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 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?”