Expo Design Centers Spread Wings

Seven years ago, I visited the original Home Depot EXPO showroom in San Diego. I came away impressed that a home center was actually courting the high-end clientele for kitchens and baths. Just last week, I drove to Fairfax, VA, where EXPO opened a showroom in July of this year. What greeted me was more high-end than its San Diego "laboratory store." The building itself was architecturally attractive, with no resemblance to its regular Home Depot hardware-oriented stores. In fact, I found it hard to identify the showroom as a Home Depot. In raised letters on the front of the building was "EXPO Design Center." Underneath, in modest letters, was the notation, "A Home Depot Company." Throughout the showroom area, personnel were identified by first name on a tasteful badge. The orange aprons worn in Home Depot stores were conspicuously absent, giving the sales staff a more professional appearance. The parking lot, which accommodates about 200 cars, was almost full on that Saturday afternoon. Inside the store, customers were eagerly touring the displays, each of which posted a listing of materials and the price of the total cabinetry, as well as a lineal foot price. Granite, solid service and genuine marble tops were predominant in the displays. Obviously, EXPO has learned that elaborate displays and high-class personnel don't come cheap. Pricing of cabinets and built-in appliances appeared to be consistent with that of comparable merchandise quoted by independent kitchen/bath specialists. Most of the company's 16 complete kitchen displays featured St. James cabinets. The line looked and felt strictly upscale. Since I am not familiar with that brand, I assume that this is a private label, exclusively for EXPO Design Centers. Other cabinet brands on display that were familiar to me included Allimilmo, Fieldstone Paris, Quaker Maid and Wellborn. The layout and decor of the displays would appeal to well-to-do prospects. There was no sign of the Mill's Pride ready-to-assemble cabinets that are so popular in the Home Depot buildng products chain. EXPO's model baths were also done in good taste, in my opinion. As I understand EXPO's mode of operation, the firm employs graduate interior designers, who help customers select and coordinate their purchases from the various departments within the showroom (see floor plan, below). Complete installation services are available for kitchens and baths. EXPO's impact What is the significance of EXPO to kitchen/bath dealers and cabinet distributors? Most of the several competing dealers I interviewed indicated that, thus far, EXPO has helped their businesses more than hurt them. This was because EXPO's displays whetted customers' appetites for a better kitchen or bath. Since dealer pricing was in line with EXPO's , and their sales floor generally has less traffic, dealers are more available to talk with prospects. I've heard that EXPO's present six showrooms may ultimately number well over 100! I assume they will be located in high-income areas. On the busy Saturday of my first visit, no salesperson approached me, because there were already so many interested prospects. I revisited EXPO again, but on a rainy weekday, and was impressed with the attention I received. My impression is that EXPO doesn't yet have enough personnel to keep up with showroom traffic during times of peak activity. It does supplement its full-time people with part-timers, which undoubtedly gives them some scheduling flexibility. Dealers report that EXPO has tried, with limited success, to seduce their sales personnel. At this time, with experienced personnel at a premium, staffing may be EXPO's greatest challenge, just as it is for all in the kitchen/ bath industry. Before the Fairfax EXPO Design Center opened, management held training classes for the less-experienced kitchen and bath personnel. EXPO obviously isn't wasting time on "tire kickers." The company requires a $750 deposit from customers before preparing quotations, or furnishing presentation drawings. My reaction is that EXPO has learned from the experience of its earliest showrooms, and is aware that time is money. On the strength of its excellent displays and personnel, it will surely be a major factor in its market area. However, it appears that the company is creating so much interest with its elaborate displays that many prospects shop the independent dealers, as well, to compare products and pricing, thus creating a new source of prospects. If we need any assurance of the demand for upscale kitchens and baths, Home Depot's investment in their EXPO showrooms certainly confirms it. Incentives Though EXPO obviously isn't flaunting low prices, it does offer some incentives for customers, which helps to close sales. Here are a few that I am aware of: 1. The showroom is open seven days a week. 2. There's one-stop shopping. Almost all of the design-related products needed for a home can be seen in a single showroom. 3. Warranties are offered on cabinets and installation against defects for the life of the home. 4. On-staff design consultants guide homeowners in their selection of compatible products. 5. Finance terms are offered a September 18th, 3/4-page ad in the Washington Post stated the following: "Now through October 27, 1999, credit up to $100,000 is available on any kitchen cabinet purchase of $2,000 or more. Make no payments for six months, and pay no interest if paid in full within six months. Retainer required." 6. Excellent preprinted information folders, in color, are part of a packet available to prospects. Included in a packet given to me were the following: "Kitchen Remodeling Guide," "Showroom Guide," "Design Services" and a printed "Installation Warranty." 7. A large display of built-in appliances include Northland refrigeration, General Electric appliances. and selected models from other well-known appliance lines. The EXPO's display kitchens were complete with appliances, mostly built-ins or slip-ins. Two of the more elaborate slip-in ranges were priced at $10,990 and $13,000! Obviously, this company isn't appealing to Home Depot's typical, price-conscious customers! A unique touch was the EXPO's library section on the sales floor, which contained a selection of shelter magazines that would be of interest to homeowners. The reaction of Independents to this new competitor was surprisingly positive. I spoke to several dealers, and a large wholesale-retail cabinet distributor, following my EXPO visits. Without exception, they felt that EXPO was currently helping their businesses, rather than hurting them. They felt that they could continue to compete successfully against this new competitor. A distributor principal, who visited EXPO more than once, said, "EXPO has raised the bar for all competitors in the metropolitan-Washington, DC, market." The real question is whether the euphoria of a booming economy may be causing some dealers to be unduly confident for the future. It occurs to me that ultimately, competition by giant corporations may prompt more single-location independents to merge with compatible businesses within their market, in order to obtain better coverage, and advertise more aggressively to gain more name recognition. Since most independents offer commission, in addition to salary or draw, they are more likely to attract the more aggressive salespeople than EXPO and Home Depot, which I understand offer attractive benefits, but no commission. Our economy's history tells us that competition can be beneficial if we react in a positive manner. I remember the days when foreign autos, other than Rolls Royce, weren't seen on our streets. With the proliferation of manufacturers, foreign and domestic, auto sales are better than ever! Time will tell if the same will be true in the kitchen/bath industry.

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