Showroom of solutions
A showroom that sells. Isn't that what every wholesaler wants? The key is finding the right strategy to stimulate those sales. After 14 years in the showroom business, Nu-Way Supply has hit upon a theory that it hopes will lead to a quadrupling of sales in three years for its newest showroom.
Larry Merritt, president of Utica, Mich.-based Nu-Way Supply, says the combination of experienced salespeople, ongoing advertising, and long-term partnerships with builders and plumbers will help achieve that sales goal for its Highland, Mich., showroom.
Beyond that, the wholesaler has created a showroom merchandising strategy that Merritt feels confident will take the company over the top.
The showroom, which opened last September, features an exposition-like environment with high ceilings, open display areas, bright lights and easy-to-update modular displays. It occupies 12,000 sq. ft. of a 57,000-sq.-ft. building that formerly housed a discount retailer. The remaining space in the building is allocated to a 1,000-sq.-ft. contractor service counter area and a 24,000-sq.-ft. warehouse. Nu-Way plans to lease the remaining 18,000 sq. ft. to a complementary business -- such as an appliance or electrical supply store -- that can attract more customers to the showroom.
Developed with the help of JGA, a strategic design firm that also has worked with Nu-Way on its showrooms in Utica and Gaylord, Mich., the Highland showroom was designed to simulate the atmosphere of a builders' expo or home show, says Michael Crosson, JGA's chief executive officer.
"We said, why can't we duplicate that experience so customers feel like they are at an exposition in terms of the product displays, manufacturer representation, and ideas and solutions offered?" Crosson says. "There's an emotional connection we have with customers, related to the excitement of selecting products they will live with everyday. Shopping should be fun."
The showroom reflects a new concept of selling, Merritt says, comparable to Home Depot's Expo stores. Nu-Way Supply has moved into the "wholetail" business, he says, referring to the wholesale-retail hybrid associated with Home Depot.
Nu-Way's business breaks down to about 70% wholesale and 30% retail, Merritt says. He estimates the breakdown for a typical big-box store would be 80% retail and 20% wholesale to trade customers.
Something for everyoneRather than focusing strictly on categories and products, the showroom stresses emotional issues such as solutions, concepts and expectations, Crosson says.
Separate perimeter areas designed with lower ceilings for a sense of intimacy are used to showcase kitchen-and-bath products. The floor plan is open, however, so customers can see across the whole showroom. This enables them to visualize how products tie in with one another and encourages them to look beyond their current project.
"If they are doing a kitchen, we want them to look at the bath stuff too," Crosson says. At the hub of the showroom is a massive, high-ceilinged display of faucets, with banners heralding brand names hanging overhead.
"We talk to the consumers at their point of interest," Crosson says. "We don't just say we carry faucets. Hundreds of businesses carry faucets. We offer solutions."
More than 400 faucets are displayed, but Merritt says he is selective about which lines he carries. "We support the faucets we carry with a full line of parts," he says. This distinguishes Nu-Way from some other local wholesalers, he says.
Nu-Way's vendor partnerships are evident throughout the showroom, printed on banners and signs. Plumbing and cabinetry brands carried include Grohe, KWC, Lasco, Delta Select, Swanstone, Moen, Briggs, Mansfield, Eljer, Pearl Bath, Sepco, Alsons, StarMark, Gatco, Haas, Bertch and Aristokraft. Kohler products are also offered. Brands offered in the heating category include State, Viessmann and Slant-Fin.
The emphasis on well-known names is intended to assure consumers that they made the right decision in coming to Nu-Way, Crosson says. "We want them to feel good about this relationship, so we stress that we have quality brands that will service them and be there for the long haul."
The real profit potential is with a mix of commodity items and higher end product, Merritt says. "We carry upscale products, but we try to have something for everyone, so we have a wide range of price points. We try not to be too upscale and close out people. We want to say yes to the widest group of customers without turning anyone off."
Two prices are shown for products carried: the manufacturer's list price and Nu-Way's 20%-off discounted price, Merritt says.
Nu-Way has chosen not to carry appliances in its showrooms because of the low margins involved in selling them, Merritt says. Instead, the showrooms offer referrals to appliance retailers.
Identifying trendsWorking displays and informational signs at the Highland facility are intended to help educate customers, says Mike Perosky, branch manager. "About 50% of the whirlpools and 50% of the sinks in the showroom are working. We also have an in-floor heating system, where customers can step on different flooring surfaces, such as carpet, hardwood and tile, to feel the heat."
Nu-Way wants to be perceived as a resource for in-floor radiant heating, Perosky says. "We have someone in our showroom two days a week to train and help with start-ups of radiant heat. There's tremendous interest in this."
Two shower stalls in the showroom feature multiple heads that can be demonstrated. One has been fitted with 21 showerheads, most of which are water-saving models, and a working steam bath unit.
Even the public restrooms are used to showcase products, Perosky says. For example, different styles of low-flow toilets have been installed in each washroom.
"Conservation will become increasingly important as the government starts limiting how many gallons of water per minute can be used in the toilet, tub or water heater," Crosson says. "People need to see the differences in these products before they are installed. The last thing the builders and contractors want is an unhappy customer. They don't want to have to un-install a product."
Prior to a major remodel of one of the showrooms, Nu-Way's managers meet with Crosson's staff to discuss trends vs. fads. At one such meeting, for example, they examined the trend toward healthier living, which is borne out in commercial-looking and special-function kitchen fixtures, Crosson says.
"Too many businesses jump into fads and don't investigate trends," Crosson says. "Nu-Way's showrooms are set up to help the consumer respond to trends in better kitchens and baths. Customers may not see the exact vignette shown in a magazine, but we have all the products needed to create that look."
Keeping up with trends means frequent updates of displays, which the Highland showroom is designed to do at minimal cost and effort, he says.
"Some showrooms create vignettes that include wood trim, special lighting, marble and ceramic tile," Crosson says. "A smaller wholesaler can't afford to change that type of vignette often, so it stays up twice as long as it should. Nu-Way made a conscious decision not to use those materials but to take more of an expo-exhibit approach, with modular units that could be changed more frequently."
As a result, the showroom is in a constant state of flux as new products are brought in at different times of the year, he says.
"We're always tearing out displays and redoing them as models change," Merritt says. An exception is made for the more elaborate kitchen vignettes, which are changed every two to three years. One kitchen vignette features a laundry room with cabinets that are kept open to show the fold-out ironing board and a pull-out clothing basket.
Designed to competeThe expo-like atmosphere of the Highland showroom makes sense given the competitive arena in which it operates. Home Depot plans to open Expo Design Centers in Troy and West Bloomfield, Mich., this year, and Great Indoors, a division of Sears, Roebuck & Co., is considering two locations in Michigan, Merritt says.
The new showroom, which Nu-Way was able to remodel and open within a 10-month period, has allowed the wholesaler to gain a foothold before the new competition enters the market.
The entry of big-box stores into its market area 14 years ago motivated Nu-Way to enter the showroom business, Merritt says. Two Home Depots are within a 10-mile radius of the wholesaler's first showroom in Utica.
"We feed off them," Merritt says. "Our service and knowledgeable staff are behind our success." At least one salesperson at each of Nu-Way's showrooms is a certified designer, Merritt says, adding that he looks for experienced salespeople for the showrooms. When the Highland showroom opened, three salespeople were transferred from the Utica showroom.
"We can train from the ground up," Merritt says. "Often we'll attract people from the kitchen-and-bath stores and big-box stores who want to work with us because of our flexibility."
In addition to the showroom and inside sales staffs, the company has 16 outside salespeople to develop new business.
Also contributing to its competitive edge is Nu-Way's availability of in-stock inventory and timeliness in assembling orders, he says. Computers strategically located within the showroom allow salespeople to check inventory at the various locations and place orders.
The wholesaler has a fleet of 20 trucks and four semi-trailers to transport products between its facilities.
The Highland facility is about 40 miles north of the Detroit Metropolitan Airport. About 50 subdivisions are under construction within about a 10-mile radius and four golf course communities are within 20 miles. The average price for homes in the new subdivisions is $290,000, Perosky says.
Chrysler moved its headquarters to nearby Auburn Hills, Mich., about five years ago and has expanded its presence there in the past year, Merritt says. "That has spurred growth. Town homes and condominiums are going up."
Partnering with the tradeThe showroom benefits from the strong trade partnerships the company has built over its 60-year history, Merritt says. James Merritt Sr., father of Nu-Way Chairman James Merritt Jr., founded the company in 1939, converting a chicken coop into a plumbing supply house. Since then Nu-Way has opened facilities in Gaylord and Imlay City, Mich. Another facility in Walled Lake, Mich., was closed when the Highland location was acquired.
Some of the showroom salespeople have been with Nu-Way 10 to 20 years, serving in different positions that enabled them to build relationships with contractors, Perosky says. Further strengthening the bond with contractors is Nu-Way's rebate program, which pays them 10% to 20% on the orders they refer to the showroom that are completed.
Each of the showrooms has a separate entrance for contractors.
The wholesaler's annual trade show, held in June, also creates good will. Plumbing contractors, their workers and their families are invited to a rented facility for a show that operates like a party with music, games and food, but also functions as a selling show, Merritt says. More than 50 vendors are invited to show products.
"We want orders and the vendors want to be there," he says. "We try to excite, entertain and educate our customers."
Installer referrals also reinforce the partnerships. Nu-Way invited each of five local installers of kitchen cabinetry to create a kitchen vignette in the Highland showroom. A sign on each vignette identifies the installer. The company also has a referral system for plumbing contractors. The local builders association has already held a meeting at the Highland showroom.
Nu-Way advertises its showrooms on billboards across the state, in newspapers and on radio. The wholesaler also participates in home and heating shows for greater visibility.
Preparing for the futureNu-Way is in the process of redoing its Web site to provide more information about the company, Merritt says. Also this year the wholesaler wants to embark on an electronic-commerce venture, in which it would sell products on the Internet but under a different name.
"That will run as a separate division of our company," he says. "We will sell to anyone off the site. We'll offer discounted product and ship from our showrooms."
Merritt says he has reservations about business-to-business e-commerce. "None of our customers are trying to drive it," he says. "It's good from a paperwork standpoint, but we don't want to lose that personal relationship. B-to-b makes it too easy to shop only by price. Also, it doesn't give a supplier a second chance to meet someone else's price."
Looking ahead, Nu-Way intends to expand its showroom hours for greater customer convenience. Currently the showrooms are open from 8 a.m. until 8 p.m. Monday and Thursday, 8 a.m. to 5 p.m. Tuesday, Wednesday and Friday, and from 8 a.m. to 4 p.m. Saturday. They are closed Sunday, but Merritt says he plans to change that. Within the next two years the showrooms will add Sunday hours.
In the future, the company expects its showrooms to attract more homeowners and builders. "All segments will change to more of a retail-based sale with the support of plumbing contractors," Merritt says. "The contractors have been instrumental in bringing their customers to the showrooms, where they can see and test a variety of products, and consider their options under the guidance of our sales staff. Without the contractors, we won't have that type of growth."
Corporate Profile: Nu-Way SupplyHeadquarters: Utica, Mich.
Facilities: Utica, Gaylord, Imlay City and Highland, Mich.
Sales: $30.18 million for 1999.
Management: James H. Merritt Jr., chairman; Larry Merritt, president; Gary Merritt, secretary/treasurer.
Employees: 124 companywide; 25 at Highland branch.
Market breakdown: 65% plumbing; 17% hydronic heating; 8% heating and air conditioning; 5% water systems; 5% other.