Journal Sentinel

Powering up - even in a downturn
Electronic gizmos and gadgets keep Batteries Plus growing amid recession
June 4 , 2009
by Joe Taschler

Amid the worst economic downturn in a generation, Hartland-based Batteries Plus is opening new locations and seeing same-store sales increase by double-digit percentages.

The company has found a niche selling batteries that power every portable electronic gizmo and gadget imaginable.

Even in a downturn, cell phones, digital cameras, laptops and iPhones need power.
"Our business has continued to be very strong," Batteries Plus CEO Russ Reynolds said. "We're seeing demand increase because of the proliferation of portable devices."
Batteries Plus employs about 125 people in Hartland.

The company is a unit of Roark Capital Group, an Atlanta-based private equity firm. Roark specializes in business and consumer service companies. Its brands include Schlotzsky's, Cinnabon, FastSigns, Moe's Southwest Grill and Money Mailer, among others.

Roark Capital purchased Batteries Plus about 18 months ago. Reynolds, who has been CEO since 2001, was one of the investors along with Roark.

The company does not release financial figures. Reynolds said Batteries Plus has seen revenue growth of 15% in the past year.

With 352 stores in 42 states and Puerto Rico, the company has a number of competitors locally in some of its markets, but no one who competes nationally.
"A lot of competitors sell pieces of what Batteries Plus sells," Reynolds said.

Backup power crucial
The size of the market served by the retailer is staggering. Every portable electronic device that hits the market is powered by a different-sized battery. And having backup power is crucial for many consumers and businesses that depend on portable electronic devices.

"A customer will buy a phone or other portable electronic device and quickly discover they want a spare battery," Reynolds said. "These devices get used so frequently in daily life now."

Besides consumer demand for batteries, there is also commercial demand to power such things as hand-held scanners and portable printers used in businesses such as warehouses.

And, all those devices need battery power.

"If the portable electronic devices come in all shapes and sizes, the batteries will have to come in all shapes and sizes," said Vishal Sapru, the Industry Manager-North America for Energy & Power Systems at Frost & Sullivan, an international business and technology consulting firm based in Mountain View, Calif.

"The opportunity in the market is huge. It's an exciting market to be in and an exciting market to talk about."

Frenetic pace
In total, Batteries Plus handles about 40,000 different types of batteries, but not all models are stocked at each retail location. Regional influences affect store inventory.
"No two stores have the same commercial account base," Reynolds said.

Among the biggest challenges facing the company is the frenetic pace at which new battery-powered devices enter the market, Reynolds said.

Of the top 20 best-selling items, nearly two-thirds will turn over in three to four months.
The challenge is "knowing when to have 10 of them in the store and when to go back to having two of them," Reynolds said.

"There's a fair amount of complexity involved in having the product on the shelf when a customer walks in the door."

Ever-shorter product lives is another trend that will likely continue.

"Consumers get bored easily," said Dennis Garrett, associate professor of marketing at Marquette University. "Product life cycles have gotten dramatically shorter," and are now often measured in months instead of decades.

What's hot right now might be considered prehistoric by October.

"If you're first to market, you have an insurmountable advantage over your competitors. Everybody's racing to get out there first," Garrett said.

Recycling also key
Besides selling batteries, Batteries Plus is also pursuing a strategy of being a collection point for used batteries.

"We recycled 10 million pounds of batteries last year," Reynolds said.
Becoming a net collector of batteries generates traffic and also cements relationships with customers.

"We believe it's a wise business position to be a resource for customers," he said.
The company also strongly believes in its southeast Wisconsin location, where it has no problem landing the qualified technical people it needs, Reynolds said.

"The key is hiring smart technical people," he said. "We're fortunate to be a Midwest company. Being in southeast Wisconsin makes sense."