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Showrooms: Who decides what the customer wants to see in a showroom?

Posted on February 21, 2008 by Jeff

In my last post I discussed the question “Showrooms: Do They Reach the Customer that the Manufacturer is Targeting?”  The showroom series continues today as we will focus on the second question I proposed, “Who decides what the customer wants to see in a showroom?”

In my last post I stated, “Simply put, these showrooms are seen by manufacturers as an opportunity to physically show their wears.”  There is an alternative to the showroom model though; the internet provides a viable solution to display a large product offering with low overhead costs.  The internet is also a vehicle to efficiently offer consumers vast product offerings, and robust data.  Exploring the traditional showroom model will help us arrive at this conclusion.

Showrooms can range anywhere from several hundred square feet to an excess of 25,000 square feet. Both the sunk costs as well as the recurring costs of these showrooms grow proportionally with the size of the showroom.  Not only does size increase the costs associated with the showroom, but the complexity of the showroom can raise costs exponentially.  I classify these showrooms in to three main types: business card, project based, and living spaces.

The Business Card

Here is an example of a typical local wholesaler showroom. These showrooms serve more as a business card for anyone who walks through the door. It quickly identifies that this business serves the plumbing industry. Icons such as the toilet and pedestal sink, help set this environment. Wall hangings establish the technical abilities of the wholesaler.  As manufacturers try to improve the ways in which they showcase products, more detailed and intricate showrooms have been developed, such as the project based showroom.

The Project Based

Project based showrooms are similar to studio shots in the photo industry, these studio showrooms allow customers to enter complete project layouts that highlight specific products, say the toilet and sink combination, while providing the design of the entire room to showcase what the products could look like in a well designed setting.

The Functional Living Space

Plumbing industry showrooms move well beyond “studio shot” showrooms to fully functional living spaces.  These showrooms not only showcase the products in a well designed room but they are also fully functional, with running water, lighting, etc.   I’ve watched wholesalers spend anywhere from several months to well over a year in building or remodeling these showrooms.


“Who decides what the customer wants to see in a showroom?”

In answering this question I have to first state, I’ve never set up a showroom, but am familiar with the subject after years of supply chain management experience in the field.

If you have, there’s no doubt that a lot of work goes into it and many questions have to be carefully thought out and answered before you begin:

  • What do you have to spend?
  • How much space do you have available?
  • What manufacturer’s do you partner with?
  • Which products should be highlighted?

The list goes on and on. For the purpose of this blog we only have to look at a single question to show the limitations of the traditional wholesaler showroom, “How much space do you have available?” PlumberSurplus.com  currently offers products from more than 175 manufacturers representing tens of thousands of active products. Let’s say we sell 50,000 products and limit the number of products in our showroom to the top 1%. A bit of math will help us here.

50,000 products x .01 = 500 products

Let’s estimate that each product has a showroom footprint of 3 feet x 3 feet. That’s 9 square feet.

500 products x 9 square feet = 4,500 square feet of showroom

I’m no mathematician but according to my calculations this works out to be 4,500 square feet of showroom.  That doesn’t even include the rest of the layout, such as hallways, walkways and entries, just to sit the top 1% of your available product line. From here you can only imagine the associated ongoing costs of showing a measly 1% of your available business. If you are not familiar with the plumbing industry it is common practice for wholesalers to expect 20% of their product offering to produce 80% of the revenue.  If we used our example above and applied it to the rest of the industry we would need 20 times the amount of space in our previous calculation to showcase 20% of our available products.  Now for those of you who don’t feel like getting out your calculators that comes to a whopping 90,000 square feet of showroom space needed. Can anyone say the word “overhead”?

What does all of this mean?  It means that when you enter a showroom, the products shown are the top 20% performers of that manufacturers or wholesalers line.  That doesn’t necessarily mean that those are the items the consumer wants to see.

The Alternative

The internet offers a cost effective manner for showcasing a breadth and depth of product not easily replicated with the traditional showroom!  I know it’s not revolutionary, but if you read my last post you would remember that the plumbing industry is still very traditionally structured.  Let’s take our previous examples above.  In using the internet as our showroom to showcase the 50,000 products we previously discussed, we need a grand total of 0 square footage of showroom space.  So now that we know that there is a viable alternative to this showroom issue, the next post will discuss “How can the dollars behind manufacturer showroom incentive programs be better spent?”

 

Showrooms: Do They Reach the Customer that the Manufacturer is Targeting?

Posted on February 13, 2008 by Jeff

I was recently perusing the plumbing, heating, and cooling industries monthly staple, The Wholesaler, December 2007 issue. The Wholesaler highlights the news, trends, and happenings for the industry’s distribution channels.

Each month I’m struck by the number of articles that, summarized, celebrate the remodeling, expansion, or establishment of new wholesaler showrooms across our country. Simply put, these showrooms are seen by manufacturers as an opportunity to physically show their wears. Manufacturers like Kohler, Moen, Delta, and others look to entice customers; dare say end users, to purchase their product offerings using this tried and true brick and mortar channel.

As an eCommerce company, our showroom is far from traditional. Our showroom is dynamic and far reaching although we have "0" square footage; in other words, our showroom is the internet.  As a Supply Chain Manager, ever time I read on of these articles touting some wholesalers' Taj Mahal showroom, I ask myself the following three questions:

  1. Showrooms reach a particular customer, is it the customer that manufacturers really want?
  2. Who decides what the customer wants to see in a showroom?
  3. How can the $’s behind manufacturer showroom incentive programs be better spent?

Look for the answers to these questions as I look further in to this “Tried & True” channel.

“Showrooms reach a particular customer, is it the customer that manufacturers really want?”
 

An elementary understanding of the plumbing industry’s distribution model is necessary in answering this question. It generally looks something like this:
Plumbing Industry's Distribution Model


If you yelled “confusing”, correct!  In looking at the journey of a product, from manufacturer, each stop on the way is, in some way, with a customer.  But at the end of the day if the product doesn’t reach the end user the rest is simply an effort in futility.

Where then are the showrooms you ask? Just through the doors of the wholesaler. Referring back to our chart, you might notice that there’s no arrow from the wholesaler to the end user.

As 1 of the 301,139,947 end users, you’re considering remodeling your bathroom. All you know is you want to replace your old dingy faucet. It isn’t likely you’ll locate 1 of the 1350 wholesalers with names like McJunkin Corp., EMCO LTD., and Johnstone Supply, Inc. even if your fingers are doing the walking. I didn’t pick those names from obscurity either; they’re ranked among the top 10 national wholesalers by, The Wholesaler, August 2007 issue.

But should you come upon the doors of a wholesaler, no matter how inviting they may look, I assure you the end user isn’t welcome. There is no opportunity for the end user to purchase anything sitting on a wholesaler’s showroom floor, no matter how shiny that Danze faucet is. Before I move on let me give you a quick note about retail: Space, Space, and Space.  Retail only stocks, at best, the top 20% of any given product line, several A’s and some B’s, meaning their top selling products.  So if you think you’ll find that exact faucet at retail, chances are you’ll be disappointed standing in the aisles of your big-box-store.

The showroom customer is the contractor.  Even if the showroom is successful in convincing the contractor they prefer American Standard over Price Pfister, the big box model tells us the Do-It-Yourselfers aren’t asking the contractor. And if they do solicit the contractor for installation, isn’t the contractor going to cater to the end users interest?

PlumberSurplus.com saw three key shortfalls of the showroom:

  1. 1350 Wholesaler locations vs. 301,139,947 End Users
  2. The end user is disenfranchised from the showroom
  3. Retail provides limited breadth and depth of product

To overcome these shortfalls, PlumberSurplus.com complicated the diagram in an effort to simplify purchasing for the end user.
By establishing purchasing relationships with the manufacturer, manufacturer’s representative, and wholesaler, PlumberSurplus.com is able to tap into the 301,139,947 end users by bridging their disenfranchisement while providing a breadth and depth of product unequaled by a single channel.

Regardless of the project, the end user is able to research complete manufacturer product offerings across multiple manufacturer lines resulting in purchasing at a reasonable price without ever having to understand either of the above diagrams. Isn’t that the customer the manufacturer ultimately desires?

Next post, “Who decides what the customer wants to see in a showroom?” Understanding breadth and depth of product.