Blueprint for diversification: Expand choices

Home Inside FCNews Blueprint for diversification: Expand choices

January 16/23, 2017: Volume 31, Number 16
By K.J. Quinn

Fierce competition from big boxes combined with the commoditization of several popular flooring categories continue to crimp profit margins for many flooring dealers. That is forcing dealers to search for new avenues to boost their sagging bottom lines. As store operators diversify their businesses, observers say many are turning to home improvement and interior decorating products that complement flooring.

Specifically, flooring retailers are expanding into categories such as kitchen cabinets, window treatments, countertops and vanities, to name a few, in their efforts to become one-stop decorating shops for customers. Industry experts say some of these items not only carry high profit margins but also create potential multiple sales with floor coverings.

Case in point is Floor to Ceiling in Willmar, Minn., which has handled countertops, cabinets and vanities for years. About five years ago the company branched out to accent furniture, frames, sofas, chairs, etc. It also offers faucets, bathtubs and bathroom accessories.

“We have four to five kitchen displays,” said Steve Johnson, owner. “We have Cambria and granite countertop displays and a lot of different displays, with actual sinks, so people can see the different options.” Countertops are big-ticket items because the sale usually includes a new sink and new faucet, he explained. For this reason, Floor to Ceiling sells those two items with countertops as packages. In addition, a new countertop can lead to the sale of a ceramic backsplash.

“When people come in, we want to find out right away what they’re looking for,” Johnson said. “Sometimes it’s items like accent furniture; other items are more of an impulse buy, such as when you see a mirror or area rug. You want to at least get them to see the items, as they may not have come into the store looking for them.”

As a store that sells more than flooring, Floor to Ceiling has found success in hiring interior decorators. “The single biggest problem is for the customer to be able to envision and imagine what the final product is going to be,” Johnson said. In addition to hiring interior decorators, “there are some [software] on computers that enable you to see virtual rooms, and that helps.”

Floor to Ceiling’s success goes beyond its vast product offerings. Regardless of what the product is, service is critical, Johnson explained. “We preach that all the time to salespeople and installers. We have to set ourselves apart from the big box stores and that’s how we do it.”

Other dealers are also finding growth opportunities outside of flooring. Hadinger Flooring in Naples, Fla., has been selling custom cabinets for the last nine to 12 months. “One reason we got into the business is we do so much work with backsplashes, why not do cabinets?” said Ed Keller, CEO. “We devoted showroom space and hired experienced people who’ve sold cabinets, including someone from a big box who has done a lot of design work.”

Hadinger Flooring has found success in including cabinets in its business.

The company brings customers into its design room and goes through different scenarios on screen. The staff is involved in the design work—creating rooms and 3-D renderings.

“Typically, the most important thing in the designing of cabinets is the doors,” Keller said. “You can have samples of the door, which take up very little space. We’ve gone a little further and put them on custom racks. This is just an idea center.”

Hadinger Flooring advertises cabinets alongside its flooring on TV and in print. According to Keller, people who sell cabinets can sell backsplashes but not the floors, which is why the company has both flooring and cabinet salespeople.

“It’s been a learning curve and an investment in the future,” Keller said. “If I were to give anyone a suggestion before he or she got into selling cabinets, it would be to hire a general contractor. Most installations we do involve moving plumbing and electrical [products], and you need licensed professionals to do that.”

If you show it…
Complementary home improvement categories have become so successful for some dealers that they are investing more capital into separate departments within the store. Such is the case at Floor to Ceiling, Virginia, Minn. Here, cabinets, faucets and area rugs have grown to account for about one-third of the company’s business. In fact, notes Jim Norlander, co-owner, the company has its own countertop shop on site.

“All of our kitchen displays have countertops on them,” Norlander said. “We’re limited in our shop to strictly laminate countertops. When it gets into Cambria or granite, we are like a subcontractor, providing a showroom for the fabricator who handles all the measuring and installing. We just show the samples.”

In addition to countertops, the company offers window treatments and higher-end cabinet units. “Some orders are custom and others are semi custom,” Norlander explained. “We sell a lot of middle of the road stuff, standard sizes which fit into people’s kitchens, and also all new colors and glazes. I don’t inventory stock for the customer, but we do have 20 kitchen displays set up in the showroom.”

Including vanity items in a showroom can entice customers and increase ticket sales. Norlander believes 90% of customers will buy something if they’re inside the store.

Norlander’s tips for retailers: “Start small and do it well. Start with some middle of the road cabinetry and be precise in what you do. It really helps to have diversity because if your carpet sales fall off in October, cabinetry sales can carry you over.”

Vinnie Virga, co-CEO, Floors & More buying group, is also a firm believer in presenting a diverse offering to the consumer. But he adds that not all categories have to be big-ticket items. Some Floors & More showrooms, he said, offer a plethora of items including mirrors, pictures, clocks, lighting and plumbing fixtures. In his experience, paints, window treatments, picture frames and other décor items are purchased more frequently than big-ticket items such as cabinets and counters. The key, he notes, is making sure everything is tagged because these are impulse buys.

“Décor products are probably the easiest to do. Paint is simple to learn, but the hardest part is mixing paint and having the equipment to do that. Cabinets are a little more involved because there’s a design element and learning how to install them. Countertops are pretty easy to sell because most people use a fabricator.”

Including cabinets and counters with average tickets from $8,000 to $12,000 provide more opportunities to increase and grow not only your average ticket but also your number of tickets, Virga stated. His advice for retailers looking to add accessories to their showrooms? “I recommend retailers pick a category to go into, then do the next one and the next one. Many of our retailers are very comfortable with what they know as well. A lot of items require some form of inventory, so you’ll need to have systems in place to buy and replenish those items on a regular basis.”

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