Crazy? A glimpse inside the mind of retail legend ‘TV Lenny’ Mattioli
Lenny Mattioli, Madison’s TV, furniture, and appliance king for three decades, has a lot of wisdom to impart about running a retail business.
The former mechanical engineer with Eastman Kodak came to Madison in 1969 to help close his dying brother’s 15-year-old Atwood Avenue American TV and Furniture shop, but he soon discovered he really enjoyed being behind the counter.
“Nothing is easier to compete with than a dot-com. They only have a price. Anyone can cut a price.” — Lenny Mattioli
Eventually he took over the store, moved it, and went on to build American TV & Appliance into a retail giant. In the early 2000s, he began phasing himself out of the company’s day-to-day operations, and he left long before the company went out of business last year.
In a recent interview with Mattioli at his new store, Crazy Lenny’s E-Bikes on Odana Road, one thing instantly became clear: You can take American TV out of the furniture and appliance market, but you can’t take the retail out of the 72-year-old Mattioli. (Watch for our startup feature on Crazy Lenny’s E-Bikes in the February issue of In Business magazine.)
Here are a few excerpts from that conversation, in which he discusses his theories on retail management:
On the role of the CEO:
“I really believe that the CEO of a company … has to still be hands-on. The CEO, not the EVPs.”
There are areas that a CEO must be familiar with, he insists.
“First, what are customers asking for, not what is selling? I call that the pulse of the public. Second, they must have the pulse of the frontline salespeople, those employees who interact directly with customers. [The CEO] must be able to know what’s going on there. You have to know your salespeople. What do they like selling? Which [products] do they think are better, or not as good?
“That really gets complicated, and that takes time. There are a lot of misconceptions among salespeople — not the least of which is, they all have their personal preferences. There’s not a salesperson I employed who didn’t think they knew what we should be stocking that we were not stocking, oftentimes not understanding that we couldn’t get [that item].
“So rather than think that those doing the buying are a bunch of empty heads, they have to understand that we can’t get this or that. Perhaps we have to buy a dozen of product B to get one product A. They’re allocated.
“When we can explain the differences in marginal utility to that person, they’ll have a much greater enthusiasm in selling to the consumer.
“Now you have gained a knowledge of your consumer and a knowledge of your sales staff. Perhaps, if your company gets so big, you can’t know every salesperson, but every salesperson can know you. Every person can say they met the CEO several times.
“Last thing, the CEO has to have a relationship with the vendors. The CEO has to visit the vendor in the vendor’s home city, home country — has to have a few hours of social time with the vendor to learn about them.
“Then you, in turn, invite that vendor here and entertain him in your home — in your home. Then, when you pick up the paper and you find the so-called ‘big box’ — what a joke — selling the product for less than you, you call the vendor: ‘I thought we had a deal. I thought I had significance in this market.’ Because the CEO doesn’t know what his product is selling for on the streets of northern Wisconsin. And when that local retailer gets the call from that CEO, he will jump.
“[Vendors] have many ways to help out. They can select a particular product that you could have as a store exclusive. It’s when the CEO is spending his time on things like that, which I call ‘not urgent but important,’ he or she is running the business right. All the other crap, including preparing for the board meetings, any college grad can do.
“So he needs to have his hands on the product, the customer, and the vendor.”
Thoughts on Internet shopping:
After recently observing a friend shopping online for hours, Mattioli couldn’t help himself. “Do you really like doing that?” he asked, fascinated.
He continued: “Isn’t it any fun to plan your day, a couple of errands, go to the drugstore, the grocery store, then swing over to a store, stop by, someone will smile and wave at you and tell you what will work and what won’t work, and if you get home and it’s not what you thought, the next time you’re in that neighborhood you drop it off and exchange it? [The friend] defended the practice, but none of it made sense.
“The problem is, us retailers eat our young. Retailers have a tendency to get stuck in their own cement and then have to eat their own young. They spiral to disappearance, to the bottom.
“Nothing is easier to compete with than a dot-com. They only have a price. Anyone can cut a price. So you say, ‘Well, if I cut the price it spoils my margin.’ Do people realize how moronic that is? You cut your margin?! You didn’t make a sale! You can’t take a percentage to the bank! …
“There’s a great song by Paul Simon called ‘Kodachrome’: ‘When I think back on all the crap I learned in high school, it’s a wonder I can think at all.’ Our retailers are not taught to think. They’re taught by spreadsheets, computer inventories; they’re taught how much 13% is of 17. I don’t want to know how much 13% is of 17. I don’t want to be confused by the numbers!
“I don’t want some consultant to come in and say, ‘You know, you make 25% on the E-Motion brand, and you only make 22% on the iZip brand,’ and I look at him and I think of when Muhammad Ali was in my store and we were joking and he said, ‘Boy, you be dumber than Howard Cosell!’ That’s a true story.
“I have to sell the customer what the customer wants to buy, and if I only make 25% on this brand and 22% on that brand, it’s not my decision! I might want to negotiate with each vendor the pros and cons of their products versus the price point they’re selling it at, but then again, I really can’t do that effectively if I haven’t in fact waited on customers and knew why certain customers are picking certain bikes!
“It’s not simple, but it’s not technical.”