We are well enough along in this downturn that any advice might be coming a little late. If you're reading this, there’s a good chance you have endured a sharp drop in demand for flooring. Still, it is worth noting that there are a few important common sense things that should remain high on your list these days. They are worth reviewing.
First: Conserve your cash. In situations like this, cash is king. Now is not the time to hold out hope that slow-movers will move. Go over your inventory and if you find something that has lingered for three months or more, mark it down, drastically if need be, no matter what your personal feelings are about this specific item. Use this merchandise as a loss leader in your advertising and promotions. Dig out all old merchandise, display it in a prominent spot and turn it into cash.
If your sales are bad, then that’s also true for most suppliers. They are just as desperate as you to drum up sales and many are willing to make concessions on price and terms if it means they keep moving merchandise. Don’t be afraid to ask for extended dating; if they are offering 30 days, ask for 60 or 90 or even 6 months. If your financials are decent and you have a history of paying bills, you will be surprised at what you are able to negotiate.
Once you’ve made the deal, do everything possible to keep your end of the bargain. If money gets tight, stay in touch with your creditors and keep them abreast of the situation. You can’t call them too much. If you haven’t done so already, arrange a line of credit with your bank for emergencies. Don’t be afraid of debt. The economy always turns around and our industry has a long history of being cyclical.
The most important word in your vocabulary is “No!” At this time you do not need new displays or additional inventory. In fact, low end inventory may not be the best buy. Those consumers who shop the low end of the market may be the least likely to be in the market for flooring these days. These are the people who literally can’t afford a tank of gas. Upper end consumers, while upset at energy costs, can still afford to buy things, so think about asking manufacturers to look around their warehouse for better merchandise they want to get rid of. Try to steal high-end flooring from them.
Even in the worst of times, there is still plenty of money around, but people get anxious about spending it. A savvy retailer will convince people that this is the exact time to buy and the opportunity to save won’t be around long. Your promotions have to offer a credible reason for the sale, why the time is now and the only place to purchase flooring is your store.
Now is not the time to cut back on your advertising. Plan a program for the next six months and be consistent. Repeat your winning ads until they stop pulling. One of the best books on advertising ever written is Ogilvy on Advertising! (David Ogilvy, Vintage Books, 1985). Before every ad runs, keep your people busy by calling all your old customers and advising them of the next promotion. Needless to say, new customers should be called immediately after installation or delivery and put on a regular call schedule thereafter.
In previous columns, I have advised retailers to zero in on those sections of the business least affected by the downturn: customer builders, re-modelers, property managers, rental agents, health care facilities and the education industry. The successful retailer will create a plan to get this business.
If you haven’t already done so, now is also the time to develop a website with an interactive store. A recent study commissioned by the World Floor Covering Association revealed that even while few people buy flooring on line, that is where they do their research. If you are selling flooring you need an online presence. A professional website positions you as a professional source of flooring. Internet sales of flooring are also likely to increase as people cut back on their driving to save gas. Also, make certain that your site has links to important sites that will support your business.
For example, maybe you should only display laminates that are certified by NALFA with a link to their site. Fiberglass-backed vinyl is the wave of the future. Provide a link to a manufacturer who produces this revolutionary new flooring (IVC springs to mind). The wood flooring industry is evolving and soon engineered wood will be dominant along with wood flooring that installs just like laminate. You could be the source for these amazing new products and your web site could be a source for information about them.
The point is that retailers can’t just sit around waiting for business. Business is out there. Go out and win it. Always have something special in your store that sets you apart. Conserve your cash and don’t buy anything unless the price and terms are too good to be true. One area not to cut back is your advertising and promotion. All this really works. If it does nothing more than keep you even in this challenging environment consider it a success. There are flooring retailers out there who are now significantly increasing their business. If they can do it, you can do it.