DARLINGTON ON SHOWROOMS: A Few Great Success Stories!
I grew up in Pennsylvania…did college…more to play baseball than to study! Then off to Officers training in the Army and served a couple of years. I was still not sure what I wanted to do, so I went back to school (this time to study) and got a Masters in business. Okay, now what? I guess it was time to get a job. My dad worked for Raub Supply Co., Lancaster, PA, a plumbing, heating, electrical, industrial wholesale distributor and he suggested I talk with the owners about going to work for them. I did! They offered one of the first college-recruited training courses in the industry. I believe there were five of us. Raub Supply Co. was named Supply House Times’ Wholesaler of the Year in 1962.
I wasn’t family so I left to go run a small wholesale business in West Virginia (back when coal mines, steel plants and chemical plants were still thriving). Eight years later I was recruited away to run a medium size plumbing wholesaler that had eight branches in the Southeast. Four years later that business became one of Ferguson’s first acquisitions.
That Southeast plumbing wholesaler had been a Supply House Times Wholesaler of the Year before I arrived. I was out of a job…and after a brief search ended up in Northern California working for a wonderful family-owned business - which was named Wholesaler of the Year while I was working for them. (That means I worked for three Wholesaler of the Year companies!)
While working as VP of marketing and operations for the California wholesaler, I became enamored by the idea of doing a showroom. There were a number of wholesaler showrooms - but in my opinion they weren’t done for the right reasons. They were built-out to satisfy the main plumbing fixture manufacturers and as a resource for the plumbing trade. They weren’t designed to be profit centers.
In the early 1980s I left the wholesale side of the industry and started a business called The Plumbery. It started with decorative plumbing products only…and there weren’t very many. In fact, there were only four true decorative faucet lines being marketed in America. How many of you remember Artistic Brass, Phylrich (now owned by Elkay), The Broadway Collection and Sherle Wagner? Oh my, how all of that has changed.
The Plumbery grew to three locations, operated as a retail/wholesale business (REWHO) and expanded into other products that included door and cabinet hardware, kitchen cabinets, countertops and appliances. It was one of the first true one-stop shopping showrooms in the kitchen and bath industry.
My wife and I sold the business in 1995. We worked out a three-year contract and I truly thought we’d retire to our beach home in Baja, Mexico. Not to be! I had started writing articles for this fine publication and a kitchen industry trade journal. I had been doing a couple of different workshops for the National Kitchen and Bath Association, and by virtue of a little visibility, folks started asking if I’d help them with their businesses.
So what’s this? My third career! First the plumbing wholesale trade, then an entrepreneur running my own business and now this gig. How blessed could/should one person be? This industry has been very good to me - and I’ve enjoyed every minute of it! Enough nostalgia!
Company #1 – I started working with these folks seven or eight years ago. They’re located in the West. At the time they had one showroom. Today they have six showrooms. They added two showrooms to branch locations and picked up three more via acquisition. Their showroom sales have grown by 400% and the GP margin on sales has grown from 26% to 36.6%. Want to take a guess on whether they like the showroom business or not?
Company #2 – I’ve been working with this company for about five years. When I started working with them, they had six very traditional wholesaler showrooms. They’re located in the mid-section of the U.S., and the automotive industry has put a hurt on the economy in the area. This means sales have been fairly flat, but they have grown their GP margin by almost 10 points…and they have totally re-branded the showroom part of their business with a new name, logo, colors, marketing, upgraded displays and more. Look out for them when the economy comes back in their area - they are going to be an even bigger player than they are today.
Company #3 – This is a large family-owned wholesaler that has about 55 showrooms in the Southeast. Any guesses? When I first met with these people, they had no direction or plan for their showrooms. Each one was built-out differently, they displayed whatever the local manager wanted and the plumber was king. One of the first things we did was spend three days writing a three-year business plan. This was presented to top management and 95% (or more) was put into action. It included a new name for the showrooms, new off-site locations for a number of the showrooms and a design-build-out theme that was going to be the same throughout all 55 showrooms.
At this point showroom sales have tripled, the margin has slowly grown by about six points and the showrooms are being treated as profit centers - as they should be. They formed a product selection committee that now has all the showrooms pushing the same products. Yes, you can make as much money in the way you buy as in the way you sell - so become important to as many of your vendors as possible.
Company #4 – This is a one-showroom operation in New England. They, too, moved from a wholesale location to an off-site, retail-oriented location and the showroom was given a different name than the wholesale business. They built-out a beautiful showroom and started marketing the showroom to custom builders, interior designers, remodelers, architects and yes, homeowners.
Their plumbing trades business has remained strong and all the new customers have helped them grow showroom sales significantly. Margins are slowly inching up - currently in the 32-33% range. They still have a way to go, but it’s much better than the 25% of four years ago.
Company #5 – This nice-sized wholesaler currently operates about 20 showrooms. I did a “showroom” talk to these folks about 10 years ago. I waved the flag of opening the doors to all comers, diversifying products and all the other things Darlington espouses. They didn’t buy it - they weren’t ready. About five years ago I was invited back and the management minds were much more open to really wanting to make showrooms an important part of their business.
One of the first things we did was to lock ourselves up for three days and brainstorm a three-year business plan for the showrooms. The final result has been terrific. Once again, a totally new “brand” for the showroom: new name, consistent build-out and design, uniform products, a nice diversification of products, a great training program - and more. They’ve gone from 95% plumber driven to about 40% plumber and 60% others. Sales have more than doubled and margins are in the 35% range (a couple of showrooms have broken the 40% mark). BIG – BIG – BIG! If I said that most of the employees are “Long Horn” fans, you might be able to guess who this is!
Company #6 – Here’s another West Coast wholesaler. These folks acquired their way into the showroom business. They operate three showrooms - all stand-alone operations. They operate under a different name than the wholesaler and their showroom doors are open to all comers. Sales continue to grow and their overall margins are in the 35% range.
They recently moved one of their showrooms to a new location (18,000 sq. ft.) and in addition to decorative plumbing products, door hardware and appliances, they have added lighting fixtures and outdoor kitchens. Smart, very smart. The more products you can show under one roof, the more you will grow your revenues. Today’s customers want “one-stop shopping” and it doesn’t cost any more to market a nice diversification of products beyond just plumbing. These folks also have several “builder” salespeople that mainly handle only custom home builders, higher end remodel contractors and high-end plumbers.
Company #7 – This wholesaler is in Florida and was recently acquired by a very large wholesaler. Pretty easy to guess this one. When I started working with these folks, they had four showrooms. Today they have six. And, they are among some of the nicest built-out showrooms in America. I mean very nice! The showrooms have a different name from the wholesale operation. I derive great satisfaction from the fact that this company did a great job growing both sales AND margin. When I started working with them, the plumber ruled. Today the plumber is certainly still very important. But once again the doors have been opened to all.
As you scan these success stories, you will find common threads that have made them successful in both sales and gross profits. Get your pencil out and write down a few of the keys to success that have allowed them to thrive and become winning operations. Apply some of these ideas to your showroom business and see what happens.
All of these companies have several things in common - they have learned how to make themselves “retail” friendly. They have opened their doors on Saturdays and some evenings. They do a great job training their people. Top management has taken the showroom business seriously and has stepped up and started learning what it takes to operate a retail-oriented business. They all have business plans, do selling skills training and they treat their showrooms as profit centers.
There are many other success stories. Suffice it to say, seeing wholesalers take their showroom businesses seriously has been one of the most satisfying experiences I’ve ever had (and that includes all three careers).
Congratulations to these seven companies and all the others that have made showrooms an important part of their future.