Growth Via Satellite Showrooms

Reico Distributors has been the dominant stocking cabinet distributor in the Washington, DC/ Baltimore market for several years, but Reico didn't achieve that level of success by sitting on its hands when its market underwent some critical changes.

In contrast, Reico changed along with the market. In fact, the story of how it changed should serve as a case study for other distributors.

Initially, Reico's competition was primarily from other independent cabinet distributors. However, when The Home Depot and Lowes home center chains decided to sell in the Washington/Baltimore territory, it became apparent that Reico had to make some changes in its distribution pattern in order to protect and even expand its share of market.

Like other distributors across the country, it found the solution to its challenge through the adoption of a wholesale/retail ("whotail") format, and through the opening of a series of satellite showrooms to achieve growth in its trading area.

nitially, Reico sold primarily through cabinet dealers. Hechinger Home Centers was its largest account. Unfortunately, it suffered loss of market share as the two newest home center chains expanded within Reico's territory.

Reico's stock lines include Merillat and Woodward. The cabinets are inventoried in a variety of door styles and finishes in the company's Elkridge, MD warehouse, near Baltimore. Reico's semi-custom cabinet is Amera by Merillat, while its custom line, from Custom Wood Products (CWP), is manufactured in Roanoke, VA.

Sold orders awaiting release for delivery are held in its warehouse. Since it delivers into three states Maryland, Virginia and Delaware Reico operates a fleet of 35 delivery vans serving its customers, near and far.

A big decision
When the sales of stock cabinets through Reico's independent single-showroom dealers were affected by competition from Home Depot and Lowes, Reico decided to take the bold step of adopting a wholesale/retail sales format.

For a traditional wholesale-only distributor, this shift in business strategy was the equivalent of becoming "slightly pregnant." Once the decision was made, Reico was committed.Many customers in Reico's dealer organization had already shifted their emphasis to custom cabinet lines that were being purchased direct from manufacturers. Reico selected prime sites in which to open a few whotail showrooms.

The move into "whotailing" didn't come easy. For one thing, the demand for qualified personnel multiplied with the opening of each new location and there was already a shortage of competent kitchen/bath designers and sales people in the Washington/ Baltimore territory.

Many challenges
There were other challenges to overcome, as well. Reico's management team, like that of other kitchen/bath distributors around the country, learned that being a prime cabinet distributor in a major metropolitan market is not for the faint of heart. I know this from experience, as the former manager of an appliance and cabinet distributor in the same territory as Reico.

At the time, I considered my decision to open a wholesale-only showroom and warehouse in Baltimore and another one in Richmond, VA to be somewhere between courageous and foolhardy. Even that modest expansion of our operations brought with it new challenges in staffing, management and delivery. However, the move did manage to increase our market penetration without damaging our bottom line. Once committed, I never felt any regrets about the decision. In fact, it was probably overdue.

Reico's move to multiple showrooms has been far more aggressive than the one I made years ago.

The company, which has some 340 employees, currently operates 14 satellite showrooms, with another in the works. Six, including the company's headquarters location in Springfield, are located in Virginia in Salem, Fredericksburg, Charlottesville, Richmond and Falls Church. Six are in Maryland among them locations in Annapolis, White Plains and Elkridge and two are in Delaware, in Newark and Dover. Each showroom has its own manager, designers and sales personnel. Reico's advertising supports all locations.

Perhaps the greatest key to the company's success, however, is its ability to select and train promising candidates to staff and service that many showrooms. Reico's training program is so vital to the company's success, that a division called "Reico University" was formed to familiarize new employees with kitchen/bath design techniques, product application procedures, sales strategies and new technology.

I salute Reico and its president, Rich Maresco, for the company's training initiatives and for demonstrating how a kitchen/bath distributor can successfully grow, while adapting to a changing and increasingly competitive market.