Analysis of the survey results provides surprises and disappointments.

Last month we shared the results of SUPPLY HOUSE TIMES' 2006 wholesaler showroom survey. For the first time, we shared the results of virtually every question from the survey. I have spent several hours comparing the 2006 results to the 2003 and the 2000 surveys. As you might expect, there were some surprises and a few disappointments. Please keep in mind that the opinions are those of this writer only. I try to use my 40+ years of experience in the industry, including 17 years of owning and operating my own showroom business and the past 10 years spent jetting around the United States and Canada to consult and teach workshops - all showroom related. I visit a lot of showrooms, talk with a lot of people and have developed some pretty strong opinions as to what formula makes a well-run showroom business. Certainly there are some differences due to the demographics, progressiveness and attitudes in various parts of the United States and Canada.

One absolute fact is that showrooms are finally becoming a more important part of many wholesalers' business strategies. People are recognizing the wonderful revenue potential. They see opportunities and they're jumping on them. Most have come to recognize that the showroom business is very different from the wholesale business. Showrooms are really retail - whether they sell to the trades only or have opened up the doors to all potential customers. Homeowners are coming into the showroom - specifying the products they want and can afford.

Maybe you've picked up over the last 12 years of reading these articles that I have a huge passion for the wholesale industry in general and especially the showroom side of it.

Each year we (SUPPLY HOUSE TIMES and this writer) refine and try to improve this survey - so all the survey questions are not exactly alike. Therefore, in some cases we can't make an apples-to-apples comparison of the 2006 survey to surveys of the past. This is the only survey of its kind. These are the only benchmarks you'll have to compare your showrooms against. I hope you enjoy absorbing these facts as much as I have putting them together.

Comparison And Analysis

  • In 2006, 439 wholesalers responded to the survey. Of these, 36% indicated they were in the showroom business - that's down from 45.1% in 2003. Does that mean fewer wholesales have showrooms? I don't know for sure because not all the same wholesalers responded to all the surveys.

  • The average annual sales volume for those responding in 2006 was $26,127,438 compared to $16,090,000 in 2003.

  • The number of showrooms that each firm operates is up dramatically from 2003. Those with two or more were 48% in 2006 and only 34.6% in 2003. That tells me that those wholesalers that are in the showroom business are operating more showrooms. I doubt they would be doing this if it wasn't a good revenue generator.

  • Showroom size is changing. Those with 1,000 sq. ft. or less diminished from 25% in 2003 to 18% in 2006. The 1,000 to 2,499 sq. ft. size increased to 45% from 40.3% in 2003. Those showrooms 2,500 sq. ft. or more grew from 51.4% to 56%. Showrooms are getting bigger.

  • The majority of showrooms are still located at the wholesale facility: 70% in 2006 vs. 74.5% in 2003 vs. 87.6% in 2000. More and more showrooms are being moved off-site. I certainly believe this is a very good thing. They need to be located in as retail-friendly an area as possible.

  • The number of businesses that opened new showrooms stayed the same at 39% in 2006 vs. 40.4% in 2003. The number that remodeled their showrooms went up slightly to 87% in 2006 vs. 84.6% in 2003. Only 1% indicated they closed any showrooms in 2006 vs. 8.7% in 2003.

  • Monthly traffic through the showrooms remained very much the same (see results in Part I - SUPPLY HOUSE TIMES, September 2006).

  • Companies used manufacturer showroom designers a whole lot more in 2006 at 31% vs. 13.9% in 2003. Those that used their own in-house personnel to design their showrooms dropped from 92.2% in 2003 to 83% in 2006.

  • Those companies that carry back-up inventory on most items that are on display grew to 68% in 2006 vs. 62% in 2003. Now I've got to tell you, I don't understand this. I have always believed that the higher end showrooms (which most of you are) experience more special orders than you do out of stock. In fact, I believe the showroom business is 75% or more special order. Yes, you have to stock rough valves on the more popular faucet lines. Yes, you need the basic white tubs, toilets and lavs and yes, you should have a few of the most popular faucets, kitchen sinks and bath accessories. But for the most part, you have time to bring in the finish products - for both new construction and remodel. So why such a high figure on back-up inventory? The lower stock requirement and the bigger “turn and earn” factor is one of the more attractive features of doing showrooms.

  • The type of products being shown and sold in the showrooms remained pretty much the same. The categories that changed the most are: decorative hardware (way up); bath furniture (new); steamers and saunas (new); kitchen cabinets (down); appliances (down) and carded plumbing products (down). As many of you who read my monthly efforts know, I like a nice variety of products. I believe in the one-stop shopping concept. This is what I believe the clients want, and to be customer-friendly we should give it to them. How do you do in this area?

  • The number of bath fixtures and faucet lines being carried remained relatively the same. Most showrooms display and sell three or four fixture lines and four faucet lines.

  • The price point on showroom products stayed about the same on luxury products at 10%, but changed quite a bit with the upper mid-range products increasing from 54.8% in 2003 to 64% in 2006. The mid-range products decreased from 35.5% in 2003 to 25% in 2006. This tells us that products shown are moving towards the higher end. I believe this is a good thing.

    Read Part III of the Showroom Survey in November SUPPLY HOUSE TIMES.