The Crutchfield story: the 2020s

n Chapter 5 of the Crutchfield story, we talked about the evolution of our company alongside the emerging innovative consumer electronics technologies of the 2010s. We fully developed our virtual speaker auditioning technology, transformed our retail space, and turned our catalog into an informational guide, which we call the Discovery Book.

With our Spring 2020 Discovery Book, we introduced a new feature. It was the start of Crutchfield’s writers visiting our manufacturers to gain a better understanding of their technology. In this issue, Kramer visited Stu Lumsden, a longtime engineer at Polk Audio in Baltimore, Maryland. Visits like this further strengthen our bonds with our manufacturers and provide us with tremendous insights into their research and development expertise. This visit took place just before the Covid-19 pandemic invaded our country.

Crutchfield writer Kramer speaking with Polk Audio engineer Stu Lumsden.

We began the creative work for our Summer 2020 Discovery Book in the winter of 2019. Again, this was shortly before Covid-19. One of the book’s key stories was the introduction of Samsung’s first 8K television. This technology offered four times the resolution of 4K televisions for exceptionally sharp picture quality. Unfortunately, the sales of these televisions have been disappointing. That is primarily attributable to their high price and the very limited amount of available 8K content. However, they are popular with hard-core video gamers.

Crutchfield Sales Advisors learning about Samsung's 8K TVs.

The Covid-19 Pandemic

By successfully identifying potential economic and industry issues over the past 50 years, I have been able to prepare our company for the consequences of those issues. However, Covid-19 was a true “black swan” event. It was a catastrophic situation that impacted the lives of virtually everyone throughout the world. No one would have anticipated it. And no company could have prepared for it.

Covid-19 forced us all to change our way of life.

In January 2020, the media began reporting about a few cases of this mysterious illness in the state of Washington. By February, more cases were reported throughout the country. Then, on March 11, 2020, the World Health Organization declared Covid-19 a pandemic. Immediately, governors across the nation started to shut down businesses and force people to stay in their homes. Virginia’s governor was no exception.

Keeping Crutchfield open in the early days of the pandemic

As I have mentioned, Crutchfield has never had an employee layoff throughout our 50-year history. However, if we had been forced to shut down with no revenue coming in, it would have been impossible for us to continue to fully pay the 500 employees which we had at that time. A truly unique solution was needed.

I knew our governor. However, I did not know him well enough to personally lobby for keeping Crutchfield open. So, I wrote a generic paper about the need to keep online retailers open. My logic was very simple. With brick-and-mortar stores closed, people needed access to the products that had been sold by these stores. Obtaining home entertainment products would be more important than ever for people stuck in their homes.

Additionally, people needed the ongoing support of full-service online retailers like Crutchfield. That would be especially important with our technical support services. Furthermore, some online retailers like Crutchfield have commercial businesses which sell a wide variety of products to government agencies and critical businesses. They would remain operational and need the products and services offered by online retailers like Crutchfield.

I submitted my paper through a mutual friend who worked with the Governor. Fortunately, the Governor accepted my logic and decided to allow online retailers to remain in operation. After that near crisis passed, another one developed. I went from fearing our sales were going to fall to zero to fearing they were growing too rapidly.

An unexpected lift in sales

In March 2020, the government sent stimulus checks of $1,200 to each income tax filer and $500 for each child. For a family of two taxpayers with two children the stimulus would amount to $3,400. This first round of stimulus checks amounted to an injection of over $271 billion into the US economy. The stimulus money combined with the salaries and wages of people working from home and state benefits for those unemployed created an enormous amount of household wealth.

On top of that, brick-and-mortar stores, hotels, restaurants, and movie theaters were closed. As a result, this huge amount of additional household wealth would be directed to mainly online retailers and streaming services. That was certainly the case with Crutchfield. Once these stimulus checks were deposited into people’s bank accounts, our sales soared. Oddly, that presented some huge problems.

Like many companies, we immediately had to purchase hundreds of additional computers to allow our people to shift from working in our offices to working at home. Fortunately, we had developed sophisticated remote software applications several years earlier. Also, we had always maintained excellent relations with our computer suppliers. That enabled us to obtain the machines quickly and allowed us to smoothly make the office-to-home transition.

Throttling sales to preserve service levels

As I explained in Chapter 2, Crutchfield has inculcated and maintains a strong organizational culture. Two cornerstones of our culture are providing the best service for our customers and the best working environment for our employees. As sales soared, our contact center people were overwhelmed with calls, chats, and emails. Our distribution center employees were exhausted due to the surge in orders which they had to pick, pack, and ship.

Complicating this added work were the strict Covid-19 protocols which we put into place. As a result of our unplanned surge in sales, we were not giving our customers Crutchfield’s legendary quality of service, and we were not providing the best working conditions for our employees. This situation was not sustainable. It was also violating our core values.

I ended up doing something that only the sole owner of a business could do. I directed our marketing people to cancel all our digital ads. Without new shoppers coming to our website, sales would fall significantly. I was willing to risk a large drop in our sales and earnings to protect the well-being of our employees and keep from hurting our legacy of providing the highest level of services for our customers.

If Crutchfield had not been privately owned, I probably could not have made this counterintuitive decision. Outside owners would have wanted us to take full advantage of this sales boom. They would not have been supportive of my idea to deliberately reduce sales and earnings for the benefit of our customers and employees. Instead, they would have wanted us to maximize sales without regard to the long-term impacts.

A balancing act

This unique decision worked. Our sales declined to levels where we could efficiently serve our customers and better provide for the welfare of our people. Since sales and earnings were still healthy, I shifted to managing our company based on service levels rather than financial metrics like sales and earnings.

At the same time, we immediately went on a massive hiring spree. During the first year of the pandemic, we hired and trained over 250 new people. This was tricky since it had to be done under the strictest of Covid-19 health protocols.

Another major problem was the throughput of our two distribution centers. Even after stopping our digital marketing and deliberately reducing sales, the operational capacities of our two distribution centers were reaching their breaking points. Without increasing their throughput, we would be unable to reinstate our digital advertising and serve new customers in need of our products and services.

To address this problem, we immediately hired distribution center consultants to help us find ways to dramatically increase our shipping capacities. Once the complex engineering was complete, we purchased and installed an impressive amount of new, state-of-the-art distribution systems. And our IT engineers developed new software to control these very complex, integrated systems.

Lots of upgrades and innovations helped us better serve our customers in a time of increased demand for our products.

Scaling up our business to meet demands

We set a goal of transforming the throughput of our main distribution center by November 1, 2020. That would prepare us for the holiday sales season and permit us to fully reinstate our digital marketing campaigns. We made it with a day or two to spare. However, it required working seven days a week for many months.

In less than a year, we doubled our packing and shipping capacities while working under the strictest of Covid-19 health protocols. And we dramatically increased the number of trained Advisors in our Sales, Technical Support and Customer Service departments.

Another component of our excellent organizational culture is maintaining outstanding relationships with all our business partners. This greatly benefited us during the pandemic. As the supply chains broke down, we were able to receive a very fair allocation of merchandise from our vendors.

Between keeping our supply chains open, hiring and training 250 new employees, and installing additional state-of-the art distribution technology, we enjoyed a very strong holiday season while maintaining our legendary service standards.

Continued success after the pandemic

There was another positive development from this period. Because we were able to maintain excellent service during the worst of the pandemic, our reputation for providing outstanding service was greatly reinforced with both existing and new customers. In turn, they demonstrated their appreciation by continuing to shop with us as the pandemic eased.

As a result, we have continued to enjoy sales far stronger than our pre-pandemic levels. This is not true of most online retailers. For many retailers, sales are “boomeranging” back to their 2019 levels. Had I not been willing to sacrifice short-term sales and profits early in the pandemic to maintain our legendary levels of service, Crutchfield would be experiencing the same decline in sales which other online retailers are experiencing.

For years, I have been honored to lecture at undergraduate and graduate business schools. Since the pandemic, I have used this experience as a case study. It demonstrates a point I have observed over many years. When companies do the right thing, they are rewarded over the long run. Too many executives sacrifice long-term success for short-term gains. By making decisions based around their long-term consequences, I have helped make Crutchfield grow and prosper for over 50 years.

Making Crutchfield a national brand

Early in 2020, I decided that more people should become acquainted with Crutchfield. This meant that we needed to embark on a professional branding campaign. To start the process, I hired a branding consultant who was a former CEO of one of the Southeast’s largest advertising agencies. Working with him and another consultant, members of our Creative department and I worked hard to learn this very sophisticated discipline. Unfortunately, the pandemic hit shortly after we started our branding initiative. Since our focus turned to the crisis at hand, the branding work was delayed until 2022.

For years, we have been producing instructional videos which mostly appear on YouTube. We have produced over 4,200 of them. However, to gear up for our branding campaign, we built four very professional video studios in 2022 and equipped them with broadcast-quality production equipment. We also hired additional videographers and producers with strong professional experience. With this talent on board, we are now producing highly professional content for both our online instructional videos and content for our emerging video marketing campaigns.

Our new video production facility gave our videos a more professional look.

In addition to the added sophistication of our creative and production people, our marketing professionals have become very skilled in consumer research and the backend analysis of our ads’ effectiveness. Collectively, we have built a very capable team to enhance the branding of Crutchfield to a larger audience. Hopefully, this effort will introduce millions of new shoppers to Crutchfield.

New products for a new world

While the pandemic was easing, it was obvious that working from home would become a part of peoples’ lives. In our Spring 2022 Discovery Book, we introduced our shoppers to the many ways which they could use our products to make remote work more enjoyable.

The modern home office, with some help from Crutchfield.

We featured compact powered speakers which could be connected via USB or wirelessly to computers. We introduced a charger to conveniently charge certain Apple® products simultaneously. We featured a large-screen monitor, noise-canceling headphones and an adjustable desk. We even offered a large Crutchfield-branded coffee cup to keep the caffeine flowing. Over subsequent years, we have added a variety of Crutchfield-branded merchandise.

Crutchfield’s SpeakerCompare™ tool is a hit with our customers

In previous chapters of The Crutchfield Story, I discussed our virtual speaker listening technology on which we hold many patents. We first employed it at our Charlottesville retail store in 2012 and then through our website on a limited basis in 2019. By 2022, it was well developed. To explain its huge benefits, we devoted two pages in our Summer 2022 Discovery Book to its online application, the Crutchfield SpeakerCompare feature. Shoppers were now able to audition 1,500 different speakers from the comfort of their homes. Our customers love it.

Yes, we built this wall of speakers in our warehouse just to take a few pictures.

Adding wellness products to our lineup

In 2023, we expanded our selection of health care products. In the Spring Discovery Book, we devoted two pages to our large selection of over-the-counter hearing aids.

In the photo below, we showed the Sony Hearing Control app which allows users to walk through fitting and tuning of their compatible hearing aids. Smart features like this eliminate the need to use expensive hearing aid specialists.

The Sony Hearing Control app lets users boost the frequencies they have trouble hearing.

As the population ages, relatively inexpensive medical devices like these are becoming increasingly important. For this reason, we are continuing to add more healthcare products.

Crutchfield turns 50

As we entered 2024, excitement grew over our upcoming 50th anniversary. Our Spring Discovery Book and our website launched with a totally new graphic look. We also created a series of articles which compared Crutchfield and our people in our early years with today. This theme and a graphic timeline were employed in our Discovery Books and on our website.

The big event

Our actual 50th anniversary was March 1, 2024. Naturally, we wanted to have a large celebration which would include our employees and their families (including their dogs). This meant that the events would need to be celebrated outdoors. Unfortunately, our weather in late winter is highly unpredictable. But May is one of Virginia’s most ideal months for weather. Therefore, we held a celebration at our Southwest Virginia contact center on May 1, 2024, and a much larger one at our Charlottesville headquarters on May 8, 2024.

We had a special guest for our Charlottesville event. The state senator who represents our district presented me with a Joint Resolution issued by Virginia’s Senate and House of Delegates. I was very honored that members of both political parties in both legislative bodies came together to pass a Resolution honoring me for my fifty years of managing Crutchfield and for my contributions to the state of Virginia.

Bill Crutchfield with Virginia Senator Creigh Deeds at our 50th anniversary event.

Over the years, governors of both political parties have appointed me to numerous boards, councils, and commissions. One citation in the Resolution pertained to the opening of our remote contact center in the economically depressed region of Southwest Virginia.

That's it for now

This concludes The Crutchfield Story through the first half of 2024. We plan to release future updates on our website. Stay tuned since our story will continue for many more years to come.

We would like to thank all of our customers for your support and business over these past five decades. We look forward to serving you for many, many more.

Copyright© 2024 by Crutchfield Corporation