By the time I opened a successful chain of flooring stores in New England, I was fortunate enough to have people who took care of those things. Were I to encounter the roadblocks that retailers of today encounter, I likely would have never entered the retail business.
Later in life when I started my consulting career on proper selling skills, I used my wife’s employees to take care of pesky details and never let the government know about my business.
However, with all the rules and regulations our government uses to impede business, it has little problem with allowing larger retailers run their outrageous ads, leaving small retailers unprotected in the marketplace.
Early in my retail career the Federal Trade Commission used to police retail advertising. At the time, Sears was the world’s leading carpet retailer. If it ran an ad on a particular quality that inferred the regular price was “$29.99 per square yard, now on sale for $19.99,” Sears had to prove it actually sold that item for the regular price for an extended period.
The leading flooring retailers of the time were, besides Sears, other department stores as well as the giant flooring chains. The large chains took a little riskier path by marketing highly advertised carpets of the day. In the early days of Stainmaster, small retailers who were paying $8 per square yard for carpet only, were driven batty by the large chains advertising it for $8.99 per square yard including padding and install.
Consumers that answered these ads would find a few ratty samples hidden in a corner, which, of course, led to accusations of “bait and switch” tactics.
We were heavy advertisers in our local markets, but used creative offers to entice consumers. However, I also had my own three ratty samples available at $8.99 installed with pad as examples of what our customers would find at the large chains. Rarely did we sell the advertised goods because our salespeople knew that customers valued style over all else and they were blessed with people skills and educated in home décor.
Today, there is no protection against false and misleading ads and consumers are more concerned about bargains and price than ever before. You all know the ads I am speaking about: “Buy two rooms get the rest of the house free.” Men’s clothing chains advertising: “Buy one suit at regular price and get two more plus three shirts for free.” The home centers continuously trumpet, “Free Padding” or “Free Installation.”
Obviously our government finds nothing wrong with this advertising, which preys upon consumers’ need for a bargain. But what does the average retailer believe? Well, many ask me: “What kind of fool would believe these ads?”
The answer is, “Most consumers.”
“Preposterous,” you say.
It just so happens the “Get the rest of house free” company is the largest flooring retailer in the country. The home centers with their “free” offerings have a 40% share of the retail flooring market, proving a lot of fools are out there.
Most small retailers have a sense of integrity and tell me they would never try to fool consumers like this. Unfortunately, here’s what this attitude will get you if you’re part of a large, national chain: With sales in the doldrums for several years, J.C. Penney hired a most highly regarded retail executive, Ron Johnson, as CEO. He was a star merchandising executive for Apple and Target, and was brought in to fix J.C. Penney. He took an innovative approach, “Treat customers as intelligent shoppers.”
He refused to run sales, but ordered all merchandise be offered at the lowest possible retail prices, which were more than competitive with other stores’ sales prices and misleading ads. The result was that after two years, J.C. Penney was on the way to bankruptcy and Johnson was let go to save the company. Consumers buy on sale.
“Sale” and “free” are still the two most valuable words in retail—and always will be. Retailers need these words to entice customers into the store, but salespeople need to know how to speak rationally to customers about the important issues in purchasing floor covering. The problem is, 90% of flooring salespeople lack the expertise required to convert the average bargain shopper.
That is what my columns will be about.
Please accept the fact the large retailers don’t lose money. They make more than you do. Retailers who have been fortunate enough to follow salespeople from these stores find they are hundreds, if not thousands of dollars less for the same job. The average small retailer barely has a 35% mark. With all their phony sales, large retailers shoot for a 50% mark.
I always investigated the false claims of flooring stores, as I still do today. The “Get the rest of the house free” company would have to have a 10 times mark on flooring products as regular pricing to be able to do what it does. Some home centers require the purchase of a certain padding to get the free installation deal that more than covers the cost of install. As a matter of fact their carpeting is less expensive when they don’t have free installation. However, even if you know how they do it, unless you know how to sell, your customers will think your explanations are just “sour grapes,” and back they go to purchase at the home centers.
Starting next issue we will begin explain how to do it.
An owner of multiple stores in New England until 1985, Warren Tyler had a desire to share his retail and sales success with the industry. His career as a columnist, sales educator and consultant has produced hundreds of top retailers, every major merchandising group as well as dozens of distributors and mills as clients—winning accolades from even his peers. He is the author of several top-selling industry books, CDs and DVDs, and is available for keynotes and sales seminars.
(804) 384-7588, email@example.com