental services are predominantly young couples and people who wish to ‘test’ the latest TV technology but cannot afford it. “In the past the main customer advantage of the rental was service; now it’s ability to replace the products every year,” explains Ashley Shorey-Mills, the manger of the out of town Ipswich store. Robert Hughes adds: “Rental pays for our service infrastructure. The two businesses are symbiotic. Rental is also a good way of using the products that have been returned from the website sales. Each part of the company has a role to play in the overall business. Each business scratches the back of the other.” “Online is a means of selling products outside our geographical locations. It helps us to clear poorly selling items in the store and the products at the end of their lives. Online also drives business to our shops.” Hughes Electrical employs more people on the service side of the business than in retail. “We have 110 service vehicles – used by engineers, installers and delivery men. We employ over 200 service engineers and installers.” “We charge for delivery and sell warranties on top of manufacturers’ warranties.”

The Hughes Electrical team The company employs almost 750 staff. The youngest are the installation personnel. The stores in smaller locations usually employ older staff.

At Hughes Electrical the management motivates their staff by keeping them well informed and involved in the business. In the back office there is a display of store’s performance in every area and charts of staff’s progress towards their targets and current priorities. “The target for the group is broken down to a target for the store (and store manager) which in turn is broken down to the targets for the sales people. However the staff has also to achieve a satisfactory standard in their

appraisal,” explains Robert. “We conduct an active appraisal system for staff and have regular staff meetings in which we discuss the performance of the store, the competitive situation and what we need to do to improve it. We are open with the staff about the profitability of the company and the profit margin within the sales. If staff share this knowledge and is aware of the problems they can help us to find the solutions for them.” Staff training includes weekly briefings,

Saturday morning training and evening sessions delivered by manufacturers. The employees who become proficient in certain areas sometimes deliver training in these competences. In 2011, the company won the Investors in People Silver Award.

Staying on top

“Business at Hughes Electrical is about relentless planning and reassessment,” says Andy Pallant, sales director. “We are always trying to look ahead,” explains Robert. “Even before the switchover we started planning for the post-switchover period, considering what is going to replace these switchover products which brought extra profit. Our profit this year (2011/2012) will be close to the best we have ever had. And the best ever results we achieved last year. The like for like sales in Hughes shops are 7% up. We constantly reinvest our profit, for example by buying out freeholds for the properties which we previously rented. We now own 33 freeholds.” Ashley Shorey-Mills adds: “The times are

hard but we don’t feel a dramatic change in our operations because we worked hard when it was easy, so now it’s not as tough for us as for other people.”

“We dominate the electrical market in nine East Anglian towns and we have to keep the customers in these towns by giving them a good service,” says Robert. “And have to add value to the transaction. We also have to be competitive so we have our own website with low list prices; but then on top of it we add delivery charge, the warranty etc. to remain profitable.

“In our market one challenge leads to another: falling sales volume and prices in the CE market lead to the challenge of reinventing ourselves in the domestic appliance category. Dealing with this requires us to have larger stores to accommodate these products.”

The independent business Robert admits that the present situation is very tough for everyone in the electrical industry. “Both manufacturers and retailers are losing money. However, the market will always need independent specialists although it won’t need as many of them as it was the case a few years ago. The current customer market cannot support all existing channels; including the internet, the mass merchants, the supermarket and us. Therefore we have to excel at our jobs to be the independents who will survive. The fact that you cannot download a television or a washing machine means that customers will need us in the future.”

Robert believes that electrical

independents have to start thinking outside their traditional business model. “They have to use their current cost base to find additional channels to get their products to customers – perhaps to new customers – and start making money on delivery, warranties and installation.” ■

Andy Pallant, sales director, and Robert Hughes (on the right) May 2012 The Independent Electrical Retailer 33

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