Plugged In

Carroll W. Conn, Sr., the founder of 57-year-old Beaumont-based Conn Appliances, was no empire builder. Conn, who died in 1976, was content to run just his two Beaumont stores. But C.W. Junior, his oldest son, had other ideas. “Dad would say, ‘Goddammit, you keep opening all these stores, you’re gonna break me,’ ” says C.W. Junior. But now, with outlets in Southeast Texas and Louisiana numbering 27, Conn’s is anything but broke. The chain, which is one of Texas’ least-known, best-run companies, earned more than $3 million on sales of $103 million this year.

Conn’s is in one of the most competitive businesses around: appliance retailing. The left side of most appliance stores sports “white goods” (stoves, refrigerators, dryers), on the right are “brown goods” (televisions, VCRs, and stereo equipment). Every appliance dealer, from department stores like Sears to discounters like McDuff and Circuit City, has the same merchandise at roughly the same price. The appliance business regularly chalks up casualties such as the money-losing Michigan-based Highland Superstores chain, which abruptly closed all its Texas stores in June.

So how does Conn’s manage to grow a respectable 15 percent a year in such a cutthroat environment? By cultivating a company culture rooted in old-fashioned notions like hard work, service after the sale, and friendly, knowledgeable salespeople. “We perpetuate the idea that it’s okay to work and work hard,” says Conn’s president, Tom Frank, a 34-year company veteran. Conn’s salespeople each put in as many as sixty hours a week, including Saturdays. They meet sales quotas that average more than $70,000 a month, or $800,000 worth of stoves and VCRs a year. Years ago, Conn’s opened new stores by rounding up company “volunteers” to help wire, plumb, carpet, and paint the premises. Company employees—service technicians and delivery staff included—still attend Dale Carnegie courses. In return, the 435 employees get unusual benefits. The company helps pay the college tuition of any employee’s child who meets grade and test-score standards. Salespeople are well paid; the better ones earn up to $70,000 a year. Then there’s the employee-stock-ownership plan, through which employees own 16 percent of the company—a chunk worth some $4 million. The net effect, says C. W. Conn, is that employees “get up off their ass and welcome you.”

The peculiar culture of Conn’s was instilled by C.W. Senior, who bought a plumbing and heating business in Beaumont in 1934 and renamed it Conn Appliances. An unyielding perfectionist who was orphaned at the age of twelve, Conn demanded an almost impossible level of customer satisfaction. Decades ago, when the triumvirate that now runs the company— C.W. Junior, Frank, and chairman John Powell—would proudly point to customer-satisfaction ratings of 90 percent plus, the old man would scoff. Remembers Frank: “He’d say, ‘I don’t care about the ninety-four percent you made happy—what about the other six percent? You get those names on my desk so I can call them and see if you made them happy.’ It was just absolute, hard-nosed doggedness.” But that doggedness is why Conn’s today offers services that hark back to a different era: things like service in the home, acceptance of trade-ins, an in-house independent credit operation, and salespeople who have worked at the same store for years. The strategy adds up to short-term hassles and headaches but long-term profits. “We don’t just want to sell somebody a television,” says Frank. “We want to sell them the TV, the refrigerator, the gas range, the dishwasher—everything.”

Conn’s conservative, old-fashioned style is what keeps it from expanding nationally. The company opens only one or two new stores a year, and the farthest Conn’s from Beaumont is a mere two hours away in Opelousas, Louisiana. “We could open fifty new stores,” says Conn, “but where would I find fifty store managers and all the salespeople who understand what we’re about?” He thinks the slow decay at Sears through the eighties and even Highland’s problems were brought on by growth that outstripped service, and he can reel off a dozen reasons why regional stores are better suited to sell stoves and washing machines. With heavyweights like Circuit City and Best Buy moving into Texas, he will get the chance to prove he’s right. “We’ve seen a lot of companies come and go,” Conn says. “We’ll just keep doing what we’re doing.”

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