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Laminate: Managing conflict via private-label strategies

November 6/13, 2017: Volume 32, Issue 11

By Reginald Tucker

 

Screen Shot 2017-11-13 at 10.08.46 AMIn the ongoing battle between independent flooring retailers and the big boxes, laminate manufacturers have come up with a way to keep their channel partners happy: Develop private-label programs for some of the home centers while awarding specialty dealers with long established brands that carry the greatest brand equity.

But this is not a distinction in name only; many of the laminate brands destined for price-conscious shoppers who frequent outlets such as Lowe’s, Home Depot and the like are developed and positioned accordingly. Meanwhile, many of the household laminate flooring brand names consumers might find at the specialty retailer level are designed to provide better margin opportunities; and they are manufactured and marketed to support that strategy.

“We’ve always tried to create differentiated products in terms of style and performance so those products can compete with one another in the marketplace,” said Roger Farabee, senior vice president, laminate and hardwood, Mohawk. “So far that strategy has worked pretty well. We’ve not only been able to do that with respect to the quality of the product itself but also with respect to our brands that have meaning to the consumer and the trade. It is a challenge, but that’s why we have so many products in the pipeline.”

Case in point is Pergo, a brand under Mohawk’s Quick-Step umbrella but one that you won’t find at the specialty retail level. (Much to the delight of Lowe’s and Home Depot.) Conversely, Mohawk laminate lines are not available at big box stores—and specialty retailers are just fine with that. Rick Oderio, owner of Conklin Bros., San Jose, Calif., recently upgraded from an entry-level laminate offering to a higher quality line from Mohawk. And he hasn’t looked back. “We literally sell miles of Mohawk laminate. More importantly, we don’t get any callbacks with the Mohawk brand. It has been a very profitable category for us, and the visuals are truly amazing.”

Armstrong is another household flooring brand name that is benefitting from the multi-channel approach. The goal, according to Morgan Hafer, product manager, is to continue to provide innovations in performance and design to not only compete but also give specialty retailers more products that can’t be shopped at the big boxes.

In that same vein, Shaw Floors maintains its commitment to the specialty retail channel by offering laminate products under the Shaw brand name. But it also manufactures a separate range of laminate lines for home centers as well as private-label collections for buying groups. However, new high-performance products like its Repel line—which is specially designed to withstand liquid spills and accidents—is strictly available to specialty retailers.

It’s a model that seems to be working for other manufacturers who cater to various channels. Uniboard, for example, is probably best known in Canada as the manufacturer of brands such as Allegria—which you won’t find in specialty retail stores. (In fact, the company supplies a host of other producers around the world with laminate flooring whose clients, in turn, market under other brand names.) However, when it comes to providing distributors with differentiated laminate products that can boost their profit margins, a Uniboard-branded strategy is the way to go.

“There is tremendous equity in the Uniboard brand name, which is why we decided to focus on that brand recognition when we re-entered the U.S. market,” said Don Raymond, vice president of sales and marketing. “For many retailers and distributors, the Uniboard brand is synonymous with high quality, and it only makes sense for us to leverage that name recognition.

Specialty retailers seem to be embracing the strategy. For some, the private label distinction—be it home centers vs. independents or independents vs. buying group brands—keeps consumers from shopping around solely based on price. “Being in a buying group has given us many benefits—one being able to have our own private-label brand,” said Carlton Billingsley, president and owner, Floors and More, Benton, Ark. As a member of both the FCA Network and Starnet, this approach sets him apart from the competition. “Private labels allow us to focus on products that are important to our market, and we work with our vendor partners to have a good assortment. This allows our customers to receive very good products at aggressive pricing while seeing products that are different from the dealer down the street.”

While private labels can certainly help improve profitability, some believe exclusive brands are the way to go. As Eric Demaree, president, Carpet One Floor & Home, told retail members during the group’s summer convention: We provide our members with exclusive brands, not just private-labeled products. “We add exclusive colors, superior warranties, product attributes and guarantees that cannot be offered by simply slapping on a private label. We integrate our exclusive brands in a comprehensive selling system that helps make the selection process easier for customers and the presentation process easier for retail sales professionals.”

Many flooring retailers, mindful of the dilemma that manufacturers have to contend with by serving different channels, appreciate the ability of suppliers to diversify the product mix. Most specialty retailers would prefer not to compete with home centers on price alone, and the branding strategy laminate manufacturers have developed sufficiently addresses this problem.

“We try not to compete with box stores on any product,” said Char Smith, manager of Gallagher’s Flooring, Grand Junction, Colo. “For the most part, they are selling to people who are only interested in a price point and have no idea or concern regarding quality of product. We have chosen to deal with laminate suppliers that produce quality products.”

 

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Digital marketing: Retailers sharpen search optimization strategies

October 9/16, 2017: Volume 32, Issue 9

By Lindsay Baillie

 

It should come as no surprise that today’s consumers start their purchasing journey online. Many use search engines, social media, company websites, review platforms and online advertisements to obtain more information about products—or retailers, for that matter—so they are better positioned to make a purchasing decision long before they enter the store.

To get noticed flooring dealers must have an online presence—and a strong one at that.

While creating and running a digital marketing program takes time, it is absolutely worth it, say those who are successful at it. For dealers who might lack the time or knowledge to successfully run a digital marketing campaign, there are options available, including help from digital marketing companies.

Following are several tried-and-true techniques that successful dealers have employed in their respective digital marketing campaigns.

Screen Shot 2017-10-17 at 10.23.30 AMKelley DeCesaro, digital brand strategist
Star Lumber, Wichita, Kan.
“We continue to work on our SEO and SEM strategies, backed by quality website content and helpful online tools for our customers. We find we get the most lead generation from our PPC plan because we can direct them to a landing page that fits their project needs and prompts them to make an in-store appointment. Customers engage with us and hear our brand voice through social media. Social media is also a great way to push out information about our sales and services. Most of our social interactions are gained through our lighter, human-interest posts, but those interactions boost our profile presence, making it more likely for our customer to see our promotional posts. We utilize boosted posts and ads on social sites to increase our digital presence.”

Screen Shot 2017-10-17 at 10.23.35 AMMeaghan Karn, director of marketing
Avalon Flooring, Cherry Hill, N.J.
“Digital marketing is essential in today’s business. We know customers are beginning the search online so we work very hard to make sure we are there when they are ready to buy. We use a combination of all the digital marketing methods—pay-per-click, SEO, social media, email, remarketing, etc. Each customer is at a different part of her journey and each one of those methods allows us to offer information about our products and services that are tailored to her needs.”

Screen Shot 2017-10-17 at 10.23.41 AMKevin Rose, president and owner
Carpetland USA, Rockford, Ill.
“Digital marketing is very important and becoming more significant on a daily basis as even the 50-plus generation is moving to digital. We have hired professionals who know the market to teach us and direct our funds to the appropriate areas. We focus on SEO, pay-per-click, etc.”

Screen Shot 2017-10-17 at 10.23.47 AMMary Ann Gore, office manager
Bridgeport Carpets, Alpharetta, Ga.
“Digital marketing is very important to us. When customers are ready to purchase, they generally use either a computer or smart phone for their research. It’s helpful if they can just pull up our website and determine whether we have the item. We utilize a digital agency to handle our website. It specializes in online marketing, so we are able to just focus on customers. We also have a Facebook page. The avenues we typically utilize for digital marketing are website, pay-per-click, social media and email.”

Screen Shot 2017-10-17 at 10.23.53 AMAdam Joss, co-owner
The Vertical Connection Carpet One, Columbia, Md.
“Digital marketing is critical to our business. It is how people are researching and shopping today. Specifically for big-ticket items, people are researching online before they go shopping in the store or contact the store. If you’re not contacting people online you’re losing the game before you even start. Websites, pay-per-click, SEO, email marketing and social media are all important. We also use Facebook, Pinterest and Instagram.”

Screen Shot 2017-10-17 at 10.23.59 AMNick Freadreacea, president
The Flooring Gallery, Louisville, Ky.
“There is a plethora of options available, and the media outlets are driving people to their online presence. When we meet with reps for TV or radio, all they want to talk about is their online options for advertising. We are not that tech savvy but we have been trying new ideas for the past several years. We recently revamped our website and are consistently changing keywords to keep up with the changes that Google makes. It is an ongoing process to tweak their algorithms on what moves a site up the page.

“We also have pages on Facebook and Twitter; we were a Pro on Houzz for several years and just began an Instagram account. We also ran with Angie’s List for a couple of years, but that did not bring us viable clients as most were interested in labor only or strictly the lowest price. There is a fine balance as to what is ‘image’ on a social media site and what actually drives a consumer to your store for a purchase.”

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Dear David: The cost of negotiations

May 22/29, 2017: Volume 31, Issue 25

By David Romano

 

Dear David:
I recently had a discussion with my sales associates about the current mindset of consumers regarding negotiations and the true cost of discounting. They got defensive and said the ability to negotiate is an important tool to closing sales. I disagree but need some advice or data to counter. Can you help?

Dear Owner,
Screen Shot 2017-03-06 at 10.37.51 AMThe most common stories about negotiations seem to center around sitting in front of a car salesman dickering over the price of a new vehicle. Millennials—which will soon become your largest customer base—are used to purchasing everything from music to groceries online and are changing that decades-old model. To accommodate this new type of buyer, more companies are embracing fixed pricing.

Last year Costco struck a deal with General Motor dealerships to sell 465,000 cars at fixed prices. Electric carmaker Tesla has made a practice of it, and other brands like Subaru and Lexus are experimenting with it in certain locations.

One reason is that instead of just dealing with a salesperson, millennials tend to research purchases online, visiting an average of 25 sites. That means they’ve largely made up their minds before they arrive on the lot. If this is happening at car dealerships, one must assume the same can be said for those looking to purchase flooring.

These buyers aren’t looking for a salesman; they’re looking for a customer advocate. The job of your sales team is to build rapport, establish trust, understand the features and benefits of each product and sell on value, not price.

When I owned a flooring company, I’d ask my sales staff: Do you think this customer is going to pay your rent/mortgage this month? Do you think they are going to buy you groceries for the next few months? Are they going to invite you over for dinner and the holidays?

When they’d say no, I’d ask, “Then why are you so willing to give up some of your commission to someone who doesn’t understand your sacrifice and doesn’t care?” I instructed them to stop relying on negotiating and sell on the merit of the product.

According to data from my company Benchmarkinc, the average flooring retailer generates just over $2,600,000 in sales. That company sells products at a margin just under 36%, with an average transaction around $2,200 and closes its opportunities at a rate of nearly 35%. Benchmarkinc is also able to analyze the effect certain practices have on business. Following are the results of allowing sales associates to negotiate: gross profit is 0.4% lower, average transaction is $35 lower and close rate is 0.5% lower.

Those numbers may look small, but the compounding effect is quite large. Based on the numbers above, the average number of opportunities is 3,376. If you take those 3,376 opportunities and close just 0.5% more you would have an additional 17 transactions, totaling 1,199. With an average sale of $2,235 ($2,200 + $35) you would generate $2,679,765 in sales. If you take that $2,679,765 and multiply by the 0.5% increase in gross profit you would have an additional $13,398 in gross profit dollars. For an average store generating $2.6 million in sales the effect is just over $13,000.

You can do the same exercise using an individual sales associate’s numbers and show him how much money he has lost by giving things away at a discount. When your sales team realize how much money they give away to complete strangers, I’m sure they will change their approach to negotiating.

 

 

 

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How the experts navigate industry’s biggest event

January 16/23, 2017: Volume 31, Number 16

By Ken Ryan

 

Screen Shot 2017-01-16 at 10.37.40 AMIt’s crazy, energizing, fun and tiring. And that’s just the first day. The International Surface Event (TISE), a.k.a. Surfaces, the flooring industry’s largest event, is two and a half days of fast-paced action with executives pounding the pavement from early in the morning until late at night.

“Surfaces is still the best all-round flooring show to attend,” said Sean O’Rourke, vice president of hard surfaces at Avalon Flooring, Cherry Hill, N.J. “To loosely paraphrase Sinatra, ‘If you can’t see it there you won’t see it anywhere.’”

Many flooring retailers and distributors prepare for Surfaces with a well-defined game plan, not unlike a football coach and his staff getting ready for the Super Bowl. In this case, the smallest details can make the difference between a successful show and a frustrating experience.

FCNews spoke to veterans of the trade show to get their thoughts on effective strategies and helpful tips for covering the show. Here are some excerpts.

Best strategies
“We go to Surfaces with a good idea of what we need so we can find the best deals. Prices on things like pad are usually discounted at the show so it’s wise to purchase as much as you can. We also like to find new products we feel will be trending so we stay ahead of the game.”
Mark Presson, Lonnie’s CarpetMax, Rockford, Ill.

“Schedule meetings with your key partners in advance. Allow plenty of time between meetings; manufacturers may be displaying at a hotel or another off-site venue. It can be a logistical issue if appointments are too close together.”
Enos Farnsworth, Denver Hardwood

“I usually take a group of employees with me so they can spread out and visit the booths I am unable to. We usually meet at the end of the day and discuss any areas of interest.”
Eric Mondragon, R.C. Willey Home Furnishings, Salt Lake City

Best thing about Surfaces
“Being able to see the majority of all our vendors under one roof.”
Dan Mandel, Sterling Carpet and Flooring, Anaheim, Calif.

“It’s reconnecting with vendors/business partners we may only see once a year.”
Sean O’Rourke, Avalon Flooring, Cherry Hill, N.J.

Sage Advice
“Leave free time for hidden gems in categories you may need. Study the vendor list to see where those gems may be rather than roaming.”
Phil Koufidakis, Baker Bros., Phoenix

“You will find the most influential people leave the hotel room at 6 a.m. for early meetings and return to the hotel at 9 p.m. following a dinner meeting. If you are hoping to gamble or attend a show, stay a couple days after the event.”
Enos Farnsworth, Denver Hardwood

“Block off at least half of a day to walk the show floor with no appointments to see what is out there that you have not seen or may not know. ”
Richard Cutting, Haines

Tips for newcomers
“Wear comfortable shoes, bring Purell, drink lots of water and get to bed before 1 a.m.”
Sean O’Rourke, Avalon Flooring

“Create a schedule with hour time slots and begin setting appointments ahead of time. Some events will overlap so be sure you are fair and equitable with everyone. And, don’t kill yourself with appointments or meetings from morning to night. Enjoy a little down time if you can.”
Scott Roy, Gilford-Johnson

“Embrace the craziness of it all. Make sure you eat breakfast. You’ll need it.”
Richard Cutting, Haines

Toughest thing about Surfaces
“Time management. With suppliers up and down Las Vegas Boulevard, it’s tough to get from place to place.”
Scott Roy, Gilford-Johnson

“Having enough time to see everybody I am currently conducting business with and still make time to see vendors I am not as familiar with.”
Eric Mondragon, R.C. Willey Home Furnishings