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Bill Fishman

Bill Fishman & Affiliates

11650 lberia Place

San Diego' Ca' 92128

?HE NATIONAL Retailing Institute*

I has completed a series of Focus Groups on behalf of a manufacturer. The client was interested in opinions and recommendations for the design and potential marketing of 3l innovative products.

Separate groups studied consisted of dedicated d-i-yers, contractors (2 groups), mechanics and merchandisers for buying groups and home chains. Although the proprietary nature of the findings still remains confidential, two general observations can be noted here.

(1) When it came to estimating retail price, the d-i-yers, contractors and those companies selling to professionals (contractors and installers) were close to target. The chain buyers were unrealistically low.

(2) Both the d-i-y group and the con- tractor groups were willing to pay a fair price for quality. They also appreciated full service and preferred shopping in nice surroundings at convenient locations.

However, all these consumer groups perceived that when they found an item at the Price Club (or one of its copiers), it would be piced substontially lower than at the chains or a full service dealer. Furthermore, they said it's this type of operation they will give their money to when they can save money by doing so,

It seems to me that the time has come for the retail dealers to become merchants! Rather than go head to head with the warehouse operators and buying clubs, the dealer would be better to shop for-and present to his customer-better quality brands and models, the ones that won't find their way onto the price cutter's shelf.

I don't think retailers can give up promotional items entirely. They're needed to create excitement and to bring feet into the store (they'd better be competitively priced).

But retailers must now merchandise creatively and carefully for those customers who knoq recognize and appreciate better quality. Remember that customer allegiance to any one retailer goes out the window the minute they find merchandise, brand for brand, model for model, priced lower at the warehouse operator's place.

Manufacturers, too, better recognize this consumer trend. In positioning their product line, they've got to understand that they may have to make a choice to go for the fast turns at the low margin warehouse operation that represents about 2OVo of the industry's retail sales or channel the distribution through the more conventional dealers. It's the latter who in the future will change brands when one is too readily available at the discounter, retailing at what is close to the dealer's cost.

For some manufacturers, it's going to be a difficult choice.

*The National Retailing Institute is a division of Marketing Services, Inc. of San Diego, Ca. It performs market surveys and strategic planning sessions for retailers, distributors and manufacturers, many of whom are in the home center and building supply dealer industry.

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