November 21/28, 2016: Volume 31, Number 12
By Jim Augustus Armstrong
Box stores, national chains and online sellers have deep pockets, which enable them to outspend small retailers in the advertising game. They also have strong purchasing power, which gives them advantageous pricing when buying wholesale. To the small, independent dealer these advantages can seem insurmountable. The good news is local retailers have unique advantages, which if leveraged properly can give them a leg up over these larger competitors. I recently spoke with Hoy Lanning, chief sales and marketing officer of the CMH Division of J.J. Haines & Co., about how dealers can win in this competitive environment.
What are you seeing successful retailers doing today to be competitive?
Successful retailers are doing things differently than they did in the past. For example, if they were only open Monday through Friday 9-5, they are expanding their hours to nights and weekends so they can reach the consumer that would have gone to the box stores. They’re also changing the way they go to market. A lot of dealers are going directly to the consumer by providing a shop-at-home experience. I also see dealers expanding their use of social media and Internet marketing.
What are your thoughts on the importance of creating differentiation?
On our level a lot of the major manufacturers have become distributors, so there is more overlap with similar products and services. This means we have to find other creative ways to differentiate. We do this by finding out what problems dealers are having and then coming up with ways to solve those problems. This way our differentiator becomes solving those problems. For example, a dealer says, “I need to control my costs more in order to compete in the marketplace, so I need to have fewer deliveries that I’m paying for.” So we solve that by carrying a huge multitude of products. We can package it all for dealers and ship it in a single delivery, so it helps control their cost.
I think retailers have got to do the same kind of thinking. Find out what problem the consumer is having and then solve it. That will create differentiation in your market and help you compete against big companies.
Let’s talk about selling on price. Many dealers feel like they’ve got to lower their margins to compete. I think that price is a much bigger issue in the dealer’s head than the consumer’s in most cases.
I agree. I think most of the time consumers don’t understand what it costs anyway. They’re hearing a per square yard price, a per square foot price, free delivery, I’ll give you one room free to every six you order.
I’ve had retailers say, “Well, I can’t compete against the person selling on the Internet.” My reply is, “Yes you can,” because an online shopper doesn’t have somebody walking them through the process and demonstrating the product. They don’t have somebody making sure the product is delivered. They don’t have a qualified installer, and no one to make sure he warrants the entire job. On the other hand, you’re right there in the same town as the consumer. You provide all these things the online seller can’t. Sell your features and benefits.