“In the early days, we handled appliances as well as televisions, video recorders, and stereos,” said Dan Schwartz, president. Schwartz’s grandfather and father founded the company, and Schwartz worked at the store while he was in high school, coming on board full time when he graduated from college in 1965.
The company always carried appliances such as washing machines, stoves, and refrigerators. “Electronics were phased out as we started to become more focused on major appliances,” said Schwartz.
During the early days of Karl’s Appliance, kitchen appliances didn’t change too much, Schwartz said. “But about 15 years ago, people began paying more attention to the appliances in their kitchens, and more deluxe home major appliances became available,” he said.
Initially, the store sold standard appliances from brands like Whirlpool, Frigidaire, and General Electric. Those brands began offering more premium brands such as GE Profile and Whirlpool Gold, and companies such as Viking, Sub Zero/Wolf, and Thermadorstarted to produce luxury and super luxury appliances.
“We’ve continued to sell a lot of the more basic appliances while we expanded our display of premium through luxury brands,” said Schwartz. “We have a very strong and knowledgeable sales force that focuses on finding the products that best suit the needs of the customers.”
The profile of the typical Karl’s Appliance store is much larger than the original 1,800-square-foot location. “Our stores are between 10,000 and 15,000 square feet and are completely devoted to appliances,” Schwartz said. “We have a combination of products focused on consumer needs at all price levels, from basic ranges and one-door refrigerators through super luxury La Cornue ranges that are imported from France and sell for $20,000 to $40,000.”
The company can outcompete the big box retailers on selection, service, and price, according to Schwartz. “We can compete on pricing because we are part of Nationwide Marketing Group, a national buying cooperative,” he said. “Going back to the 1950s, my dad was part of small buying cooperative in New Jersey that merged into a larger cooperative.”
Rather than trying to act like a megastore, Schwartz said the company focuses on providing the products that work best in its markets. “Our stores are pretty focused on serving the hometowns,” he said. “We have delivery services that can deliver most items within one day. We also have a number of employees who have been here for 20 years or more, so some of our sales staff members are selling to the grandchildren of their earliest customers.”
Karl’s Appliance saw its sales take a hit during the recession, but Schwartz said the company’s attention to solid customer relations helped it fare better than many of its competitors. “We saw a bigger dip in the sales of the more expensive appliances, but we maintained our sales because of the good relationships we have across the board,” he said. “We picked up a good piece of the kitchen redesign market by selling less expensive items. A lot of people moved down from buying the luxury items to buying the premium or mass premium items.”
Most of the company’s advertising is through freestanding print inserts. “One of our challenges is that we are in a section of Northern New Jersey where electronic advertising goes across such a broad spectrum that we don’t get a good return on investment,” Schwartz said. “The largest part of our business comes from referrals. In addition to advertising and promoting products to our existing customers, we find that our customers refer us to their friends and relatives.”
With the higher-end appliances, Schwartz said the company has seen benefits from advertising in glossy regional design magazines. “In addition to the freestanding inserts for our everyday line of products, we’ve done a lot of co-branding with companies like Sub-Zero and Viking where we are promoting their products and our name in the glossy magazines.”
Schwartz said the company’s growth pattern is to do one major project per year. “It might not necessarily be opening a new store, but it might be moving to a new warehouse or updating our computer system,” he said. “Our business has grown dramatically over the past decade; we’ve almost quadrupled our business.”
Adding new stores is still something that is on the radar, Schwartz said. “We’re looking at other opportunities inside and outside of Northern New Jersey,” he said. “The stores we are opening are destination stores. There are live kitchens where chefs give use and care classes and do cooking demonstrations. We also display many of the brands within cabinetry so people can visualize how the appliances will look in their kitchens.”
In large part, Schwartz said, the company benefits from having talented employees who help create loyal customers. “The longevity and knowledge of the people who work here is why our customers keep coming back,” he said. “Our employees are happy to be here, so that creates a good atmosphere for everyone.”