P.C. Richard & Son Corp.
Address:
150 Prince Parkway
Farmingdale, New York 11735
U.S.A.
Telephone: (516) 582-3800
Fax: (516) 843-4309
Statistics:
Private Company
Founded: 1909
Employees: 1,700
Sales: $510 million (1997 est.)
SICs: 5722 Household Appliance Stores; 5731 Radio, Television, and Consumer Electronic Stores
Company History:
P.C. Richard & Son Corp. is one of the largest major-appliance and consumer-electronics retailing chains in the fiercely competitive metropolitan New York area. The number of its stores increased from 11 in 1985, all in the city's borough of Queens and the two Long Island counties east of the city, to 38 in 1996, including outlets in New Jersey and Connecticut and four of the city's five boroughs.
Early Years to 1986
A Dutch immigrant, Peter Christiana Richard was working as a milkman in Brooklyn when he opened a hardware store in 1909 with his wife, Adelta. "We lived in the back like gypsies," P.C.'s only son, Alfred J. (A. J.), recalled in a New York Times interview. "And he had a little partition and he had a counter. And he fixed furnaces, replaced window glass. And that's how he accumulated inventory."
After three years the landlord told the Richards he was not going to renew their lease, so they moved to a building they bought in Queens. Their first electrical appliance was an iron that cost $4.95 in 1924. "People just wouldn't spend that," said A. J. Richard. "They were getting, some of them, only $2.75 a week," he noted. In order to stimulate business, the store began offering credit, accepting as little as 50 cents a week. P.C. Richard & Son later laid claim to being the oldest appliance store in New York, if not the entire country.
According to A. J. Richard's account, during the 1920s he persuaded housewives to abandon their washboards and buy ringer washers by offering $5 to try the machines in their homes. After a while, he said, he was selling more Westinghouse washing machines than anyone else. A. J. Richard also said he instituted deferred-payment plans and rebate programs, established the first roadside drive-in appliance showroom, and had 15 salesmen working different territories. He claimed to have founded the first nonmanufacturer's service department after beginning to sell tube radio sets in 1935 and realizing that he would sooner or later have to repair them.
A. J. Richard became president of the company in 1947, when his father retired. There was a second Queens store in 1952, when P.C. Richard opened a third in Bellmore, a community in Long Island's Nassau County. By now the company was selling television sets, according to A. J.'s son Gary Richard, as well as radios and a variety of home appliances. (In another interview, however, Gary Richard would recall that the company did not begin to sell TVs until the beginning of the 1980s.)
Honest give and take between P.C. Richard and its vendors was an important element in the company's success, according to Gary Richard, who credited the willingness of one manufacturer to defer payment with saving P.C. Richard from bankruptcy in the 1950s. As urban dwellers continued to fill the two Long Island counties east of New York City, P.C. Richard grew with them. Even so, sales volume was still a relatively modest $27 million in 1983.
Major Expansion: 1986-93
In 1986, however, P.C. Richard had 16 stores, including five newly opened in Queens, and it ranked ninth among major appliance dealers in the United States, with sales volume of $96 million in these appliances alone. The company had sales in excess of $200 million in 1987 and was reportedly the largest General Electric dealership in the nation. Hundreds of appliances were on display in its stores, which averaged 10,000 to 11,000 square feet in size. By this time Gary Richard had succeeded his father as president. Corporate headquarters were in Hauppauge, Long Island.
P.C. Richard had sales volume of about $300 million in 1990, including about $130 million of electronics equipment and $110 million of appliances. The Richard chain also had been selling ready-to-assemble furniture since the mid-1970s. Among such items were entertainment centers, audio racks, and television and microwave-oven stands. The 21 stores, including five opened in Brooklyn during 1990--the first in that borough since the original P.C. Richard store--were being fitted with a racetrack design to take customers on the perimeters of every department and encourage impulse buying. A sophisticated computer system was linking billing and inventory throughout the chain and enabling a customer credit card to be approved in 15 seconds. The company began adding home office equipment to its product mix just before Christmas 1993.
In a 1990 HFD/Home Furnishings Daily interview, Gary Richard said that in the 1980s "much of our competition walked away from the appliance business, which left room for us, so we stayed with it." Not mincing words, he went on to declare, "It was not logical for those retailers to be in the appliance business. You don't get rich in this business, especially if your advertising is devious, or if you bait and switch products." Interviewed by another trade journal in 1993, he said, "It's our belief that there's nothing more important than satisfying the customer--you make money by accident when you do that."
There were 28 to 30 P.C. Richard stores--five of them former Newmark & Lewis outlets--in the summer of 1993, ranging from 8,000 to 18,000 square feet in size. The company, long debt-free, was now willing to take on a sizable level of credit in order to open stores outside its Long Island base--three in New Jersey, three in Connecticut, and one on Staten Island. It was building a new 600,000-square-foot warehouse in Farmingdale, Long Island, and expanding showrooms in Hauppauge, Plainview, Babylon, and Patchogue. P.C. Richard also had a 40,000-square-foot service center in Central Islip, Long Island.
Gary Richard acknowledged that the company's $30 million expansion program had been prompted by the demise of competitors as a result of the 1990-91 recession, including the giant retailers Crazy Eddie Inc. and Newmark & Lewis Inc. and more than a dozen smaller operators. "We're strong enough to do it," said Richard, "and if we don't, we could be wounded later." Once again, in this Chain Store Age Executive interview, he had harsh words for his competitors, saying the companies that had failed had done so not so much because of debt as because "they had no strong foundation. They were built on egos, and they constantly played cute, clever, and cunning."
Richard went on to say his company prided itself on honesty and integrity with vendors, customers, and employees and had built strong partnerships with its suppliers. "Some of our failed competitors were ruthless with the vendors," he claimed. "They had no mercy. Consequently, the vendors walked away from them when things began to go bad." Being an honest and reputable dealer of electronics and appliances, he added, "isn't easy in any market, because the margins are so low. But it's even worse in New York, because we're competing with so many opportunists and thieves."
Among the unethical, or downright criminal, practices Richard cited were selling gray-market merchandise (meant for sale overseas and usually lacking a U.S. warranty), baiting and switching (advertising an item at a very low price to pull in customers, then saying it was out of stock and offering a more expensive model instead), charging extra for accessories that were supposed to be included free (such as batteries), and not passing on the sales tax. Asked why these practices were rife in electronics retailing, Richard called it "a want, not a need, business. If I have five camcorders in the trunk of my car, I can go to any block, ring five doorbells, and sell them. It's not the same with appliances. Nobody wants a refrigerator. They buy one because they need it, probably because their old one broke."
For a time P.C. Richard considered going public in order to finance its expansion. In connection with a public offering of common stock planned for August 1993, the company revealed that it had net sales of $314.6 million and net income in excess of $6 million in the 1992 fiscal year ended January 31, 1993. The company's long-term debt was only $500,000, but about $11 million of the proceeds from the proposed stock sale was earmarked to repay a note issued in May 1993, in lieu of a dividend, to a family holding company that was also leasing 17 locations to the company for $3.3 million a year. Another $24 million was to be used to enlarge, replace, and open new stores.
But P.C. Richard ultimately decided to remain private. Interviewed in 1996 for DM/Discount Merchandiser, Gary Richard rhetorically asked, "What do we need underwriters, analysts, and the stock market telling us what to do, when we can do it ourselves when we want to do it? We generate all our own expansion money internally, and we are very successful at it."
Among the things outsiders were ready to tell the company to do was cut the payments to Gary Richard and his brother, Peter. In 1992 they shared total compensation of $2.8 million, or 15 percent of pretax profits, of which $2 million came in the form of bonuses. In the proposed public offering, the brothers' future bonuses were to be reduced to seven percent of pretax profits.
Still Growing: 1995-96
P.C. Richard's mammoth new warehouse in Farmingdale, the size of 15 football fields and the largest on Long Island, was completed by the summer of 1995. Corporate headquarters also moved to the site. In 1996 P.C. Richard opened its first Manhattan store by taking a 20-year lease on a three-story building in the Union Square area. With the opening of this outlet the chain had 38 stores--up from 31 in 1995 and including its first store in Westchester County, New York--and owned 22 buildings. The typical showroom offered 5,000 items, including personal computers. P.C. Richard's 1995 fleet of 60 trucks and 35 trailers was averaging 1,000 deliveries a day.
One reason P.C. Richard had survived the retailing bloodletting of the early 1990s, according to industry observers, was its decision to avoid suicidal price-cutting. These observers said the chain had a reputation for keeping prices and margins higher than other operations in the metropolitan New York area. One reason it had been able to do so was its strong retail-support program and its reputation for reliability. According to Gary Richard, high employee morale was another reason. The salaries of its sales staff were based on commissions, but company executives were going to great lengths to convince these personnel that they could move up the ladder to managerial positions.
As long as the company remained private, however, it was clear that the top positions would be going to a fourth generation of Richards. Gary's son, Gregg, had by 1995 been chosen as his father's ultimate successor. Peter Richard, Jr., son of Peter Richard, Sr., Gary's brother, was scheduled to succeed his father as executive vice-president. Four other children of Gary and the senior Peter were also involved in the company.
Further Reading:
Benson, Barbara, "P.C. Richard Tries Offering to Help Make It Tops in N.Y.," Crain's New York Business, August 2, 1993, p. 7.
Bernstein, James, "Electronics Retailing Heats Up," Newsday, February 20, 1996, p. A27.
Fox, Bruce, "Seizing the Opportunity," Chain Store Age Executive, May 1993, pp. 51-52.
Johnson, Jay L., "P.C. Richard & Son: A Regional Survivor," DM/Discount Merchandiser, September 1996, pp. 20-21.
Julianelli, Jane, "6 in Family Moving P.C. Richard to the Future," New York Times, July 23, 1995, Sec. XIII, pp. 1, 9.
La Rossa, James, Jr., "Venerable P.C. Richard Flourishes As Rivals Flounder and Fall," HFD, January 2, 1991, pp. 238-39.
"P.C. Richard & Son (PRCI)," Barron's, August 2, 1993, p. 38.
Schoenfeld, Bruce, "P.C. Richard & Son," HFD, June 6, 1988, pp. 200, 207.
Wray, Kimberley, "TV Stands Spark Sales at P.C. Richard & Son," HFD (RTA Special Report section), October 7, 1991, p. 8A.
Source: International Directory of Company Histories, Vol. 23. St. James Press, 1998.
