Sound of success: Julie Abraham

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Thirteen years – and counting – feels like a long apprenticeship. But Julie Abraham, anointed by Richer Sounds founder Julian Richer in 2009 as his eventual successor, has relished every day of it.

Eight years of close mentoring until Richer formally appointed her as chief executive in 2017 allowed her “to learn from everything Julian’s learned over the years”, she says, adding: “I feel very privileged to have had that opportunity.” As the company battles the fallout from the pandemic and Brexit, combined with the rising cost of living, the learning curve goes on.

Many entrepreneurs struggle to relinquish control of the companies they have founded, usually to the detriment of those businesses, but Richer has long been preoccupied with succession. The most tangible and high-profile manifestation of this was his decision, in May 2019, to transfer 60% of the shares in Richer Sounds, the hi-fi and TV retail chain he founded in 1978, to his employees. He had just turned 60 – the age at which his father died suddenly – and he felt the time was right to pass the baton.

Abraham didn’t see her promotion coming. “When Julian started to talk about a successor, never in a million years did I think it would be me,” she says. “He obviously spotted something in me that even I didn’t know was there.”

There were several things, says Richer. “Julie had no background in electronics when she joined us, but she did a few different things round the business and adapted very well. She’s loyal, hardworking and well liked, but, most important for a leader, she has great judgement.”

Unusually for Richer Sounds, Abraham joined head office from the outside. In common with the other directors though, she’s been at the company a long time – indeed, her 28-year tenure makes her something of a newbie. She had been working for IBM in Bahrain and, while back in the UK on holiday, had coffee with a friend who was marketing director at Richer Sounds.

“The next thing I knew, I’d agreed to have an interview for a job,” she recalls. Shortly afterwards, on the day the company opened its 14th store, she joined as a purchasing analyst. “It was a big departure”, Abraham admits, “but Richer Sounds was small and dynamic, so I had the chance to progress.”

The company has always recruited on attitude and personality, confident it can train people in the right skills. Abraham headed up stock control and purchasing, as well as IT, as she worked her way through – and up – the business.

“Then, one bank holiday at Christmas, Julian rang me out of the blue and asked me if I’d like to take over from him one day,” she says. “I thought it was a bit like one of those little ‘Break in case of emergency’ boxes you see. He gave me a week or so to think about it and I realised there was more to it than that.”

It has been, she adds, “fantastic” to work so closely with the man whose legendary leadership skills and business philosophy are encapsulated in the cult classic The Richer Way, now in its sixth edition, and embraced by a raft of retailers eager to see what a sprinkling of Richer dust might do for their organisations.

Instead of the resentment that can often creep in when a founder stays too close to a new management team, Abraham counts herself and her colleagues “very lucky” that Richer, who calls himself ‘managing director’, has remained involved. “The more we can learn from him, the stronger we will be if and when he ever decides to step back and retire,” she says.

When Richer transferred his shares into the Employee Ownership Trust, he did step back, leaving the management board to run the business and spending more time on his own projects and philanthropic activities. But when the pandemic hit, the neat division of responsibilities came to an untimely end.

“Julian says he grabbed the reins from me, and I say I threw them at him,” laughs Abraham. The first few months of the pandemic were “horrendous,” she acknowledges. “There was a constant worry that the warehouse would have to close because of an outbreak of Covid, which would mean the business wouldn’t be able to operate. We didn’t really know if we’d survive.”

Richer Sounds has long prided itself on holding its own against big online retailers such as Amazon because of its knowledgeable staff, exemplary customer service and competitive prices, but it also had web and telesales operations. Once it realised customers still wanted to buy from it, pandemic notwithstanding, it started to bring store colleagues back off furlough and migrated them onto these platforms. “We called them our laptop army,” says Abraham. “They delivered the same advice as before, but virtually, and goods were delivered direct to customers’ homes from the warehouse.”

Tough though it was, she maintains that the company has emerged stronger than it was before. It set up its own warehouse last year to avoid being dependent on a third-party logistics provider and now offers video calls to customers to help them install their new kit and make sure it works in situ. Indeed, results for the 2020/21 financial year were so healthy that the business was able to return to the Treasury almost £500,000 of the support it had received to weather the crisis.

Things aren’t getting any easier, however. “We’ve been hit by stock shortages because factories in China have been opening and closing due to ongoing lockdowns, there was a fire in the factory that supplies most of the world’s computer chips, the container ship that got stuck in the Suez Canal dammed up worldwide shipping, Brexit has caused issues at the ports… You name it, we’ve been hit with it in the past couple of years,” says Abraham. “And now we’ve got the dreadful situation in Ukraine, plus inflation, National Insurance and energy costs are all rising. It really is a perfect storm.”

Consumer behaviour has definitely changed, she adds. “I haven’t quite been able to work out what the pattern is yet, but there are definite signs that people are more cautious in their spending.”

The business is managing the uncertainty by “just being very agile, thinking on our feet”, Abraham says. “The purchasing department are spinning plates to try to ensure we have the stock that customers want, and we are also doing regular promotions. We’ve just got to stay on our game and make sure we can always offer the most competitive price on a day-by-day basis.”

The split between in-store and online sales has almost returned to its pre-pandemic ratio of 80/20 in favour of stores (it is now 70/30 ), suggesting that the high street is not as dead as some suggest. “I’d love to see us steady at 75/25, and grow the overall cake,” says Abraham. “That’s a work in progress.”

The route to continued success remains a relentless focus on colleagues. “As Julian says, if you look after your people they’ll look after you,” remarks Abraham, explaining that engaged, motivated and well-trained staff, combined with good-value products, make for happy customers. “If you put people before profit, the profits tend to follow.”

The company uses a raft of techniques to motivate staff, from letting them use the company’s 12 holiday homes, to daily training (in work time) and a staff suggestion scheme. Shrinkage is around 0.1% of sales, a fraction of the 1% to 2% typical of the high street, and labour turnover is less than 10%, meaning the company saves millions on recruitment and sustains consistently high customer service.

The fact that staff are now shareholders, receive a windfall payment of £1,000 for every year they have worked in the business, and benefit from an annual profit-share payment, has boosted engagement further still.

Abraham explains: “All our stores are set up almost as independent businesses, so the manager and deputy manager are paid on the success and profits of their own store. But with profit share on top, they are interested in everyone else’s performance too.”

Abraham nails her colours to the mast in her LinkedIn profile, which is less about her than it is about the values Richer Sounds espouses. A signatory to the Good Business Charter (which Richer was instrumental in setting up), accredited by the Living Wage Foundation, and holder of the Fair Tax Mark, she asks that organisations seeking to do business with Richer Sounds are similarly accredited to demonstrate their adherence to good business principles. “To be honest, I only put that on LinkedIn to stop all the flipping emails I got from people trying to sell me stuff, which drove me nuts,” she admits. “But this is the way we do business, and we want others who do business with us to do the same. It is in our supplier code of conduct.”

It’s almost impossible to quantify the effect of being an ethical business, Abraham says, because it’s aways been in their DNA. “It’s part of our culture, and we are absolutely not doing it for marketing purposes. However, we use the accreditations as an opportunity to reinforce that this is the way we do business – and are proud of it – on social media.”

The response is “phenomenal”, she adds – far more so than for product announcements or other business news. “When we announced the Employee Ownership Trust, it went mad. Stories like that seem to gain an awful lot of very positive traction with customers.”

Independent accreditation is a way for consumers to see that you are walking the talk, not just talking a good game, she points out – but how does the company know that everyone in the business buys in? Abraham explains that, because colleagues have been imbued in the firm’s values from the day they join, it is second nature to behave correctly. She adds that the regular contact all staff have with senior people, combined with weekly morale surveys, results in the top team being able to quickly spot the signs of anything going awry, and address them.

With only 500 colleagues, the directors pretty much know everyone anyway, she says – and the value of having a long-standing, tight-knit management board also means the directors know each other and the business very well.

“There’s always someone who can say, ‘well, we did this before, let’s try it again’,” she notes. “I often find with people coming in, even consultants, that I have to spend a long time trying to explain the culture to them. Which is why we always look to the stores first to find someone who might fit a particular role.

“Store colleagues also understand the products and the customers better than anyone, of course.”

It’s no accident that Richer Sounds won the Which? Retailer of the Year award again in 2021, with a clean sweep of five-star ratings across 10 categories, including product range and availability, product quality, staff helpfulness and knowledge, and value for money. Its customer score was 92%, five percentage points higher than that of John Lewis.

Richer has described the staff suggestion scheme as ‘the oil well’ of the business. The bell outside every shop was the suggestion of a manager nearly 30 years ago, who was concerned that when his branch was busy, he might not see a customer in a wheelchair wanting to come in (the shop doors are always closed to protect staff from pollution).

Likewise, the comprehensive ‘jargon buster’ section on the website was a staff suggestion. Abraham says: “Most of what I do every day has stemmed from a staff suggestion at some point. As well as being the cornerstone of innovation at the business, it is a great way to make staff feel involved. Everyone knows they can contribute.”

Since the transfer of ownership, employees are even more involved in which suggestions should be implemented, referring them to heads of department only at the end of the process. Similarly, colleagues are more involved in the company’s philanthropic activities, encapsulated in the new Richer Sounds Foundation. “I’m not allowed to be involved – though I can add my two pennorth if I’m asked,” says Abraham.

Perhaps one of the reasons Richer and Abraham work so well together is that they are completely different. “I’m a lunatic maverick entrepreneur, and Julie is far more sensible,” says Richer. “I have crazy ideas and she will give me the reasons why they won’t – or sometimes will – work. It comes down to judgement again.”

Abraham agrees. “We complement each other,” she says. “Julian is brilliant at thinking of the worst-case scenarios, whereas I tend to be a bit more relaxed – though a colleague did recently describe me as ‘a velvet steamroller’. Sometimes we agree to differ, sometimes we compromise, but he always listens to me. I wouldn’t have lasted this long as his successor if we’d not been able to talk about things.”

One thing they are absolutely in tune over is the importance of succession. “I think a weakness in the past has been that, while we have had a great set of directors, the people below them have not been ready,” Abraham says.

Suddenly losing a very senior colleague from one particular department during Covid was a bit of a wake-up call. So she recently instituted a series of ‘Julie’s succession sessions’, which will focus on developing leadership skills in people below board level.

As the number of stores is likely to remain fairly constant (Richer made a strategic decision early on to open stores only in freehold premises in areas of high-density population), Abraham will concentrate on ensuring the business remains agile and adaptable.

“I’d hate to think that all the work Julian has done to get us this far would be ruined because we don’t have a plan in place for the future generation,” she concludes.

This article is from the July 2022 edition of Impact magazine.