With housing bottoming out at a 50-year low, many LBM dealers that abandoned their retail trade and focused solely on new construction a few years back are keeping one eye on one-time competitors exiting the business and the other on their own survival. There are some exceptions, such as dealers who found niches in specialty products, installed sales or commercial/government business, but they are relatively rare.
Meanwhile, a smaller group of dealers held onto retail, even during the construction boom and even after they were advised to focus on the building business. Such advice made sense at the time; after all, in doing so, they could reduce their store hours, labor hours, inventory, and earn higher bottom line profits.
Today, what should your focus be? My opinion is that if you have signs at your business that read, "Wholesale Only." "No Cash Sales," or "No Retail Sales," then it is unlikely that you will be able to rekindle the retail sales. However, if you have showroom, a home center selection of products, or a great location, you are in an excellent position to capitalize on the staycationers (those that will stay home for vacation and not travel) or those that are remodeling because they can't sell their home.
So if you want to grow or revive that retail business, here are 10 things to consider:
If you are going to be in retail, you have to have retail hours. Retail hours are not 6 a.m. to 4 p.m. Monday through Friday. Retail hours are those hours when you customers want to shop. This includes late evening and Saturday and Sundays. Yes, Sundays. It is the biggest sales day of the week in retail.
You have to have a retail location. A retail location is not the industrial or commercial district, but rather is convenient to where people live.
Your employees must be retail friendly, not Knowledge Knuckleheads. What is a Knowledge Knuckle Head? That is a person who has no personality but performs better than Google when answering questions about products size, installation, and price. This personality is usually tolerated because of talent. However, that person may be kept in the back room and only communicate with your existing employees. Knowledge Knuckleheads are so crammed with knowledge that their personality is overshadowed by their knowledge and their relationship with the builders. In retail, you need an outgoing personality, but one that has product knowledge as well.
You have to have products in stock. You have to have to have breadth in product lines and you have to have depth of stock. Stock outs will put you out of business faster than you can imagine. You have to have good, better, and best. (Or, as I like to put it, you need reasonable price, middle price, and higher price, with margin percentages at reasonable, middle, and high; your customers do not know your costs.)
If you are going to stock a product category--paint, for example--you have to stock the full selection with everything that a consumer needs to complete a project. Having barn paint and a 4-inch throwaway brush in stock does not qualify you as being in the paint business. Stock the full line or get out.
Beware price points. If you advertise that you have low prices, you have to publish those prices. If you don't, you have to overshadow the price issue with exceptional services, selection, and location.
Retail Is not about supplying industrial accounts. Industrial accounts complements what you do for the pro. You can supply industrial accounts with pro-oriented hours, existing sales staff, and delivery services. Retail is different.
Customer shopping must become a habit. Your store must serve as a routine stop. Consider letting customers rent equipment or tools for their projects. Consider postal services and package shipping services; offering these will pull people through your store. If your retail customers get used to returning to your store, they will buy more with each visit.
Don't confuse customer service with a knowledgeable staff. You absolutely must have a knowledgeable staff, but don't stop there. You must have clean and well-organized store with easy-to-understand displays. Every item must include a price. The tail will wag the dog if your customers enter your store and they can't find what they are looking for without help from your sales staff. The staff should be supplemental to close the retail deals and upsell higher-margin products. That's the opposite from what happens on the pro side of the business. There, the sales staff is everything.
Get local. Host the Boy Scouts pancake breakfast. Develop relationships with the local community college building program. Have birthday parties for children. Support your community and they will support your business.
A closing thought: As you pursue the retail customer, I would not abandon the professional builder altogether. We are seeing a glimmer of hope in housing starts. But if you are retail, consider investing more in retail. If you are out of retail, you should stay out and look for additional niches that will service the professional builder. Look into installed sales, kitchen cabinet sales, industrial distribution, or look for businesses in your area that need your products and services.
Chris Rader is a consultant based in Lafayette, La. Contact him at firstname.lastname@example.org.