i3 - January/February 2017 - 103

By Paul Sabbah

of attention speaks to the notion that
HFK club members are seeking quality
products and a positive experience rather
than just low prices. "Our consumers
would rather spend additional money
and get good quality."
Sales staff is paid on salary, with no
individual sales commissions or spiffs
allowed. Sales bonuses are paid out to
the entire sales team in a particular
store to encourage group cooperation
and comradery. The firm has a high rate
of retention for sales staff, compared
to many U.S. CE retailers, and has a
philosophy of in-house, rather than
vendor-managed, training.
The firm does not believe in discounting
and almost never reduces prices. Company
promotional efforts are focused on brand
image and the customer experience rather
than on specific products or pricing. "We
will attract customers for different values
than our competitors," says Kristensen.

Our consumers
would rather
spend additional
money and get
good quality.
"To see the positive reaction of customers,
that is a benefit in itself."
When asked to define the retailer's
sweet spot for product offerings,
Kristensen described the typical sale
as "two-channel audio with streaming
media, and good pair of speakers, for
about 2,000 Euro," ($2,200 U.S.). The
typical store format is 3,500 to 4,000
square feet in size, with flagship stores
in each country around 10,000 square
feet. The company has also experimented
with smaller footprints (1,800 to 2,500

square feet), in higher rent districts,
aimed at attracting walk-ins and
drawing them to larger shops which
have demo rooms.
Growth at HFK is measured in several
ways. The first, and most obvious, is the
chain has grown to 100 stores and has
moved into neighboring Germany for
the first of a planned 10-store expansion.
"In Scandinavia, we have 89 stores,"
says Kristensen. "We have the market
covered there, with little room for further
expansion." In the Netherlands, where
the Amsterdam store opened in 2012,
the plan is for 25 total stores with three
to four openings per year.
The advantages of being privately held
play out in the chain's expansion. "When
we find a new location, we plan to be
there for 25 years, so we are patient in
choosing, because we know that once we
start somewhere, we are married to that
location to cover our startup costs." That

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