Retailer education: Proven practices to increase profit margins

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December 23/30, 2019: Volume 35, Issue 13

By Lindsay Gonzalez

R.C. Willey has shifted its focus to selling exclusive, private-label products,
which has helped increase profits.

Now that 2019 has come to a close, it is an ideal time for specialty flooring retailers to take stock of their current businesses to find potential areas of improvement or innovation. While some flooring dealers may not want to rock the proverbial boat, others suggest there is always room for implementing new strategies or adjustments as a means to increase margins and profit opportunities.

FCNews spoke with several flooring dealers to see what tried-and-true practices they have enacted in the last five years. Following are their proven practices for dealers looking to push against the status quo.

Increase prices
Great Western Flooring of Naperville, Ill., has found success raising its prices at least annually, according to Lauren Voit, president. The reason? Quite simply, it continuously costs more to operate a business. “Just to maintain profitability we need to increase prices,” she said. “However, what really sparked our motivation for regular price increases was getting invoices from other trades, seeing their prices rise and thinking, ‘Wow, we are really undervaluing our services.’”

Keep stock on hand
For The Vertical Connection Carpet One based in Columbia, Md., stocking product has helped increase sales and profits. According to Adam Joss, president, the company previously special ordered 100% of its materials. “We can now capture sales that are needed next day/same week,” he explained. “Margins have also improved through more strategic buying. We had outgrown our warehouse and moved to an offsite warehouse. Once we had the space, stocking became a natural progression in our expansion.”

Sell private-label products
To combat the increasing number of online stores steering customers away from brick and mortars, Salt Lake City-based R.C. Willey has turned to selling private-label products. “We are part of the NFA, and I have the benefit of corresponding with other NFA members,” said Eric Mondragon, hard surface buyer. “We develop products specifically for the group with each vendor. We’re able to pick out products and specific colors that work well for my area as well as in Florida or up in the Northeast or Northwest. With private-label products, I don’t have to worry about a competitor down the street or online stores selling out for cheaper product. I’ll actually sell these products for more and I make a higher margin. Exclusivity, that is the key.”

Educate your RSAs
In addition to selling exclusive brands, Mondragon explained that R.C. Willey has focused on properly educating its retail sales associates on the information available online. “RSAs need to be more educated on what the consumers are seeing and hearing online,” he said. “Flooring is a very different animal—we speak a different language. If a consumer chooses to go online and buy flooring without any knowledge of it, she is going to hear things and read things she may misinterpret. If the RSAs are not understanding what the customers are hearing or reading, they can’t help them through their buying process. The RSA may try to re-educate the consumer, which can create distrust in the consumer. She’ll look at it as the RSA is just trying to confuse her or it could become an argument.”

Narrow your selection
While some dealers continue to add more flooring options to their showroom, Great Floors based in Coeur d’Alene, Idaho, has recently eliminated 20%-30% of the displays in its showrooms. What’s more, the retailer has chosen to feature its strongest items in each category in a more meaningful way. That’s according to Mike Nelson, executive vice president, who explained, “This has made our stores easier to shop, increased the sales of our key vendors and given the consumer the best product at the best price in the marketplace.”

Great Floors made the change after it realized its previous number of choices was overwhelming not only customers but staff alike. “We are one of the largest flooring companies in the nation,” Nelson said. “We have great products at great values that have been installed in hundreds of homes in our communities. Yet, we wanted to offer everything with the idea that is what people want—more choices. We finally realized that people do not truly want the burden of searching through every product available to find the right product for their needs. They want us to look for the best products in each category.”

According to Nelson, Great Floors’ new mission is “to have access to all products available yet feature products in our stores that we believe in and would recommend to our families and friends. We want to make those products easy to find and showcase them in a unique way that separates them from all of the other products available.”

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