Treat Your Showroom as a Separate Profit Center, Distributors Advised

by WOHe

Treat Your Showroom as a Separate Profit Center,
Distributors Advised

Chicago Treating the showroom as a separate profit center is a
must for kitchen and bath distributors, who are being forced to
turn increasingly to more sophisticated forms of merchandising for
cabinets, countertops, plumbing products, decorative hardware and
other kitchen and bath products.

In fact, distributors need to produce and review all-inclusive
monthly profit-and-loss statements for their showroom, since these
statements “are the tools owners and managers can, should, and must
use to run this part of their business.”

That was the key recommendation made recently by the
Kitchen/Bath Distribution Alliance, a membership segment of the
North American Building Material Distribution Association, which
offered the advice in conjunction with the results of the
distribution industry’s first Kitchen & Bath Showroom
Operations Survey.

The report, according to the Chicago-based KBDA, represents the
first set of data that allows kitchen and bath distributors to
benchmark their showroom operations against others in the
industry.

The KBDA’s final report, based on a survey of more than 65
distributors, details such issues as overall showroom operations,
merchandising practices, sales strategies, service practices,
profitability results and personnel/ management practices.

The survey revealed that while distributor showrooms are not new
(more than half of those surveyed opened a showroom prior to 1980),
two-thirds of the distributors polled plan to grow their showroom
business in the near future.

More than half of the surveyed distributors display four or more
cabinet lines in their showrooms, and 87% said they also sell
direct to consumers.

Surveyed distributors also noted that their primary means of
improving showroom profitability is to promote more aggressively to
builders, designers and other specifiers.

Aside from operating the showroom as a separate profit center,
the KBDA offered the following advice to distributors:

  • Develop a yearly advertising, promotion and public relations
    plan and budget broken out by month.
  • Establish sales goals of $600,000+ per showroom salesperson,
    and gross margins of 33%-plus.
  • Provide consumers with one-stop shopping experiences in which
    all their questions can be answered and all their needs
    addressed.
  • Grow revenue through product diversification, learning the
    retail side of the business, being more loyal to fewer
    manufacturers, and by developing showroom business plans for the
    next three to five years.

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