Finance

Jaycar founder Gary Johnston on how to get the business basics right and avoid the fate of Dick Smith

Ronelle Richards /

 

Growing a business in the current climate can seem a mammoth task, especially in the retail sector that has been hit by the collapse of the likes of Dick Smith and Laura Ashley.

However, Gary Johnston, founder and managing director of electronics retailer Jaycar, says surviving tough times is about getting the basics right.

Johnston was marketing director at Dick Smith Electronics, where he worked alongside founder Dick Smith for seven years during the company’s rapid growth in the 1970s.

He left Dick Smith in 1981 to found electronics retailer Jaycar, opening the first store in Sydney. The company now operates 90 stores in Australia and New Zealand and is reportedly worth more than $500 million.

Speaking to SmartCompany last week about the receivership of Dick Smith and his interest in potentially picking up several Dick Smith sites, Johnston shared the following advice to small business owners.

 

1. Overheads

 

Johnston’s first business basic is about keeping overheads low.

Let overheads get too high and they “will gobble you up if you’re not careful”, Johnston says.

 

2. Products

 

When it comes to product management, Johnston’s advice is simple.

Inform your customer; tell them as much as you can about a product, whilst offering a reasonable price on the latest lines, he says.

“The best products at the best price and keep them in stock,” Johnston says.

Offer the best price you can without an obsessive reliance on discounting, he says.

One of the major downfalls of Dick Smith, he says, was the company’s massive 70% off discounts during December.

“Their discounting was ridiculous and Gerry Harvey agrees with me on that one,” Johnston says.

 

3. Online sales vs bricks-and-mortar

 

Johnston is passionate about the importance of retailers having bricks-and-mortar outlets, citing plenty of potential in the tried and true sales method.

“I love walking into a store and looking around and you can’t do that on a computer screen,” he says.

While shopping internationally is now a breeze for consumers, Johnston believes one of the main motivations for travellers heading overseas is to go shopping, which he states makes a case for the importance of bricks-and-mortar businesses.

Johnston predicts the online retail market will never account for more than 20% of economic activity, with customers still enjoying the tactile aspect of shopping in store.

 

4. Staff

 

“Have staff who know what they’re talking about,” Johnston says.

“We recruit out staff from our customer base, from electronic consumers,”

Johnston believes the Dick Smith chain stopped following this method about 15 years ago, at which point he says uninformed staff became the norm, which caused a downfall in customer service.

Pretty soon he says, the staff become “just there to hold the door open”.

 

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Ronelle Richards

Ronelle Richards is a former journalist at SmartCompany. She is currently studying a Masters of Journalism at The University of Melbourne and has previously worked as a journalist and photographer in rural newspapers.

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