Jim Buckles is a guy that has been in the flooring industry for a long while. He has served as a virtual CFO for many retailers over the years, offering them insight into a lot more areas than just their finances. That’s why I thought this topic, the design and allocation of a retailer’s sales floor, was a perfect one to explore with him. As competition gets sharper and as big box stores become more aggressive, independents need to explore every possible facet of their businesses for ways of achieving advantage in order to help them compete at least as effectively and as profitably as their competition, hopefully more effectively. The following are excerpts of a conversation we recently had with Jim, which you can listen to in its entirety here.
TF: What is your observation as to the process many retailers go through to arrange their sales floor?
Buckles: It’s very easy for the retailer to fall into the display trap. In reality, they need to look at the specific products we actually sell so when the consumer walks into the showroom, they are seeing what it is they are ready to buy. In a grocery store, they put the milk in the far corners of the store so customers are forced to walk through the store hoping for an impulse buy. The grocery store model is not one that works in a floor covering store. What we as floor covering retailers are trying to do when customers walk in is let them know that we are a source for the type of flooring they are looking for.
The first thing retailers should be doing in this process is analyzing what they have been selling during the past year, not only what they sold in terms of product type, carpet, vinyl, wood, laminate or LVT. They also need to drill down a little bit more into what specific products have been selling. This will give the retailer an idea as to what retail sales associates are showing and what customers are actually buying. And from there, they can start looking at what percentage of their showroom floor is allocated to those specific product types as well as what products are the biggest sellers with their clientele so they can be sure the products on the sales floor fit those particular styles.
TF: I’ve been in stores where there’s just so much product on the sales floor it’s difficult to walk around let alone get a good look at anything. I don’t know what led a retailer to that position, but I expect it’s the results of a sales guy coming in with a product the retailers think someone would possibly buy, so he adds it to the sales floor. After that happens several times, the sales floor is clogged with product, much of which is not only not selling it has the effect of driving consumers out of the store.
Buckles: I completely agree. It’s the same thing as a showroom by default, which is never a good idea. As we all know in the industry, there has been a shift more and more to hard surface. Concrete, for example, continues to maintain a very healthy market share. If someone comes into a retailer’s showroom, they most likely are thinking hard surface and they need to know what they don’t know exactly which product category. They don’t know if they want LVT, laminate, or pre-finished woods, they just don’t know. If they walk in and 75% of the showroom in front of them is carpet and they have to work their way through it to try and find hard surface, it’s going to make them doubt that you are the retailer for them.
Within any given marketplace, there are certain products that sell well. In some parts of the country Berber is still very big, and in other parts of the country, they’re very much into pattern goods. Others, just a good old mid-grade plush or texture is the thing people are looking for. That lets the retailer put these products that you know are hot sellers in an out-front position. First, you have a product where the customer can see it, and two, it’s a favor perhaps to one or two of your salespeople because these certain products are their go-to products. Retailers may even need to set up a product education situation with their sales force because there may be a comparable product from a different vendor that can yield a better margin.
TF: Do you find that most retailers develop a schematic or some type or floorplan of their salesfloor on paper noting where particular products should be placed, along with the specific reason for the placement, or is placement more of a seat-of-the-pants situation?
Buckles: I would say with 90-plus percent of retailers, it’s a seat-of-the-pants situation. Often, they get their warehouse guys up to the front of the store and start pointing and moving things around. There are exceptions to that because many of the buying groups offer showroom planning services for their members where they have specific displays that are group specific that let a vendor help design the retailer’s salesfloor making it more consumer friendly and more in line with the products that are being sold. Unfortunately, even within those groups a lot of the members don’t take advantage of it.
TF: Talk about the basic philosophy of allocating space on the showroom floor, using the floor as a sales tool. I have been told that retailers selling TVs, for example, often place three sets in a row with the least expensive on the left, a mid-priced set in the middle and the most expensive on the right. The rational was that by having all three available more customers than not would select the mid-priced model, than if this approach were not used. Have you seen this technique used in floor covering stores?
Buckles: Oh, absolutely. It’s used not only within a category but among categories. Often there is a good, better, best situation or even an inexpensive good, better, best situation. Many consumers might be comfortable with the better price point, but not if it’s the top price because they’re afraid they might be paying too much, or they feel it doesn’t offer the right value because they don’t have a reference point. Also, in terms of percentage allocation, if the retailer finds that 44% of his sales are in carpet, then that’s how much space on the floor he should allocate to carpet. That’s the easy part. The next part comes to merchandising and where they need to feature the products that people want.
Often consumers need to compare products so they can see if there is a better price. Many consumers want to buy the best. Then there are other people who want the number two-tier product based on price, for that situation there needs to be a number three tier product. It’s a comparable feel but at a lesser price. Fewer features and benefits and lesser weight for carpet, perhaps, so the salesperson can trade them down and the retailer doesn’t lose margin from the salesman who doesn’t have an easy go to product. By the same token, they should seek an easy transition between flooring types as well. A customer comes into the store thinking carpet and in interviewing them, they start talking about all the kids and the dogs and the problems with them and you realize you need to move them to at least look at hard surface and the come back to soft, but you have to have an easy transition to it, which again goes to the way floor space is allocated. If you have your most popular products at the front of the store, working towards your least popular, it lets salespeople easily walk the customer through the products talking features and benefits.