SEMA News—June 2015

BUSINESS
By Chad Simon

Retail Spotlight

H&H Classic Parts Perseveres Despite Changing Business Climates

H&H Classic Parts is a retail mail-order company located in Bentonville, Arkansas. It has seven employees.

Initially a one-man operation run by Herman Smith, H&H Classic Parts opened its doors in September 1987 as a hobby that got way out of hand, according to Smith’s son Tray, who is now vice president of operations and sales. The company has since grown in size by 300%.

During H&H’s infancy, the elder Smith also owned an automotive service center. It housed H&H in a small room, but he sold the service center in 1993 so that he could concentrate on growing H&H. Soon after, the company added 7,200 sq. ft. and expanded again last year by 13,000 sq. ft.

Today, H&H is a family-owned retail mail-order company in Bentonville, Arkansas. It has seven employees and is located in a 24,000-sq.-ft. facility that includes a warehouse and showroom.

The company specializes in selling more than 20,000 parts from more than 150 manufacturers for Tri-Five Chevrolet cars, ’55–’72 Chevrolet and GMC trucks, Impalas and GM fullsize cars, ’58–’70 Chevelles, ’64–’72 Novas and ’62–’74 Camaros. It will soon add ’67–’81 Camaro components.

Overcoming Challenges

Since ’95, H&H has achieved success by catering to an older demographic of Chevy enthusiasts. Sales were up 120.8% but, as with many other companies, the 2008 recession brought sales to a crawl. H&H is a discretionary business, so it saw as much as a 20% drop during that time, according to Tray Smith. It still hasn’t all returned, but the company is within 5% of its 2007 peak.

H&H Classic Parts 12325 Hwy. 72 West Bentonville, AR 72712 479-787-5575 www.hhclassic.com •Owners: Herman, Liz and Tray Smith. •Seven employees. •Specializes in retail mail order of GM/Chevy parts. •Sales are up 120.8% since 1995. •Focuses are providing customers personal service and fast ship times. •Plans to expand into Camaro and ’80s truck parts. •Operates in a 24,000-sq.-ft. facility in Bentonville, Arkansas. •Believes in having a presence at industry shows and events to get out in front of customers. •Industry challenges include gaining and retaining customers, attracting young talent and combating legislative issues that affect the industry.

“We survived 2008 with low overhead and by doing more with fewer people,” Smith said. “We never laid anybody off, but we had staff who left on their own. We changed the amount of product we brought in and how we moved it across. We figured out how to increase our turns by handling less inventory but still selling the same amount of product. It was a process of going through and looking at the way we did business and figuring out how we could do it cheaper and still provide the same level of service. It was the right road for us, because we survived when a lot of companies didn’t. I call it the thinning of the herd. A lot of companies aren’t here anymore, some big and some small.”

In addition to outlasting the recession, it’s challenging from a sales standpoint to find a customer who’s willing and able to spend money on hot rods and classic cars and then take care of and retain that customer, according to Smith.

The greatest long-term struggle is what Smith and many others call “the graying of the industry.” Most of H&H’s customers are 45 and older, although Smith is starting to see younger guys ages 25–40 taking an interest in some of the Novas and pickups.

“I’m 40 years old, and I’m considered a young guy in this business,” Smith said. “As an industry, to attract a younger demographic, we have to be willing to adapt to what they’re interested in. It’s tough to get a 16-year-old kid to come out and build a Tri-Five Chevrolet car, because they can’t afford it. We have to adapt to newer model years and different types of cars to stay relevant. If we don’t, we’ll see this industry disappear. It won’t disappear tomorrow; it’s a long-term thing. It’s a tough sell with some of the older members of this industry. Sometimes we get tunnel vision and are focused on only the now instead of 15–20 years from now.”

	Last year, H&H added 13,000 sq. ft. to its facility, including a new showroom.

Even marketing strategies require evolving with the times. Since the way people choose to consume news today has largely shifted from print to digital, the majority of H&H’s advertising dollars is spent online and on social-media platforms such as Facebook. Instead of advertising in 40–50 magazines as the company used to 15–20 years ago, it’s down to the 10 that bring it the best response rates.

Another challenge facing the industry is combating harmful legislation passed in Washington, D.C., such as stringent ethanol requirements and limited off-road access to public lands. Smith currently serves on SEMA’s Automotive Restoration Market Organization (ARMO) as the legislative committee chairman.

“It’s something I believe in whole-heartedly,” he said. “If we as an industry don’t make noise about what we feel is wrong politically, we’re going to get run over.”

Provide Personal Service

The level of personal service H&H provides is what sets it apart from its competition, according to Smith. Many companies today are being bought up by investment groups and turned into conglomerates. As a result, customers lose out on one-on-one service. Even though Smith is an owner, he always makes himself available to personally help his customers whenever necessary.

“We do our best to make an investment in our customers,” he said. “We understand that they have a choice of where they go to spend their money.”

	Orders placed on in-stock items are always out the door the same or following day.

Making yourself visible to vendors is just as important. H&H has expanded its vendor base from 12 to more than 150 since its 1987 launch. According to Smith, one of the best vehicles he has to establish and maintain vendor relationships is attending the SEMA Show.

“Being able to go out there, even for just five minutes of face time, is golden,” he said. “It puts a face to the voice and the money you’re spending with them.”

Smith and his team are set to attend 20 events this year in their mobile warehouse, which is filled with 4,000 to 5,000 different products of the 20,000 they sell. These opportunities will bring them more face time with their customers, since there’s a segment of the market that will buy product only after they see it firsthand.

Another factor that sets H&H apart is its fast ship times. Orders placed on in-stock items are out the door the same or following day. According to Smith, 99.8% of everything going out is correct and damage-free, and the company’s return rate is miniscule.

Looking Ahead

Smith said that H&H will begin to focus more on the Camaro and ’80s trucks because of the plethora of parts available and their numbers on the road. The company had plans to expand its reach several years ago, but those plans were put on the back burner when the recession hit because H&H was just trying to survive. Now that sales are picking up and people have more discretionary income to spend on their toys, Smith believes it’s time to expand into different products to meet customer needs.

Smith advised that novice retailers get to know their product before they sell and stressed the harm caused by giving it away.

“A lot of guys come into this business in the small end of it, and they feel like they have to give product away in order to make a sale,” he said. “It does nothing but hurt the industry. You don’t have to be the highest-priced guy out there; you don’t have to be the cheapest guy. Let the merits of how you do business make the sale for you. Get to know your product. Don’t just go out there and sell it. Don’t be afraid to say, ‘I don’t know, but I’ll find out.’”