Gerhard Appliances

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Gerhard's Appliances Cooks Up The Living Kitchen, an interactive Designer Appliance Showroom

By Natalie Hope McDonald

In 1954, Charles Gerhard did it. In 2003, the third and fourth generations of the Gerhard family are still doing it. According to Gerry Gerhard, vice president of Gerhard's Appliances, the 58-year-old retail store started off with a hands-on approach to retailing 50 years ago when his grandfather sponsored a cake-baking contest in conjunction with brand-new 40-inch ranges. "It took place in the same exact room as The Living Kitchen does today," Gerry notes. Only now, The Living Kitchen relies on sophisticated technology whereas the bake-off may have been satisfied with old-fashioned elbow grease.

These days, while many aspects of the Gerhard's business have changed, just as many tenets have stayed vital to the retailer's hometown legacy. Gerhard's Appliances headquarters is still nestled on the same main avenue in Glenside, Pennsylvania, a suburban enclave of Philadelphia, where Charles Gerhard first established the family business. Today, the Keswick Theatre stands across the street where music headliners are booked and coffee shops and taverns draw crowds from throughout the region. Even Gerhard's expanded to include a second location in nearby Doylestown, where a working demo kitchen is featured as a much smaller homage to the Glenside store's centerpiece, The Living Kitchen, which is a functional kitchen that is as interested in being high-tech as it is in being stylish.

The Gerhard brothers agree that part of what has made the business successful over the years is not only being able to evolve with the laws of supply and demand, but the family's loyalty to its forefather's ethic. That is, says company President Charles "Bud" Gerhard, "Just take care of the customer." And despite an aggressive advertising campaign throughout Pennsylvania, southern New Jersey and Delaware, Bud swears, "The best advertising is word of mouth."

Luckily for Gerhard's, word of mouth travels fast ever since The Living Kitchen was introduced as a way to propel sales. The concept driving the showroom isn't necessarily novel—it seeks to demonstrate the products—but the extent to which the concept has expanded proves to be a highly evolved means of salesmanship. This comes along with enthusiastic statistics from the National Retail Federation (NRF) suggesting that retail sales are growing 5.7 percent overall this season, compared to last year.

For Gerhard's, the showroom, complete with in-house chef, is probably the closest a retailer has ever gotten to being a veritable restaurateur of retail. In a very literal sense, the store serves up appliances for dinner.

Out-growing Pains
The first impression of Gerhard's, however, may be misleading. The usual pedigree of appliances greet customers who walk into Gerhard's on any given day. Washers and dryers line the aisles in typical discount fashion. A few televisions sit on shelves ranging from traditional CRTs, which outweigh selections of LCDs, Wegas and flat-screens.

"We decided about a year and a half ago to expand the concept," says Bud. He's referring to the second tier within the appliance store, known for its selection of Kitchen Aid products. Stepping out of the front showroom is like stepping up to a higher-end, more design-conscious style of retailing. The products are no longer stationed into platoons. Instead, the Kitchen Aid appliances are set into realistic household environments, some of which feature working sinks, ovens and appliances. There's even a live Miele coffee maker built into a designer cupboard. Beside it, customers help themselves to paper cups and all the ingredients necessary for good cup of Joe.

Gerhard's encourages its customers to test drive products and ask questions. The staff is trained to tackle inquiries about model numbers, price, rebates and brands, and have a working knowledge of each product category. In some cases, they may go as far as to bake a cake just to prove how well an oven really works.

The retailer is also very much in sync with current industry trends. According to Appliance Magazine, shipments of built-in electric ranges have increased 11.2 percent since last year. And surface cooking units increased 10.8 percent. Both of these product categories rely heavily on aesthetics, a feature that plays strongly into the interactive showroom's design. Bud says he and his brothers decided to recreate a kitchen environment by placing appliances into the best possible space scenarios.

As the Riedel Marketing Group reported that Americans are eating at home more now than a few years ago, popular multi-dimensional cooking appliances can increase sales potential. The cocooning effect, though bad news for restaurants, is great news for appliance dealers like Gerhard's.

"Customers see products in a setting regardless of price," says Bud. "It makes it a lot more attractive. People can place the appliance visually in their homes. There's an advantage to that."

Each showroom offers a different tier of inventory. "We have three live kitchens now," explains Bud. Walking into the third showroom, customers are greeted with the ultimate showcase space, The Living Kitchen, which Bud says was designed with a hardy sense of creativity and plenty of ingenuity. "We wanted to go one step further," he says, "to compete with the independents and the big boxes."

With the help of several major manufacturers, such as Wolf, The Living Kitchen opened for business in 2002, with Wednesday and Saturday cooking events that help show off products on themed nights.

Now called "Wednesdays at Six," the high point of the week is when in-house chef Griff Milla serves up dishes to customers on the brink of investing in higher-end kitchen appliances. As an alumnus of the Four Seasons and Ritz-Carlton hotels in downtown Philadelphia, Milla provides four-star dining options for unique customers. But even before he dished out food at Gerhard's, Milla, too, was a customer. After buying an appliance at the store, the relationship bloomed and the rest is history.

Bud says now the Wednesday events are off-shoots of Saturday kitchen demonstrations where everyone is invited to shop and enjoy complimentary bites. Gerhard's uses this as part of a three-step process designed to engage customers in the hope of closing sales.

First, he says that Milla cooks on Saturdays, preparing employee luncheons and snacks for customers which are doled out in typical hors d'oeuvre fashion. The aroma coming from the kitchen, he says, is a big draw for people who may have just wandered in to browse, for instance, microwave ovens.

Second, interested customers sign a guest book, which provides a sense of where the customer base if hailing from, in addition to who may be most suited for invite to Wednesdays at Six. At that point, six-to-eight customers will enjoy a hands-on demonstration about how the appliances operate. And while the goal of the demonstration isn't to provide lessons in gourmet cooking, many repeat customers likely leave with a sense of inspiration.

The Belly of the Beast
Amy Trantwein, the showcase coordinator for The Living Kitchen, explains, "We have to keep life up here all the time. If you don't have activity going on, it's a static showroom." Trantwein not only refers to the cooking events, but also the decorative touches that make the showrooms more domestic. During the interview, she arranges Martha Stewart-inspired wreaths and lights a Yankee candle in preparation for the day's events. "And we always have a soup going," she says.

Originally, Trantwein acted as a cook in the kitchen, until demand reached an all-time high and Gerhard's opted to hire a chef, who in addition to handling Wednesday and Saturday work, often cooks full-course meals and brick-oven pizzas for private demonstrations for kitchen designers and corporations, like the Chamber of Commerce. The goal, says Trantwein, is to introduce the products to the designers, who in turn often encourage their own clients to shop at Gerhard's for appliances to compliment kitchen design plans.

Having the kitchen showrooms set up like high-end kitchens that could easily be found in domestic settings, says Trantwein, is helpful in answering practical product questions and showing design potential. "The events are really designed for someone who has real questions," says Trantwein. "They learn about the appliances while enjoying soup, appetizers, first- and second-course meals, dessert."

In some cases, manufacturers will bring in their own chefs to demonstrate a product line. Recently, Hatco made an appearance in The Living Kitchen to conduct a Thermadore demo. Bud says that one reason retailers and manufactures alike are investing much more time and energy into showrooms and events is because consumers are simply much smarter today. "The consumer today is more intelligent than they had been and the technology is more complicated," says Bud. "I laugh at my brother saying we all spend half of the time in training."

He also says, "The education people look for far surpasses what they used to. We don't have every line out there, but we have what will be the most profitable. We can't be important to everybody."

Learning the Ropes
Training also plays an integral role at Gerhard's Appliances. Bud breaks down the training process, which he says neither he nor his brothers are immune from having to complete. He says that the Gerhard's employees are highly motivated. Comparatively, based on the U.S. Economic Census, BizStats.com reported that employee productivity in electronics and appliance stores is healthy, with sales over $68,00,000 and sales reaching $198,704 per employee on average. The Department of Commerce estimated that retail sales at electronics and appliance stores were up 10.0 percent from August 2002.

To keep up with industry trends, training is constant. One part of the training takes place online, but additional training includes factory tours and manufacturer-driven tutorials that help management and staff discern the differences between brands and goals of each low-end, mid-range and high-tech appliance category.

That's one issue that the Gerhards are particularly zealous about: serving a range of customers. Bud reiterated that his own goals are not only to court the high-end buyer who wants to install a professional-grade kitchen system, but also the customer in search of a dishwasher deal. In fact, during the course of the interview, while several people were browsing the Wolf oven in The Living Kitchen, another customer purchased a 29-cent light bulb.

"Walking in, sometimes you may think that this is an expensive place to buy," Bud admits, "But we can compete with big box prices, as well as high-end retailers."

To this, Bud acknowledges that the reason CRTs are heavily shown at Gerhard's is because CRTs are still in demand despite the hype that suggests otherwise. "We're doing more and more LCD business," he explains. "But we still sell a ton of CRTs. I think price has a lot to do with it."

He predicts that as price sinks on plasmas and LCDs, which he says is happening practically every week, more people will buy the products. Until then, he has no intention of making room for the new models until they prove they can sell. "CRTs," he says, "sell."

But after touring The Living Kitchen, it's not a question of whether Gerhard's may be "too" entrenched in the past to predict the road ahead. Quite the contrary—the brothers have an intuitive sense of balance as their customers hail from a variety of demographics. On one hand, Bud says that second and third generations shop at the store; they're children and grandchildren of the customers who his grandfather served. On the other hand, The Living Kitchen has brought in a new category of people willing to make substantive investments in home appliances..

Trantwein says that it's not unusual for customers to want to outfit their kitchens with high-end merchandise. "They often hire chefs to come in to their own homes and cook for guests," she says. "They want to have those resources at home."

It may seem like a far cry from the bake-offs that took place at Gerhard's in the 1950s, but Gerry disagrees. "Our showroom from the year 1954 was a live demo kitchen, too." And while the store may have gone through several incarnations, first as an appliance retailer, and later expanding into hi-fi, by 2002, Gerry says, "We realized we needed to expand. And in today's marketplace, it's not about price alone; it's about service."

Each of the Gerhard brothers are quick to point out that with more than 50 employees and a family management team, Gerhard's Appliances can still compete with Best Buy by offering both manufacturer and in-store rebates, as well as compete with independents by offering what the big boxes cannot: service. Bud says that he doesn't want to alienate the customer who walks in to buy that 29-cent light bulb. But at the same time, he says, at the opposite end of the economic spectrum, "people don't want to buy out of a catalog. They wants to see the product in a setting,"

Other seemingly common sense approaches are taken to ensure customer service. Bud says it may seem obvious, but keeping the store clean is a priority. "Presentation is extremely important," he says, right down to the welcome mat and presentable staff. "We feel everyone should feel comfortable. If you're buying the budget washer or the $5,999 range, everyone should be treated the same. We have the range of appliances, so we can accommodate the majority of people out there. They see the price and they see the service and they become regular customers."

The C Word: Competition
Company Treasurer Rich Gerhard adds that in order to be pertinent, "You also have to keep going to the next level. Changes are a part of new technology; you have to be up on everything." He says that he's personally amazed at how far people will travel to shop at Gerhard's. But it's caused him and his brothers to rethink advertising, reaching newspapers, radio, cable TV and magazines.

"We want to be different from everyone else," says Rich, not wanting to show up in venues where taking out the biggest ad is everything. Instead, he notes that home expo shows have proven excellent territory in which to seduce new customers with this hands-on approach. "We co-host the Fort Washington Home Show with Kitchen Aid," Rich explains. "Ten days at a show like this can mean six months of business." At the expo, Gerhard's sets up a working kitchen and does what it does best: Shows attendees how luxury-driven appliances can enhance the kitchenscape using cooking experts to drive the experience home.

Bud also says that having a 10-team service crew and nine trucks for delivery is beneficial to keeping up with customer relations. "Just because a customer buys an oven and leaves the store," he says, "the relationship doesn't stop there."

Bud explains, "Competition—that has changed. Our competition today is not necessarily the small independent store. What we're preparing ourselves for is staying one step ahead."

The North American Retail Dealers Association (NARDA) recently announced, "In-store promotional events attract customers, build a dealership's reputation and motivate staff members...especially during the holidays." Gerhard's has taken this concept and expanded it, even though business, says Bud, is conducted differently behind the scenes than before.

He also says that the distribution model has evolved. "Everything used to be dealt with on a personal basis," says Bud. "Smaller retailers may find it difficult to develop these relationships with manufacturers, but we've not only maintained good relationships with our distributors, but also our manufacturers." He says that even though partners rely on the bottom line to determine relationship value, Gerhard's growth has been lauded. "We've grown," he says. "The manufacturers know our business continues to grow. They see what the potential is as more manufacturers get into the higher-end business."

He says that above all, customers receive "immediate attention, not an 800 number." For Gerhard's, personalizing the service pays itself off. And while Bud says that plenty of retailers favor automation over personalization, he disagrees, saying that a better experience can be had by being able to talk with a real person on the phone.

"You can call Gerhard's," he says, "and sometimes talk to me or my brothers. If people want to talk to a Gerhard, we're here. I don't know who can talk to Mr. Sears and Mr. Loews."

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