Treat Your Showroom as a Separate Profit Center, Distributors Advised
Chicago Treating the showroom as a separate profit center is a must for kitchen and bath distributors, who are being forced to turn increasingly to more sophisticated forms of merchandising for cabinets, countertops, plumbing products, decorative hardware and other kitchen and bath products.
In fact, distributors need to produce and review all-inclusive monthly profit-and-loss statements for their showroom, since these statements "are the tools owners and managers can, should, and must use to run this part of their business."
That was the key recommendation made recently by the Kitchen/Bath Distribution Alliance, a membership segment of the North American Building Material Distribution Association, which offered the advice in conjunction with the results of the distribution industry's first Kitchen & Bath Showroom Operations Survey.
The report, according to the Chicago-based KBDA, represents the first set of data that allows kitchen and bath distributors to benchmark their showroom operations against others in the industry.
The KBDA's final report, based on a survey of more than 65 distributors, details such issues as overall showroom operations, merchandising practices, sales strategies, service practices, profitability results and personnel/ management practices.
The survey revealed that while distributor showrooms are not new (more than half of those surveyed opened a showroom prior to 1980), two-thirds of the distributors polled plan to grow their showroom business in the near future.
More than half of the surveyed distributors display four or more cabinet lines in their showrooms, and 87% said they also sell direct to consumers.
Surveyed distributors also noted that their primary means of improving showroom profitability is to promote more aggressively to builders, designers and other specifiers.
Aside from operating the showroom as a separate profit center, the KBDA offered the following advice to distributors:
- Develop a yearly advertising, promotion and public relations plan and budget broken out by month.
- Establish sales goals of $600,000+ per showroom salesperson, and gross margins of 33%-plus.
- Provide consumers with one-stop shopping experiences in which all their questions can be answered and all their needs addressed.
- Grow revenue through product diversification, learning the retail side of the business, being more loyal to fewer manufacturers, and by developing showroom business plans for the next three to five years.