The Missing Ingredient In Showrooms
If you are not carrying appliances in your showrooms, maybe you'd like to consider doing so. Appliances represent 35% to 50% of showroom sales for some of the wholesalers contacted by Supply House Times and sales are on an upward trend. As consultant and columnist Hank Darlington has said, “Make your showroom a one-stop shopping outlet and boost profits.” This means adding such product categories as appliances, tile, kitchen cabinets, bath vanities and lighting fixtures to the showroom mix that will appeal to busy customers in search of convenient solutions.
When SUPPLY HOUSE TIMES surveyed PHCP wholesalers in 2000, 16.8% said they offered appliances in their showrooms. That had expanded to 19.8% of wholesalers in the 2003 SUPPLY HOUSE TIMES showroom survey. Compare these percentages with 64.4% of wholesalers that carry vanities; 32.3% that offer kitchen cabinets, 26.1% that show lighting fixtures and 11.1% that carry tile, according to the 2003 survey.
We contacted five PHCP wholesalers that carry appliances in their showrooms, including Modern Supply, Knoxville, Tenn., J.D. Daddario Co., Franklin, Mass., and City Plumbing & Electric Supply Co., Gainesville, Ga., all of which have offered appliances for 25 years or longer. Sharing their experiences are: Dottie Ramsey, president/COO of seven-unit Modern Supply; Don Richards, sales manager of the appliance division at J.D. Daddario Co., which operates showrooms at each of its four locations; Stewart Teaver, president of City Plumbing & Electric Supply Co., which carries appliances in all six of its showrooms; and Ken Kidd, vice president, C & L Supply, an 8-unit wholesaler based in Vinita, Okla., which displays the Fridgidaire line of appliances in one of its showrooms. Here are their stories:
Modern Supply Co.Knoxville, Tenn.-based Modern Supply Co. operates a 10,000-sq.-ft. showroom at its headquarters location and a 4,000-sq.-ft. showroom at its Johnson City, Tenn., branch. It has been offering appliances for more than 30 years, primarily as a convenience for its builder customers.
“The builders were buying cabinets, kitchen sinks and disposals from us, so dishwashers and other appliances were a natural,” according to Dottie Ramsey, president/COO.
Currently Modern carries four lines of appliances and General Electric is its largest vendor. “It was hard to do a good job with four to six lines - we can do a better job with three or four lines,” Ramsey says. “Our people are more knowledgeable about those and it has also worked to our advantage with the manufacturers.”
In the last three years Modern Supply has expanded its space allocation for appliances from 500 to 1,800 sq. ft. “We needed to show the dishwashers and washer/dryers in vignettes because people wanted to see what they were buying instead of looking in a catalog,” Ramsey says. “Now we are carrying fewer lines but more products.”
Appliances account for 50% of Modern's showroom sales. The renovation of its 10,000-sq.-ft. headquarters showroom should result in higher sales of appliances, Ramsey predicts. The showroom will still have five vignettes with appliances plus a working kitchen featuring warming drawers and a cooktop where the wholesaler plans to offer cooking classes.
Modern does not list prices for the appliances; customers have to ask. The wholesaler has a standard margin across the board.
The wholesaler does not install or uncrate the appliances like some of its competitors do.
“Appliances are easy to sell,” Ramsey says. “You don't have to worry about warranty and labor. The customer can call the manufacturer's 800 number. Once the appliance leaves our building, we don't have to touch it.”
J.D. Daddario Co.Franklin, Mass.-based J.D. Daddario Co., which was acquired by Ferguson, Newport News, Va., in January, carries appliances in all four of its current showrooms and expects to add appliances to Ferguson showrooms in its operating area, according to Don Richards, sales manager of the appliance division. The company, which has three satellite locations - Mashpee, Newton and Marlboro, Mass. - is retaining the name J.D. Daddario and its executive team remains in place.
J.D. Daddario has been selling appliances for more than 30 years, Richards says. “We have always made our showrooms available to our trade customers to assist their customers in making choices,” he says. As the company evolved from a plumbing wholesaler into a plumbing and electrical distributor, its showrooms also grew. The addition of appliances expanded its customer base to include builders and contractors.
“Builders could now send their customers to one source for a large percentage of the finish goods they needed to complete their homes,” Richards says. “When you look at the Ferguson showroom structure and philosophy, you can see why the addition of J.D. Daddario to their fold made so much sense.”
The company's showrooms carry GE, GE Profile, GE Monogram, Whirlpool, KitchenAid, Maytag, Amana and Jenn-Air appliances.
“We also have strong relationships with high-end manufacturers such as Sub-Zero, Wolf, Viking, Bosch and Thermador,” Richards says. “There are very few lines that we don't deal with. The number of vendors has not changed over the years, but the distribution of sales has increased dramatically for the more premium and luxury lines.”
J.D. Daddario tries to divide its showroom space evenly among bath products, lighting and appliances. Appliances are the most challenging to display because of their size and the space required for vignettes. Washers and dryers can be placed in a back-to-back row, but built-in appliances such as ovens and cooktops need to be displayed in a setting that allows customers to envision their new kitchen, he says.
Appliances account for about 35% of J.D. Daddario's showroom sales, while bath products represent 45% and lighting 20% of sales, Richards notes. “Our goal is to increase total showroom sales each year and not focus too much on the individual categories,” he says.
J.D. Daddario had one location, in Franklin, Mass., 13 years ago, when there was a building boom in the western Boston suburbs, Richards recalls. “At that time we were sending out $750 builder packages for appliances that usually included a range, dishwasher and range hood. As time passed, buildable land in the greater Boston area became harder to find. Now what is being built is more expensive. Our average builder packages have more than doubled since that time and our high-end sales have increased dramatically. You could count on one hand how many Sub-Zeroes you sold 13 years ago; today, it is one of the largest selling refrigerator lines.”
When the company opened a branch in Newton, Mass., its showrooms began attracting remodeling customers who were willing to invest more money on appliances.
Prices are displayed on the appliances, Richards says. “Appliances are the most heavily shopped category in our showrooms,” he notes. “The consumer has so many resources available to research pricing that we feel we must tag all our showroom appliances with a realistic sell price. When we experimented with list prices in the past, too many customers would walk in with pricing from the Internet or a competitor and walk right out without giving us the opportunity to talk to them,” he says.
The reward to the wholesaler in selling appliances is the ability to offer customers everything they need for a new home or remodel project, Richards says. “On any given day you will see customers in our showroom spend several hours working with our salespeople, making decisions that they will live with for the next five to 10 years. These are very emotional decisions for the homeowner. It takes a tremendous burden off them to be able to complete their shopping in one day at one location. Many of our customers are from out of state and come to us to save time. Other customers spend more time in our showrooms than some of our employees.”
City Plumbing & Electric SupplyCity Plumbing & Electric Supply Co., based in Gainesville, Ga., has carried appliances in all six of its showrooms for the past 25 years, according to Stewart Teaver, president.
The wholesaler sells eight to 10 lines of appliances. “Now we are carrying more stainless steel, more commercial looking products and more gas appliances,” he says.
The wholesaler allocates about 1,000 to 1,500 sq. ft. per showroom to appliances. The six showrooms range in size from 8,000 to 10,000 sq. ft.
Appliances represent 50% of the company's showroom sales, he says.
“We display prices and everyone gets the same price,” Teaver says. “There may be some price cutting on low-end spec builders.” City Plumbing & Electric meets the prices of its competitors, he adds.
What is most rewarding about carrying appliances is the actual money made, Teaver says.
C&L SupplyC&L Supply, an eight-unit wholesaler based in Vinita, Okla., distributes a private label brand of appliances, Crosley, in all or part of seven states, according to Ken Kidd, vice president.
Its customers include independent appliance dealers, furniture stores, hardware/lumberyard stores and rent to own, he says. C&L has been a Crosley distributor since 1975 and received its Distributor of the Year award for 2004. Crosley has about 26 distributors in the United States and Canada. Kidd's father, Fred Kidd, who is president of C&L, is also the current president of Crosley.
At this time C&L displays only the Frigidaire line of appliances in one showroom and it is allocated relatively small space, Kidd says. The wholesaler has never sold appliances from its showrooms in the past.
“We have to decide if we are going to get in or out of this business,” he says. “We have tried to sell Frigidaire to the builder market, but we have had little success. Our sales have been minimal - they can only improve if we offer the same service as our competitors. If we are going to get aggressive in going after the builder appliance business, we will have to make a big commitment and display a complete line of products to compete with the other builder distributors and Lowe's.” <<
Sidebar: Advice To Wholesalers Considering AppliancesDo a lot of research on your own market, suggests Dottie Ramsey, president/COO of Modern Supply. “Each market is different. We find different things sell better at different locations.”
Modern Supply keeps keep four or five dishwashers in stock in case someone needs one the same day, but otherwise orders appliances as needed. “Once a day our buyer orders on the Internet, and we get the appliance in one or two days,” she says. “We don't have to stock them. We don't have to uncrate them and risk tearing up someone's kitchen. Appliances have small margins, but they are an easy sell.”
Be sure you can allocate sufficient space in the showroom to adequately display the appliances, advises Don Richards, manager of the appliance division at J.D. Daddario Co. Also confirm that enough space is available in the warehouse and that the company's delivery service is prepared to deal with appliances.
“Unlike faucets and toilets, appliances require more handling than anything you've dealt with in the past,” Richards says.
Handle fewer brands for higher volume to achieve better pricing levels, suggests Stewart Teaver, president of City Plumbing & Electric Supply. Also be sure to have the proper equipment to handle the products and provide employees with training on handling the appliances, he says.
The wholesalers said they rely on their vendors for much of the product training on appliances.
Sidebar: The Challenges Of Carrying AppliancesThe biggest challenge is merchandising, according to Don Richards, manager of the appliance division at J.D. Daddario Co. “Because of space constraints, it is important that our appliance showrooms have the correct cross-section of product,” he says. “We need that $299 washer, but we also need that $6,000 Viking range. Making sure you have those and everything in between is a challenge. Double-tagging product and knowing the complete product line becomes more important when space is an issue.”
Also, it is essential for wholesalers with limited display space for appliances to have literature available and Internet access to provide product information.
“If we don't have it on the floor, it is critical that we are able to present it to our customers in some form,” Richards says.
Deliveries, damage and service are the biggest challenges wholesalers face when carrying appliances, says Stewart Teaver, president of City Plumbing & Electric Supply.
Competition for sales is the biggest challenge faced by wholesalers that carry appliances, says Dottie Ramsey, president/COO of Modern Supply. Independent showrooms and department stores that sell appliances, such as Sears, pose a serious competitive threat.
For C&L Supply, the challenge of carrying appliances is how to compete with the major builder distributor in its area that carries about $100,000 worth of product in all of its multiple showrooms, including working models, says Ken Kidd, vice president. Lowe's poses another challenge with its nice displays of appliances, something most wholesalers could not match in terms of space allocation or funds invested, he says.
“If most wholesalers are like us, they need more products that they can make higher margins on, more than 20%, and appliances don't fall into that category,” Kidd says.
Wholesalers' chief competitors for appliance sales include other plumbing wholesalers, big-box stores, home centers, independent showrooms, hardware stores, discount stores and appliance retailers.
“Our biggest direct competitors are the independents,” says Richards of J.D. Daddario. “Like us, they are investing more in their showrooms and displaying more of the high-end products in demand. The big boxes are always going to do the lion's share of the business. Short of standing in a Home Depot or Lowe's parking lot on a Saturday and handing out cards, it will always be difficult to take that business away.”
J.D. Daddario can offer prices comparable to the big boxes but with better service, and also carries premium and luxury brands not found at some competitors, Richards says.
“We could sell $299 washers all day, but we need to continue directing our promotional resources toward the customers who are looking for quality and service,” Richards says. “We invest a lot of time and money into our showrooms and sales staffs and as a result our customers receive a higher degree of service than they would at a big box.”
Most of the major manufacturers also compete with wholesalers by selling their products direct to builders in the multi-family market, Richards says.
“Our primary competition is factory direct,” says Kidd of C&L Supply. “All of the major brands sell direct to retail dealers.”