by Ray Ducharme, Rave Reps
Today, we find kitchen and bath dealers offering five or more cabinet lines. Indeed, we know some who offer ten or more lines. It seems everyone needs something specific to hit every price point possible or when a new designer joins the company they “must” have their favorite cabinet line. Do dealers really need a same week delivery line, an import line, and several semi custom lines in framed and full access and several custom lines? Does this guarantee the dealer have it all? Having recently helped some dealers with retail sales we find this to actually be a bad idea. Consumers have limited knowledge about cabinetry, the get somewhat educated on the web but it's really up to the designer to direct the sale. Having too much to offer slows the selection process and the sale. Some dealers will say they need all these products to get the best pricing. While we agree that you need various price points to meet budget, salesmanship and design can make up for having to beat the next guys price.
Yesterday I was with a dealer (Charles) who told me that his latest client had come in with a $10,000.00 budget and had finally purchased the job for $15,000.00! He offers only two mid- priced semi custom / custom cabinet lines by choice. Charles has positioned his company to capture the middle to upper end of today's kitchen market. He says it makes no sense for him to work just as hard to design and sell a $3,000.00 to $5,000.00 kitchen especially where the margins are reduced. By offering limited products with better profit margins Charles devotes more time to each client. He knows the two product lines he sells intimately and has developed better relationships with the manufacturers. By limiting purchases to only two cabinet lines his commitment and volume does help him get better service. Does he get better pricing, you bet! Because of his volume he get extra discounts, rebates, spiffs and Coop. He also makes fewer mistakes and can design faster because he knows the product offering so well.
While we are not telling you to limit your company to only two lines consider your current client base, look where you position your company. Are you selling to builders and remodelers? Do they really need cabinets this week or can you help them plan ahead? Builders do know they will need a kitchen for that new house before they start building. If you can get out and measure and design once the house is framed you can offer a line that is price competitively but offers more style and color choices than the stock lines. That might cut down your suppliers from two or three to one.
While having a contractor priced cabinet line is important the most prevalent market today in the mid- priced semi- custom / custom market. Here we see dealers offering one or two lines of face -famed cabinets and another for full access and maybe a fourth for inset. Well, that's about to change with many quality manufacturers now offering framed, full access and inset in one package! Now you can get one manufacturer to supply you with the total package. You get the same delivery cycle, specs, finishing quality and nomenclature that eliminate confusion and costly errors and the added bonus of volume rebates, rewards, Coop and other programs. We see this trend continuing and steadily growing. Again, you can cut suppliers from three or more to just one.
As the prosperity of 2016 continues consider this advice when you start you planning for 2017. If you would like some help making decisions about how you position you company for the future give us a call. We would love to review you offering discuss alternatives that can help you increase profits and make doing business more fun.