Learning from Satellite Showrooms

Twenty-eight years ago, when the Brighton, MI-based Kitchen Suppliers, Inc. was in its infancy, one showroom and warehouse was the order of the day for kitchen/bath distributors. Almost unanimously, these distributors sold to wholesale accounts only, using their dealers to operate local showrooms convenient to the retail customer.

Kitchen dealers, too, felt little need for more than one showroom. However, in today's business world, the involvement of home center chains in the kitchen/bath field has influenced the merchandising strategy of both cabinet distributors and dealers.'

These giant chains operate multiple showrooms in several metropolitan markets. Home Depot showrooms number in the hundreds. Now they are becoming competitors in custom cabinets, as well as stock. In case you haven't noticed, Home Depot Expo showrooms are proliferating at an increasing pace.

Back in 1992, I visited the "laboratory showroom" for Home Depot Expo. It was one of a kind, located in San Diego. An excerpt from my July 1992 column reporting on that visit indicates that I was duly impressed by that first showroom. "The showroom was well conceived and attractive. Individual display kitchens rivaled those in the most prestigious custom dealerships. . ."

A changing market
Through the 1970s, dealers' source for cabinets was a nearby distributor of stock cabinets. However, during the past 20 years of evolutionary change, semi-custom and custom manufacturers have largely become factory-direct suppliers to custom-oriented kitchen dealers, thereby reducing the importance of dealers to the cabinet distributors' volume and profitability.

Distributors as well as dealers have adapted to the changing marketplace. The early connotation of "cabinet distributor" was a firm that sold only to wholesale accounts such as dealers, builders and remodeling contractors.'
When I was introduced to the derisive term "whotailer" by a large wholesale-only cabinet distributor in the late '80s, I recognized wholesale/retail "whotailing" as an inevitable force in the future of cabinet distribution. Today, the majority of cabinet distributors have successfully, turned to whotailing.

Such an example is Kitchen Suppliers, Inc. (KSI). I asked Bob Elliott, president and CEO of KSI, why satellite showrooms have become so important to cabinet whotailers. KSI began its transition from wholesale-only to whotail during the 1980s. In 1983, KSI operated two satellite showrooms for builder customers only.

Today, the company features six wholesale/retail satellite showrooms in addition to a large headquarters showroom in Brighton. All are located in the important Detroit market area. The typical distance between showrooms is 20+ miles. Eleven trucks with 26-foot bodies deliver to wholesale and retail customers who are served by their seven showrooms.

KSI is one of Merillat/Amera's largest distributors. KSI's showroom representation within its assigned market significantly contributes to the firm's market penetration. In addition to the volume generated by its satellites, there are other distinct advantages to a cabinet distributor with multiple showrooms that Bob Elliott cited as important synergies:

1. Local appeal Even within the Detroit metropolitan market, there are areas of different degrees of affluence and sophistication. Though all KSI showrooms display Merillat/Amera, Kitchen Craft and Candlelight cabinetry, the makeup of the displays varies to appeal to each showroom's particular clientele.

2. Convenient to showroom staff and customers Because of the heavy road traffic in metropolitan Detroit, customers and personnel both favor business locations which minimize their travel time. As a result, KSI has been able to attract competent personnel who might not be willing to travel to the main facility in Brighton.
Each showroom is staffed with a store manager, four to six salespeople plus a receptionist/phone operator, and often an inside support person who relieves salespeople of as much detail work as possible. Visits to customers' homes for measuring or following up during installation are less time consuming than with only one location.

3. Satellite showrooms' cost of doing business Top management and administrative staff are based in KSI's main facility in Brighton. That overhead is prorated among all the showrooms. Therefore, the more business generated by satellites, the lower the administrative burden on a pro-rated basis. Pete Casteel, v.p., coordinates and guides store managers to assure a high level of performance and customer satisfaction.

4. Clientele emphasis for sales personnel All satellite sales personnel are trained to service builders, remodeling contractors and consumers. Each individual tends to gravitate toward the clientele with whom he or she is most comfortable and competent to serve. This is in addition to KSI's successful wholesale division.

5. Effectiveness of advertising Because KSI has maintained a compact market area, basically metropolitan Detroit, it's possible to reach all potential clients, wholesale or retail, through one advertising medium. Bob Elliott feels that television has been an effective medium to draw prospects to the firm's showrooms. KSI commercials are therefore frequent visitors in prospects' homes.

6. Availability of desirable personnel Despite the company's success in attracting personnel to staff the showrooms, KSI, like most other employers, views available, competent people as a rare commodity indeed! As a result, KSI and many other whotailers tell me the proliferation of satellite showrooms is limited by availability of suitable associates to staff additional facilities.

Despite the presence of home center chains in most large markets, successful management of independent distributors is dependent on the caliber of the people they recruit. Astute management is aware of the prior experience of job candidates, uses innovative recruiting techniques and knows how to retain good personnel through incentive programs, recognition and promotion within the company. The odds favor retaining productive people over finding worthy replacements.