Handling supply issues and price increases

Home Column Handling supply issues and price increases

supply issuesBy Jim Augustus Armstrong—Some of the challenges faced by floor dealers right now include supply issues, price increases, labor shortages, combined with high demand for flooring services. This series is dedicated to giving you actionable strategies for overcoming these challenges more effectively than your competition.

Positioning is critical

Price increases and delays in getting product represent bad news for your customers. How you convey bad news to customers and prospects plays a large part in how it’s received. First, you should always seek to position yourself as a trusted advisor, like a family physician or family accountant. Bad news coming from a trusted authority is received very differently than bad news coming from a “salesman.” In this column, I’ve covered many strategies for positioning yourself as a trusted advisor.

Beyond good positioning, what else can you do to mitigate the effects of price increases and supply chain issues? I recently spoke with fellow FCNews columnist, Scott Perron, owner of 24-7 Floors and Floors 4 Pros, on strategies for handling these challenges.

Price increases

Selling from existing stock can help buffer the effects of a price increase. “Try to qualify people from stock offerings,” Perron told me. “We base our pricing on landed costs. If a price increase is coming, this gives us time to offer a product at a lower price than a competitor offering a similar product but who has to special order it.”

Private labeling is also a big help, according to Perron. “In my market there’s a lot of comparison shopping online and a lot of dealers selling the exact same thing, so it often degenerates into a price game. Private labeling helps solve this issue.”

Price increases are happening so frequently that constantly updating the pricing on your product displays can be a nightmare. “We don’t try to keep up by changing prices on the products themselves. It’s too much work. Each job’s pricing is based on the most current pricing available from the supplier.”

Perron does not use price tags in his showroom. As an aside, this is something I’ve taught floor dealers for years. Price tags on products create problems, including giving your prospects the illusion that they can comparison shop using a square footage price.

Supply issues

Where there are supply issues, beefing up inventory can help. “We have fewer SKUs, but we go deep with the stock on those SKUs,” Perron said. This gives Scott an advantage over competitors both in terms of pricing and in delivery time.

“Another thing I do is give the customer options,” Perron said. “For example, if a customer wants a product that has to be special ordered, I’ll tell her it may take two months for delivery and installation. But then I tell her that if she can be a little flexible on the style, we can give her one of our stock products and she can get it installed within two weeks. Another factor working in our favor is that customers are more patient because everything is delayed right now, not just flooring.”

Perron has also done a great job positioning himself as a trusted advisor with his clients.

Jim is the founder and president of Flooring Success Systems, a company that provides floor dealers with marketing services and coaching to help them attract quality customers, close more sales, get higher margins and work the hours they choose. For information visit FlooringSuccessSystems.com.

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March 7/14, 2022

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