Apparently, He Really Is the King
Big-screen television dealer Paul’s TV has one store, sells two brands, shuns such modern tools as the Internet and is four miles from the nearest freeway offramp.
But the La Habra retailer has survived for decades in an increasingly cutthroat industry as smaller competitors folded and heavyweights such as Best Buy and Circuit City opened around it.
Paul Goldenberg, who for years has crowed “I am the King!” on radio and television ads, says his company is thriving and insists he can weather an economic slowdown because the big-screen TV market is “exploding.”
Customers say they are lured by Goldenberg’s hokey ads, his prices and pledge to deliver anywhere in Southern California, usually within four hours.
“Who else is the king?” asked Jeff Marx, a 57-year-old product marketing director who recently drove 90 minutes from Woodland Hills to Paul’s TV. “It’s a joke, but it worked for me.”
Goldenberg, 72, focuses on the big-screen niche, which industry insiders say has grown steadily over the last couple of decades and holds increasing promise as consumers warm to digital TV, with its sharp pictures and wide screens.
The self-proclaimed “king of big screens” said he sells about 10,000 TVs annually, at an average price of $3,000--a tab that can climb to $6,000 when cabinetry and a sound system are included.
That volume makes Paul’s the largest single-store dealer for Mitsubishi Digital Electronics America Inc.--the nation’s top seller of large-screen digital TVs. Paul’s has held that distinction for 17 years in a row.
“He does more out of that one store than many chain stores do,” said Max Wasinger, vice president of sales and marketing for Mitsubishi Digital in Irvine.
Merging With the Marketing
The business is driven to a great extent by the high-profile personality of its owner, whose long-running advertising spots have made him a familiar figure in Southern California. His persona pulls in customers, and they find at the store that the man has merged with his marketing: A picture of Goldenberg wearing a crown hangs in his showroom.
Though Goldenberg sells big-screen sets, he is really in the customer-service business, said Tom Edwards, an analyst with NPD Intelect Market Tracking, a New York firm that tracks consumer-electronics sales.
It helps that he has a veteran crew: 11 of the 12 salesmen have been with the company for more than seven years. All were trained by the boss.
The company’s attention to service, said Edwards, has won it “tremendous loyalty” from customers.
Deliveries, for instance, are free, even if they take hours. In one instance, Paul’s drivers hauled a television to El Centro in the Imperial Valley, a 220-mile trek that required crossing snow-covered mountains, Goldenberg said.
“It wasn’t perhaps our most profitable delivery,” he said.
By comparison, Circuit City Stores Inc. said it offers free delivery on big-screen televisions within the Los Angeles area, usually the following day. Best Buy Co. generally delivers within two days at a cost of $29.95 in the store’s vicinity. Deliveries that are farther away cost about $1 a mile, according to a Best Buy spokesman. Good Guys Inc. generally delivers the next day, but at a cost of about $50.
The big chain stores may be more convenient or offer a wider selection, analysts say, but mom-and-pop operators like Goldenberg can zero in on a niche, offer greater customer service and carve out a good chunk of the market.
“If the competition knew how well he does, they’d have a heart attack,” said Dennis Holt, who handles Goldenberg’s media buying and has known him about 30 years.
Competitors are closemouthed about Paul’s TV. An executive at Ken Crane’s Home Entertainment City in Hawthorne, for instance, would say only that Goldenberg is a “formidable competitor.”
“He says he’s the king. Yeah, whatever,” said Robert Waldron, a young customer service manager at the Circuit City store nearest Paul’s.
It’s not clear yet whether Paul’s profit will be hammered by a cooling economy. The national economic slowdown already is hurting some bigger retailers.
“[Consumer electronics] is an industry that does not do very well during periods of economic slowdown,” said Todd Kuhrt, an analyst with Midwest Research.
And profit margins at independent retailers are generally thin--about 2%, analysts say--so a drop in sales volume can cause a serious dent in the bottom line. At the 2% rate, the sale of 10,000 televisions at $3,000 each would yield $600,000 profit.
But Goldenberg, who declined to reveal profit or specific sales numbers, is upbeat: “We had the best February we’ve had in many, many years, and we had a fantastic January.”
Sales rose about 17% last year from 1999, he said, and jumped 30% in February from the same month last year.
Coming to See the King
Shoppers might whiz right past Paul’s if they weren’t dead set on visiting the store. The showroom is hidden behind a plain, boxy exterior, with “Paul’s” slashed across the front in red letters--next to a KFC fast-food restaurant. The showroom is far from palatial, despite the bejeweled crown in a display case.
But it attracts customers from throughout the Southland and beyond.
Restaurant owner Shawn Meth, his wife and daughter recently traveled an hour from Reseda to buy a 65-inch TV for $4,000.
“Before we bought anyplace else, we wanted to come and see the king,” Meth said.
Goldenberg tends to downplay the importance of his advertising campaign--saying in the privacy of his office, “I don’t consider myself really the king of anything.”
But associates say he has been aggressive about his marketing.
“Where a lot of his competitors under-advertise, Paul’s actually over-advertises from a budgetary standpoint,” said Jay Stevens, owner of the studio where Goldenberg records his ads.
Holding Back on Expansion
In other ways, though, he has held back. Even as his competitors have added stores, Goldenberg--an old-school entrepreneur who has no voicemail or Web site--has shown no interest in expanding.
“If I had three or seven or 10 stores, I couldn’t manage them the way I think a store should be managed,” said Goldenberg, who likes to track inventory, monitor delivery schedules and call customers to see whether they’re happy with recent purchases.
He also “works the room,” say those who know him.
“He’s in the store. He talks to his customers,” Stevens said. “I don’t think you can go into a Good Guys store and actually meet the Good Guy.”
Goldenberg was about 23 when he opened a store in 1952 in Los Angeles near Griffith Park, launching the business with $1,000 loaned by a cousin. In 1964, he moved to La Habra.
“Orange County was growing, and I wanted to get in on that growth,” he said.
At first, he carried a full line of televisions and appliances to tempt the burgeoning area. But when big-screen TVs hit the market about 1979, the movie buff began phasing out stoves and refrigerators to make way for giant screens.
“I was just very excited that you could, basically, have a movie in your house,” he said.
By the time of the 1984 Summer Olympics in Los Angeles, Paul’s had transformed itself into a regional electronics powerhouse.
And the store continued to thrive even as competitors such as Phil & Jim’s TV and Appliances in Anaheim, LA Tronics in Encino and Adray’s CBS Premiums in Orange were forced to shut down.
Goldenberg’s success has enabled him to donate money to favorite charities, muscular dystrophy and pediatric AIDS groups among them. He also supports the Democratic Party, giving it $175,000 in the 1999-2000 cycle.
He offered President Clinton a big-screen TV but was turned down.
Instead, Goldenberg, a sometime dinner guest at the Clinton White House, gave the president two 27-inch televisions and a DVD player last year for the Clintons’ new home in New York.
The president, who said he would either pay for the gift or donate it to the White House, paid Goldenberg $2,993 in February, according to Clinton spokeswoman Julia Payne. In a note, she said, Clinton thanked Goldenberg for his “friendship and generosity.”
Goldenberg is optimistic about his company’s future. Big televisions are becoming increasingly popular as more people try to re-create the moviegoing experience in the privacy of their homes. Home builders are helping to fuel the trend by making homes with large rooms that are meant to accommodate massive TVs.
Analysts predict a surge in demand as prices drop for digital TVs, which hit the market in August 1998 and are the fastest-growing segment of television sales. The number of digital TV sets sold to dealers--while still a small part of the overall market--increased fivefold last year and is expected to nearly double this year, according to the Consumer Electronics Manufacturers Assn.
Mitsubishi Digital accounted for more than a quarter of 350,000 big-screen digital televisions purchased nationwide last year, said analyst Edwards. The No. 2 seller is Panasonic, the other brand Paul’s sells. Digital TVs now account for about 85% of his store’s sales, Goldenberg said.
And consumers generally keep buying TVs, even the pricey ones, in a rocky economy, Edwards said, adding, “I don’t want to use the word recession-proof, but it almost is. That’s where somebody like Paul’s strength is.”
It is not clear what will happen to Paul’s TV and its 100 full- and part-time employees when Goldenberg bows out. He’s not considering retiring and wouldn’t say whether he has a succession plan. The divorced La Habra Heights resident has one child, a son who’s a botanist.
Goldenberg will never sell, said media buyer Holt. “That store is an organ in his body. . . . It’s his identity.”
Besides, added Holt, “kings don’t retire.”
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The Digital Difference
Sales of digital televisions, which offer wider screens and much higher picture quality, are growing rapidly while sales of analog TVs are flat. But digital TVs still represent a small portion of overall sales.
*
DOLLAR SALES* (In billions)
Analog: $5.9
Digital: $2.2
*
AVERAGE PRICE PER UNIT
Analog: $247
Digital: $1,925
*2000 figures estimated, 2001 figures projected
Sources: Atlantic Stereo, Consumer Electronics Assn.
