In addition to the new normal of working for every sale, it is up to the retailer to maximize profits for each transaction made, particularly if that sale is the only moneymaking opportunity of the day. While the flooring itself is a large chunk of the purchase, retailers are privy to a myriad of sundries. However, one that is often overlooked or passed over is moldings and according to some top manufacturers, those who pass on it are missing out on some easy extra profit.
If you are selling a consumer more than just flooring—like an enhanced space for a beautiful home—you will need to complete that sale. “When a consumer replaces a floor she most likely will not get the exact same species as the old floor, so new moldings are needed to match that new floor,” explained Thilo Hessler, president of Versatrim. “Furthermore, why would she want to have that brand new floor in her house and have the old worn out moldings with it?”
Aside from looking out for your consumer, the flooring retail industry is no different than any other retail industry when it comes to the sales of accessories, said Bas Van Genderan, CEO, Pedross USA. “The margins, or big bucks, are made in the accessories. For example, you get the cell phone for free but you are sold the belt clip, car charger and other accessories and end up paying $100 for the accessories.”
It really depends on the individual’s situation, Gary Hernandez Jr., co-founder of Flexitions told FCNews. “Sometimes a retailer will be able to throw in the moldings with the flooring purchase and sometimes there is not enough profit in a sale to cover the cost of the moldings. This really comes down to the individual retailer and how he packages the sale for the consumer.” One point was indisputable. “Right now, retailers need to be making money on everything.”
One must purchase a molding program to protect terms of the flooring warranty, as well, cautioned Van Genderan. “Each floor—whether wood, laminate, cork or even LVT—is expanding and contracting so if one does not want to void the warranty you need to leave expansion gaps around a floor.”
The requirement exists for carpeting as well. When carpet is in other rooms, an overlap threshold is needed, particularly if a floor is larger than 200 square feet and the floor is installed in more than one room. The floors are connected with each other so T-moldings need to be installed in doorways to avoid reactions like buckling.
“With all this knowledge it is easy to finish a sale as the hard part is done,” he explained “The floor is sold. Now, we need to finish the room.”
Is it worth my time?
With your availability stretched thin, it can be difficult to qualify the add-ons on your watch. However, this is not the sales equivalent of a cell phone case, belt clip and hand-free headset to tack on an extra $100. This is an opportunity to make an additional 30% on the sale of flooring.
“Retailers should be making a minimum of 30% on moldings and related accessories,” Hernandez said, “especially, if the dealer is providing moldings that are a color match for a seamless transition within their installation.”
He added in most cases, retailers can earn more profit with Flexitions because it allows the consumer or sales associate to embrace design aspects that could not be achieved otherwise, by integrating curves, an arch or a radius. What was a headache in the design challenge is now an opportunity to stir the creative juices. “This ultimately adds value to the flooring project overall, which allows the retailer to increase their profitability substantially.” Pedross molding products offer competitive returns, as well. “Average margins on flooring are between 20% and 28%,” Van Genderan said. “If the molding percentage can be brought up to approximately 10% while the margin is kept at 50% or more, the result at the bottom line will be at approximately 20%, so suddenly 10% of the sales represent 20% of the overall business.”
Van Genderan said he saw the opportunities available with moldings during his time as CEO of Lumber Liquidators, growing the share from 2.8% to 10% over six years. “At Pedross, we can offer 70% to 80% margin opportunities.”
Learn the way
When it comes to putting money where your mouth is, most manufacturers who spoke with FCNews agreed education is the way to sell the product and maximize profits. “It is not that difficult but most people make it difficult,” Van Genderan continued, citing the manner in which individual accessories are made for carpet, 3⁄4-inch thick wood, 1⁄2-inch thick wood, 7mil laminate, etc. “Every Pedross T-mold is one price at retail, regardless of the specie. It’s our approach to sell to distributors and retailers because that’s the best way to get a strong net result.”