S Gold & Sons

Source: Retail Digital

Date :31/05/2007 15:21:48

GOLDS – NEW MARKETS FOR NEW MEDIA

The best ideas are often the simplest, and there is a simplicity about the philosophy of Golds that has survived through its development into an undeniably complex business. For those whose business doesn’t involve retailing music, DVD, Video, games and other home entertainment products let it be recorded that S Golds & Sons is the UK’s principal wholesaler of these products

Written by John O’Hanlon: produced by Kate Bradley

The company started in 1995 with Sidney Gold’s delicatessen store in Ilford. Nothing to do with records, but Sidney was a traditional Jewish businessman who allowed his sons to work in the shop and took the view that if they wanted spending money they should earn it through their own initiative – a great incentive to entrepreneurship.

Barrie and Tony Gold accordingly started selling records from racks outside the shop. That went well, so they took a stall in Petticoat Lane and started selling records there on Sundays. That went even better, and in the early 1960s they were taking £1,000 a week, a large sum in those days.

The move to wholesale

Other shopkeepers started coming to the Golds knowing that they held accounts with record companies like RCA and CBS, and that was how the first record wholesaler in the UK was established. It was not long before they decided to close down the retail side of the business and devote themselves to wholesale.

Golds invested in their future and had a warehouse built on the back of their store, later moving to a 30,000 square foot warehouse in Leyton as the company embraced the growth of video from 1979. “They became a one stop shop,” says Garry Elwood, who joined the business as national sales manager in 1988 and is now Managing Director. “You could get everything for the entertainment business from them, from CDs, cassettes, VHS and Betamax videos and all the accessories that went with it including blank media, cabinets and even electrical equipment.”

It was also in 1979 that Golds started the export side of the business, initially to Eire, Germany, Switzerland and Holland but early in the 1980s the company went global. Today it is able to service nearly 1,000 accounts in over 96 countries, accounting for 25 percent of the company's annual turnover.

The concept of service simply runs in the Golds’ veins explains Garry Elwood. In the early days it is said that if a customer came into the shop for eggs and these had run out, one of the boys would dash to Sainsburys and sell the eggs at cost to his customer rather than see them leave without. “Service has always been of paramount importance to the company. They always want to be first in everything they do. We were the first company to have a printed catalogue in this industry. And our catalogue became known as the industry bible because it listed everything. Even the film producers rang us to ask if certain films had been released in the UK!”

Systems for service

As Elwood puts it, Golds is a part of the home entertainment establishment, but he never forgets the axiom: ‘you are only as good as your last order’. In other words loyalty won’t stop a customer moving to a competitor if even once a film or record is not with him by its release date. Imagine a bookshop not having stock of the last Harry Potter on July 21st! “We are very much a trade operation. That is our forte. There are people who deal both with the trade and the consumer but we won’t compete with our customers.”

To make sure all customers from HMV and Blockbuster down to the smallest local one-shop retailer never have that experience, Golds expanded in July 2001 into its current premises in Walthamstow, where it has 33,000 square feet of office space and a 75,000 square foot warehouse.

The warehouse is highly automated, with a system supplied by the Austrian warehouse systems integrator Knapp. “We brought them in and asked them to design a system for us we could build our operation round it, “says Elwood. “Everything that comes in is barcoded. These are scanned, so the system records the inward stock which then goes into a conveyor system. The barcode tells the system which hopper to place the stock into, and the hoppers are then launched onto a roller system which takes them to the point in the warehouse where it needs to be filed. The only manual intervention is to place the goods onto the racks.”

At the other end of the warehouse is the launch system for orders out. Orders come in on the internet, by phone, by fax, by EDI or by e-mail. The computer generates the order with a barcode and transmits it to the warehouse. There an operator scans the order and an empty hopper which goes round the store stopping wherever it needs to pick up product. The product is placed manually into the hopper, following which it proceeds to dispatch for a final check, packing, palletising and dispatch via Golds’ logistics partner DHL for next day delivery.

The warehouse system has been in place for some time and everyone is used to it. More recently the staff has been getting ready for a radical change. The company has invested £1.1 million in a new state of the art computer system. “This is a huge change for us,” says Garry Elwood. “It will help us manage the business more efficiently, though. We were using a Unix-based system but now we are moving over to a Microsoft Dynamics system. The changeover is scheduled for June 1, but we have been preparing for 18 months, with staff involvement from the very start. They are very much behind it and have adapted the programmes to fit their own departments.”

The preparation was needed so there would be no interruption to business. Rather than bring in a training company Golds created ‘superusers’ who can train their colleagues using their super powers! Though Sidney Gold died many years ago, Barrie and Tony now own the whole of the business, divided equally between them, Barrie Gold’s son Jonathan is also on the board, and the company continues to work like a family in which all the members are consulted about major changes.

Outside the box

A couple of years ago, says Garry Elwood, there was something of a wake-up call as the directors realised growth had ground to a standstill thanks to a number of factors including price cutting and piracy. The response was twofold. A five-year plan was put into place to achieve 10 per cent growth over the period to 2010 (more of this in a moment) and Elwood addressed the whole of the management and supervisory teams explaining the policy of diversification and investment and asking them to generate savings wherever they could. “The response was tremendous, and I took a lot of notice of every idea. As the MD I know that if I can turn a staff idea into a policy they will buy into it.” Among the ideas acted on was a recycling exercise, and one person had the sound idea of saving a third of the cost of such items as soap and toilet paper by switching the staff restrooms from branded to own brand products!

The growth plan means thinking outside the box. Golds is not the kind of business to gently decline as the market for music and DVD changes, and in any case the core business is expected to hold up for many years as the industry moves over to new formats such as Blu-Ray Disc and HD DVD. It just isn’t growing so fast any more. Some of the outside the box ideas are very smart and can’t be mentioned here for that very reason.

The majority of Gold’s income still comes from DVD. Music accounts for about 11 percent, games about five percent and accessories and some hardware. However it is worth mentioning that Golds has its ‘own label’ as well under a separate division called Blackhorse Entertainment (www.blackhorseentertainment.com), which has an output deal with some small American studios and producers. Elwood is aggressively growing that division, which was established three years ago, recruiting a general manager and redesigning its website. “It has done very well when you consider that it started from nothing and is now turning over £3 million a year. Under the five year plan we are planning to grow that to £10 million and I am confident that will happen.”

However there are plenty of new sectors for Golds to exploit and Garry Elwood is determined to miss none of them. For example Golds already supplies more than 80 percent of the public libraries in the UK with their growing stock of multimedia for loan. It’s a sustained business, good for cash flow because the local authorities pay promptly and one Golds has made its own, adding value by supplying the products with the libraries’ labels and lending documentation attached. Other alternative markets could be garden centres that carry gardening videos, sports and fitness centres, where customers expect to find instructional programmes and the like. With more than 40,000 items in the catalogue Golds is the obvious choice to supply these markets.