Twenty years ago, Brian Holowaychuk was a carpenter framing
houses in a very competitive market in Edmonton. Today, he is
president of
Axe Music Light Sound & Video,
the largest most comprehensive music store chain in western
Canada. Starting out of a garage on an acreage just outside
Edmonton, Holowaychuk and his brother, Darrell, Axe Music’s
Vice-President, have framed quite a success story in the
industry.
“I was thinking, one day when it was 40 below, that
there must be an easier way to make a living,” recalls Brian
Holowaychuk of his decision to go into the music business. “I
had some interest in music. I played drums and, being a
carpenter, had built my own
PA boxes.” Building
PA boxes is how Holowaychuk got
started in the business. He noticed in visiting some
Edmonton-area music stores that all the
PA boxes were built in
Vancouver.
“I figured if I could build the boxes locally, I
would have an instant market.” He says, “There would be a
considerable freight savings for the stores. I built a shop on
this piece of land I was living on just outside Edmonton. I then
went to work building speaker cabinets.” Much to his dismay,
Holowaychuk found that he had product that nobody wanted to buy.
Despite the quality of his work and the pricing, he discovered
that retailers were reluctant to take a flyer on a new supplier.
They preferred to stick to the suppliers they knew. From this he
learned his first two major lessons in business-the power of a
relationship and to look before you leap.
He finally found one store that was willing to take
his equipment in exchange for some of the retailer’s product. “I
started going around visiting local bands in the bars selling
this equipment I was receiving to raise money to buy more
supplies and a few hot dogs,” Holowaychuk says. “That’s how I
got started in retail.”
Holowaychuk’s next step forward was finding
suppliers out of province who were willing to sell him products
close to cost. “We were able to sell for less than other stores
in town,” he says. “It gave us a niche and that side of the
business quickly grew to overshadow our cabinet manufacturing.
Because we were brand new and every sale was important, we were
very attentive to our customers.”
Holowaychuk officially launched Axe Music in the
spring of 1980. (Darrell Holowaychuk joined the company a year
later.) He turned his garage into a retail outlet. “We started
with six guitars on the wall,” he recounts. “We had a wood
burning stove for heat because we couldn’t afford a furnace.”
Very early on, Holowaychuk made a business decision that set Axe
Music apart from the competition. He was determined to deal with
both musicians and deejays.
“It was risky trying to deal with both groups
back then,” Holowaychuk explains. “Musicians were leery of
deejays. They were afraid that deejays were going to put them
out of business. Other music stores were reluctant to sell to
deejays.” Axe Music was able to sell to both groups. For
deejays, Holowaychuk was able to provide custom
consoles,
turntables and
speaker boxes. Axe has been
able to carry forward this talent of tactfully balancing
different customer groups to the present, Holowaychuk notes. “In
Axe,” he says, “it is not unusual to see a minister standing at
a counter next to a punk rocker with a green Mohawk.”
After a couple of years in business, the City of
Edmonton came calling on Axe Music. City Hall insisted that the
Holowaychuk Brothers relocate to a proper retail outlet. Thus,
they moved into a site on the Capilano Freeway, just a block
north of Edmonton’s Skyreach Centre near the downtown.
Brian Holowaychuk says that he was
initially a little anxious about being able to afford the
overhead. It turned out he need not have worried. Axe Music
started out in Edmonton as one of three tenants in their new
location. Gradually, the company expanded from its 2,000 square
feet to fill the entire building. A couple of years ago, the
landlord came in the door with an offer to sell Brian and
Darrell the building. Since then, they have added a second floor
and renovated the entire building. Unable to get the hammers out
of their hands, Brian and Darrel spent a full year doing the
construction while Axe continued to operate.
“That was a long year,” Brian recalls. “We had a
hard time finding contractors to do the work so we would
literally have to go lift some trusses, then run back downstairs
to return some phone calls. Trying to run the business out of
the building while we did the construction was nuts. Our staff
had to have moved every piece on inventory dozens of times
during the process.”
“We now do more business in a month than we did
in our first three years combined,” Brian Holowaychuk says. “We
have customers in all parts of the country.”
In the early 1990’s, Axe Music opened a second
store in Calgary. That was followed by a third location in
Kelowna three years ago. All the head office functions are done
out of the Edmonton store.
In terms of product, Axe Music offers a more
diversified selection then anyone else in the industry. “We have
competitors in different sectors but no one single competitor
overall.” Holowaychuk says. “We try to bring more products to
the market than any other competitor by a factor of two. We have
already achieved that in some sectors, notably in audio where we
have more selection than our two closest competitors put
together.”
In audio, Axe Music is among the largest accounts
for
Peavey,
JBL, and
EV. The stores also stock Bose,
Fender, a full range of guitars like
Peavey,
Fender,
Ibanez,
Paul Reed Smith, Seagull,
Dingwall, and
ESP, drums (a recent addition),
ranging from African Percussion to standard rock and roll, from
Mapex,
Ayotte,
Tama,
Peavey and
Roland electronic, electronic
pianos and keyboards by
Kurzweil and
Korg,
Crown amplifiers and
Mackie mixers.
“We were the first in the market to introduce
digital recording equipment,” Holowaychuk points out. “We carry
equipment from
Panasonic, Sounder,
Roland,
Event, and
Behringer.”
When you come into an Axe Music store, no matter
which location, you will find a large open area with a
receptionist and a sales counter in the centre. Products are
grouped by category in separate rooms. “We encourage customers
to try out the instruments. A guy can go into our drum room, for
example, pick up a couple of sticks and try out the drums.”
Axe Music stores also have digital recording
studios. The studios are not for actual recording work,
Holowaychuk points out. Axe does not believe in competing with
its customers. Rather, the studios are sales tools, much like a
control room, for musicians to try things out.
The manufacture of PA units and custom flight
cases remains a part of the business. As well, Axe Music does a
lot of commercial installations. “We started doing commercial
work very early on,” Holwaychuk notes. “The commercial side
represents 40 percent of our business. We do all kinds of
lighting and audio-visual stuff.”
Axe Music’s commercial clients have included
schools, churches, hospitals, airports, race tracks, government
conferencing systems- including one in Yellowknife to
accommodate eight or nine different languages- and a large
number of hockey rinks in western Canada. “We have done more
hockey arenas than all of our competition put together,”
Holowaychuk states. Axe Music’s lighting and video arms
developed out of its audio business, Holowaychuk explains.
“Audio, video and lighting go together,” he notes. “Bands,
deejays, nightclub and home theatre need all three. Some
lighting systems are as simple as sticking a bulb in a socket.
Others are much more complex and require an artistic flair. It
can be like working with paints and a paint brush and Axe has
the people to bring it all together.”
Axe Music has also been a leader in the use of
computer technology to improve business efficiency. It was one
of the first companies in Canada to introduce a computerized
point of sale system. “We bought our first mini computer back
when people were just starting to talk about linking PCs to form
a network,” Holowaychuk says. “We have employed a full time
software developer for the past 12 years. The whole company is
filled with tech heads. We have computers in every room with the
latest software.”
He reports that Axe Music has invested close to
$1 million in its computer system over the last ten years.
“Information is the key to success in managing a business with
in this day and age,” he notes. “Wal-Mart dominates its field
because its information system is second to none.”
The biggest benefit from computerization,
Holowaychuk notes, is in purchasing inventory. “Our purchasing
is heavily based on computer data. It ensures that we have what
people are looking for. Because of our efficiencies, we are able
to price products accessibly. In fact, we guarantee the lowest
prices. Our computer system helps us run an organization this
size efficiently without the need for excess staff.”
Axe Music has a staff of close to 100
encompassing all three stores. Staff members, Holowaychuk says,
come from a variety of backgrounds. While some, like purchaser
Gord Boyce of Higher Power (a religious music band) are
professional recording artists, others have never played an
instrument. “We put a lot of attention into hiring staff,” Brian
Holowaychuk says. “You cannot build a company without great
people and many of our people have been there since the start.
Many of the people we hire say that they have never experienced
a hiring process as exhaustive as ours. We feel as though the
staff is very important to the success of the business. We want
to make sure we hire the best people. Our hit ratio is terrific
concerning employees. Many new staff reach the top of our charts
within two to three months.”
Staff training is also very important to the
Holowaychuk Brothers. Axe Music sales staff gathers three times
a week, first thing in the morning before the doors open, for
short training sessions. As well, the Holowaychuks encourage
their employees to upgrade themselves in a number of different
ways. For example, Axe Music is putting one of its office
managers through a CA program while a credit manager is taking
college correspondence courses, with the company’s support, to
gain accreditation. “We have our own library with our own books
and video programs,” Holowaychuk says. “Staff members can sign
anything out any time.”
One personnel area where Axe Music does things a
little differently is that specialist sales people in each store
rather than the store managers make the purchasing decisions.
“It is very important that our managers are accessible to the
public,” Holowaychuk explains. “We want them to be able to
devote 100 per cent of their time to deal with staff and
customers.”
For parents whose children are just beginning
lessons, Axe Music has a monthly rental program with nominal
rates for top quality equipment. “This isn’t a profit centre,”
Holowaychuk notes. “But we want to give kids a chance to try
music before their parents sink a lot of money into an
instrument. The success rate is amazing once kids try out an
instrument but they often need that chance to try it.”
In another relatively new program for Axe Music,
the company began encouraging its clients and the public to
donate instruments that people aren’t using anymore two years
ago. Axe Music refurbishes the instruments and gives them to
school boards for their music programs.
“We have always believed in servicing what we
sell,” Holowaychuk says. “We have a repair depot in each store.
Repairs are all done in-house. We also have a wood repair shop
next door for custom woodworking and flight cases.”
When it comes to paying for their instruments,
Axe Music has taken a leaf from the auto industry in helping
customers arrange financing. The company has developed a close
working relationship with Westana Financial, the third largest
private lending agency in Alberta.
“We used to do our own in-house leasing,”
Holowaychuk says. “Over the last five years, we have been doing
more and more with Westana. We can provide consumers and project
managers with loans ranging anywhere from $300 to $1 million at
competitive rates with up to five years to repay them.”
Over the past three years, Axe Music has been
perfecting its website (www.axemusic.com).
Holowaychuk says it is still too early to know how much the
website will affect sales. He is excited about the possibilities
though. “As an information tool, its capabilities are
unmatched,” he says of the Internet. “We are writing our own
system so that customers can drop by on our database and thereby
make educated decisions quickly about purchases. If you want a
$500 guitar, for example, you can look it up on our website
first. We show all the other possibilities. Sure, you can look
up a manufacture’s website but as a store, we are more
objective.”
As well as providing solutions to as many
customer problems as possible, gaining the customer’s trust is a
key focus at Axe Music. The company has an extensive quality
control program including questionnaires that are sent out to
each customer. Any problems cross the desk of Darrell
Holowaychuk, who gives the matter his immediate attention.
Looking ahead, the Holowaychuk Brothers’ goal is
to make Axe Music a chain with branches right across the
country. “We just finished major upgrades in Edmonton and
Calgary,” Brian Holowaychuk says. “We want to double our sales
volume in Alberta and British Columbia, then roll out the
company nationally.
Operating a retail chain presents different
challenges at different times, Holowaychuk notes. “There was a
time early on,” he recalls, “when we ran into a cash flow
crunch. We had to borrow money from the bank and have our dad
co-sign. I didn’t sleep well for three months until we were able
to pay off the bank loan. I was worried about our father having
to be responsible for our organization. I learned the importance
of running a tight financial ship. We make sure all the bills
are paid promptly. We have a triple A credit rating.”
“We find it helps build relationships. I know our
most trusted customers are the ones who pay their bills.”
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