Dealers share best practices for profits
By Ken Ryan Fguru Tom Jennings is known throughout the industry for his many wise words for retailers, including his mantra: “They say champions don’t do one thing 100% better than their competitors; instead they do 100 things 1% better.”
That statement accurately reflects 2021 for many floor dealers, who – despite numerous challenges – are closing 2021 with one of their best sales years ever, with many shattering records.
Dealers’ ability to circumvent supply chain delays, inflation, and labor and facility shortages is a testament to their entrepreneurial knowledge and drive.
FCNews asked several floor vendors to share their proven practices for profit. For many, it was all about focusing on the details and doing the little things the right way.
Don Cantor, Lake Interiors Chelan,
Buy better, choose our jobs wisely, watch our overheads, charge for all the little extras we used to not charge for (like loosening and resetting doors), installing metal carpet, hard surfaces and tile transitions. Charge more for tear-out and dump fees.
We increased our margins and watched our freight and charges more closely to include in the contract price. We increased margins on our custom granite and quartz countertop installations from 18% to 25% due to demand, and for the same reason, we also increased our cabinet sales margins from 35% to 38%. We also negotiated better prices for LVP/LVT jobs to fetch another 2%-3%. We also increased our window covering sales by 50% from last year, generating an additional 2% in additional discounts. It’s all right.
Carlton Billingsley, floors and more
We managed to add items to the sale such as transitions, upgrade padding underlayment (not just carpet) and other items to increase sales, while the customer can be confident that they are spending money on our company. We also continue to look for tools to streamline our efficiency, such as technology for our office team and mechanical (floor removal machines, milling, etc.) for the installation team. Adding line items to the sale will bring more profit at the beginning of the project, and if we do tasks correctly in a faster turn, we can do more volume at the end of the year.
Steve Weisberg, Crest Flooring
Instead of showing manufacturers’ displays, we select a complete product line, be it a soft surface or a hard surface. The products are displayed in our own custom displays. In fact, we create our own private label line-up based on good, better and best qualities. In general, the lineup is renewed every two years. We’ve been doing it for 48 years. Keep it simple.
Bill Huss, D&M Interiors
Buying truckloads/container deals has been good for us. We get a solid price advantage for a good margin and try to turn over the product in a 60-90 day period to avoid stock stagnation.
The other not-so-new idea is to display some of your products at a higher margin in highly visible areas of the showroom. It is important to have a sales force who does not sell the price; instead they emphasize the importance of quality and fashion.
Matt Wien, Marshall Carpet One & Rug Gallery
Mayfield Heights, Ohio
With the increase in higher ticket items, we increased our margin on premium products. We increased our minimum labor costs and implemented a $1,000 project minimum. If a job costs $650, we charge $1,000. If the customer agrees, we move on; if not, then we move on. It has worked surprisingly well with minimal pushback. This helped keep our calendar free of unwanted projects that have clogged up our installation schedule in the past.
Kevin Frazier, Frazier Carpet One Floor & Home
- Here are some of the things we do:
Maintain strict control over your product’s net margin by developing and maintaining a vision of how your company’s standard operating procedures are set up. You want your SOP to always “work” to create more margin at multiple times, such as pricing, amounts payable, and task costs.
- You, or your partner, should be the controller for both strategic and protective reasons. Remember to work on your business, not your business.
- Check each incoming vendor invoice for accuracy. Provide a systematic, watertight process that allows your operational staff in both the order entry/purchase order phase and the accounts payable phase to perform this check on each invoice. We researched for a year about three years ago and found that, month in and month out, 30% of our incoming supplier invoices were priced higher than they should have been. This was not done consciously, but still 30 of the 100 invoices came in too high. Be on the lookout for that.