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ColumnsBusiness Insights

Loyalty May Be the Answer You're Looking For

By Sandy Montero
customer loyalty
October 28, 2019

You’ve heard it all before: Consumer buying habits are changing radically; specialty flooring retailers are on the decline; home centers and national chains are on the rise; and, manufacturers are caught in the middle. Independent specialty retailers can sometimes feel they’re being left behind.

It’s not just in flooring. Independent retailers across virtually every industry and business in America – neighborhood pharmacies, automotive repair shops and tire centers, hardware and appliance stores, craft supply stores, even restaurants – are all losing market share. They’re being replaced by national chains, some by online sellers, and in some cases, by manufacturers themselves.

The number of specialty flooring retailers has dropped from a high of as many as 24,000 or more to under 11,000, and that’s store fronts. When you count the number of actual business entities in flooring retail, that number might be a low as eight or nine thousand. And getting smaller all the time. Worse still, the outlook for unaligned specialty retailers can be a bleak one.

Believe it or not, at one time, specialty retail sales accounted for more than half of all industry sales. Today, it’s home centers and a handful of larger retailers that dominate. 

In flooring, we’ve seen lumber yards, hardware stores, price clubs, online sellers like Wayfair, all entering the market. Some of them have very powerful brand identities and a strong base of customers. And then of course, there’s Lumber Liquidators with its proprietary suppliers, private label brands and a huge advertising budget. Facing off with any one of these in your home market can be a fierce battle. You need all the help you can muster. 

So how do you stay relevant when your suppliers are increasingly being pulled into the home center space and when new emerging competitors lurk everywhere? Your very survival depends on how you answer that question. It could just be that the answer is something as simple and as old fashioned as loyalty. 

Very often I hear complaints about a lack of loyalty from both sides of the aisle – from retailers and manufacturers. Clearly, this is a two-way street. Manufacturers want to help you. They love specialty retail. They want you on board. And they spend lots of money on trade shows, displays and salespeople visiting your store to help you, to support you and to help your business be more profitable because you are their most profitable customers.

Perhaps, then, the best way to succeed in the longer term is to embrace your top suppliers and commit to their brands. Even without making it a priority, it’s probably already happening. Most retailers find that the leading supplier in any given product category accounts for nearly half or more of category sales. 

I’m not saying that you have to throw out your secondary suppliers or even that you have to put all of your support behind one supplier, but at the least, you need to express your commitment to your key suppliers and make them partners in your business. As for secondary suppliers, you need those too. Pick a few and stick with them.

The same applies to distribution where, to paraphrase Mark Twain, the rumors of their death have been greatly exaggerated. Distributors in today’s market still carry some of the industry’s best-selling brands along with a host of alternative suppliers providing products that might not make it into the mainstream but give you a selection that can help you differentiate your offering from competitors. 

Product differentiation has to be at the core of your retail strategy: Home Depot is not going to carry high-end hardwood. You can. Lumber Liquidators does not carry this industry’s best-known brands. You can (and you should).

Loyalty does matter, even in today’s helter-skelter world of flooring retail. The large buying groups have figured that out a long time ago. In return for their loyalty, they get proprietary brands and programs, special promotions and pricing, and more. That strategy has paid off for them in key markets across the country and it is helping them fight off encroachment from other retailers that sell flooring – and those seem to be everywhere these days. It is also helping them pull ahead of other specialty retailers in their home markets.

Loyalty is a two-way street. Without it, you’re just another store front in a sea of store fronts all competing for the same prize. Maybe it’s finally time to choose sides. Align yourself with a few key suppliers and then put your focus on selling those lines.

They’ll welcome the opportunity to help you, and you might find they’re open to new and creative ways to drive your business forward. 

They’re always coming up with new ideas to support sales through the specialty retail channel: seasonal sales, special products and brands not available in home centers, internet and social media programs to help drive engagement, and so much more. It’s complicated, I know. And many of you simply don’t have the time to figure out which programs are right for you. But they’re there to help. 

Invest your time in figuring out which ones work best for your business. Talk to your suppliers. Ask questions. Assess your weaknesses and strengths. Reward loyalty by throwing more of your support behind their products and programs. 

There are many types of loyalty programs available, and there are plenty of opportunities to become more fully aligned with your top suppliers. Use them. 

Loyalty. It matters, and I think you’ll be rewarded for yours. At the very least, your suppliers will love you for it. And that ain’t a bad thing.

KEYWORDS: business management flooring retailers

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Montero author

Santiago Montero has been covering the flooring market since 1988. He has spoken to hundreds of retailers, manufacturers and distributors as they’ve generously shared their struggles and their challenges as well as their successes and triumphs during this time of unprecedented change in the industry. He can be reached at monterosantiago@gmail.com.

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