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How retailers can still profit versus big box competition

Volume 28/Number 3; July 21/28, 2014

By Louis Iannaco

Screen Shot 2014-07-30 at 10.43.41 AMFlooring retailers of the mom-and-pop variety have been battling the big boxes for years, often using their knowledge of consumer tastes and superior customer service to help them hold their own. In terms of selling laminate, which has become more difficult in recent years thanks to an increased focus on competing products as well as more aggressive approaches by the likes of big boxes and Lumber Liquidators, smaller retailers need to use their competitive edge to help garner customers.

Whether it’s using their showroom floors to display products, the ability to stock multiple SKUs or promoting offerings through strategically placed merchandising displays, retailers who continue to successfully sell laminate almost 20 years after it was introduced into the U.S. market always use multiple tools to do so.

Show what you sell

One of the most effective ways retailers can profit from selling laminate flooring involves the amount of showroom space allocated to displaying products. The smart retailer knows once a customer sees the product in action, most of the selling job is already done. Businesses like Carpet World in Bismarck, N.D., attribute much of its success in selling laminate flooring to this type of product placement, as it dedicates about 15% of its showroom to a laminate display area.

“We stock 16 different SKUs that we’ve installed on the floor in 6 x 8-foot areas,” explained manager Brian Dauenhauer. “This is a huge help in letting customers see patterns in large areas. If they don’t see what they are looking for in these spaces, we show them additional displays from major manufacturers that we can special order from.”

Chris Quattlebaum, general manager of Manasota Flooring in Bradenton, Fla., agreed with Dauenhauer, noting the visual element of flooring is critical to selling laminate. Manasota has approximately 1,000 square feet of Mohawk laminate flooring installed in its showroom. Therefore, a customer can immediately see how the product performs and visualize how it will look in her home. In a retail environment that gets a lot of foot traffic, Quattlebaum explained, “The durability and cleanability of the product are on display.”

Retailers need to be confident when installing various laminates on the showroom floor, including areas outside of those that feature laminate displays, noted Bill Ziegler, manager of Charles F. Ziegler & Sons in Hanover, Pa. “Especially in area rug sections, offices, walkways, the showroom entry and anywhere else you find room to use [laminate]. Walk the customers through those areas. When it comes to selling laminate flooring, it is most important to ‘know it and show it.’”

Laminate as a trade-up

Another way retailers can successfully sell laminate involves the manner in which the product is marketed. Some continue to market laminate as a hardwood alternative as laminates have become more realistic than earlier versions. Others market the category as a value proposition to more expensive, upscale hardwood species. According to Milton Goodwin, Armstrong’s vice president, product management, hardwood and laminate, retailers should be selling laminate as a trade-up from other surfaces, such as vinyl or carpet.

According to Goodwin, retailers should clarify the trade-up story by calling out key attributes that drive value for the customer. “Show them how realistic looks differ across price points. Premium laminates offer the most realistic visuals on the market, often confused with their real wood counterparts. Inexpensive laminates can’t compete in visual clarity, realism or quality. Some producers are moving away from high-quality, premium products. We’ve targeted our laminate to have the best price-value equation of any product.”

Highlighting laminate’s best features and benefits are crucial starting points. For example, the consumer who wants the look of a wood floor without the maintenance issues can look to laminate for the perfectScreen Shot 2014-07-30 at 10.41.38 AM solution. Dan Natkin, Mannington’s director of hardwood and laminate business, believes with the durability, environmental benefits and realism now being achieved in upper-end laminates, “you have a product that is, in many ways, superior to a real wood floor.”

 

Focus on the high end

Natkin implores retailers to educate the consumer about laminate’s benefits and to emphasize the realism achieved in the upper-end range of products. These techniques can help make money in a category many have written off.

In terms of selling against big box stores, Ziegler is a proponent of avoiding competition at the low end, as was noted by several business owners. His store rarely shows anything less than $2 per square foot, with the exception of three to four pallets from $1.29 to $1.99. Ziegler & Sons does offer laminate in the $2.79 to $3.99 price range, so it can be compared to the “same (special order) laminate in the home centers,” he explained. “If they special order it, they’ll consistently be 35% to 40% higher than our price. Retailers can easily and profitably beat their prices. Check their special order prices online; it’s easy to see.”

The bulk of Zeigler & Sons’ volume is in the $3.99 to $5.99 per square foot price range, selling 85% of its laminate at $3.50 or higher. Combine that with a high-end underlayment pad and “you’ve taken home centers out of the game early,” Zeigler noted. “Customers see the value and want to buy from independent dealers.”

Product expertise, top service

Product knowledge and customer service also play significant roles in how flooring retailers can outdo their big box counterparts; it is crucial for sales associates to be well versed in the benefits of each manufacturer’s products. “The [manufacturers’] reps do a great job sharing information with our sales team about their products,” Dauenhauer said. “We also offer full installation service, provided by a subcontractor, for all the products we sell.” Carpet World installs nine out of 10 sales and tends to sell more of the high-end laminate visuals while making about a 40% margin.

Echoing Dauenhauer’s sentiment, Ziegler said a sales associate’s product knowledge and attitude is everything. All representatives must be confident they’re showing consumers the right products for their individual needs. “We do this by consistently training and retraining owners and salespeople alike.”

When it comes to product knowledge, the consensus is that consumers most often look to flooring retailers as the experts who can find solutions and provide answers. Customers don’t necessarily visit an independent flooring store for the lowest price in town, Zeigler concluded. What is most important to the consumer is finding a “durable product to beautify her home and obtaining knowledge from a true flooring professional. Price may be on the list, but it’s not the most important part of the sale.”