High profits for high profilemillwork dealers

By Laddie F. Hutar, MBA, CMC Certifi ed Management Consultant Hutar Growth Management Institute Glenview. Il.

nO YOU know who your customers are? Do you know I-7who vou want vour customers to be? A niche in "Decorative High ProfiC' millwork products may provide the answers you want.

The '90s has been a transitional decade. The baby boomers are again turning towards traditional values. As the boomers age, they will spend less on luxury items such as travel, entertainment and dining out, and become more of a generation of "homebodies." As they mature, mobility slows, careers level off, they spend more time at home with their children and utilize the home more for entertaining. If they are not in a position to purchase their dream home, they are more willing to make sizeable investments for remodeling their current home in order to be able to enjoy amenities that add "class, luxury, and status" to it.

These consumers are 'shopper smart' and are demanding these amenities and upscale, architectural features to distinguish their homes from their neighbors. For homeowners, the ability to customize their homes makes it more comfortable for them to entertain there. Makins amenities available to these buyers either in display, sample or setting form will be important in aiding them in the selection and purchase process. As much as building a new home is a business decision. buying one is, for the most part, an emotional decision.

New approaches and new mindsets in both manufacturing and marketing need to be applied. At a time when remodeling dollars are nearly equal to new housing dollars, demand for products is becoming more consumer driven. The latter '90s is focusing more on the buyer's mindset. This is difficult since suppliers or the "makers" traditionally held the position of strength in the marketplace. However, as the surplus of production capacity continues to grow, along with competition and products crowding the market, sellers will need to position themselves better in terms of successfully moving product through the channels of distributi This is a shifting of effort and energy toward the talent of marketing. The focus now will be on differentiating the product. When combined with improved marketing skills, outlets and products, market share and prof- share and profitability will be strengthened.

As this process unfolds, we must become more sensitized and attuned to these needs and demands. In order to survive the environmental changes of an increasingly competitive marketplace, we must adapt and develop a new attitude and mindset.

A renewed demand for aesthetic appeal in home construction and remodeling has generated a vast variety of Decorative High Profit (DHP) millwork products allowing any basic house to be "owner customized."

Products such as decorative leaded glass entry door systems complete with sidelites and transoms, beveled glass French doors, decorative windows, ornamental mouldings, or other architectural embellishments such as fluted door frames, pediments, cupolas, decorative exterior window mouldings, etc., can really dress up a house, create endless options and have a dramatic effect on the curb appeal of the house.

,::F or suFpliers, DHP,,pioduCts:

(1) Pionide needed:additienal profit mar$ins

(2) Sometimes are used to round out product lines

(3) Add prestige

(4),Calt attention to the cofipany ::,..,

(5) Help obtain more publicity

(6) Help to sell oiher products

(?) Open doors to new customers

(S) Add excitement and romance to selling process

:

,(9),:Stirmlate Creativity in,:selling and design ideas

(10), ShoW, appieciation of good taste: :and val ue

(11) In proper settin$, help, people,rnake decision to buy

,,,,(12) Create pride in products and store among staff

(13) Open up new markets

For,,homeo*ners, DHP,products:

(1) Stimulate the senSes

(2) Are highly visible

(3) Get noticed, talked about

(4) Add beauty, warmth to functional items

(5),,Cbnhibute to,historical :character of a neighbornooo

(6) Add long-term value

(7),hovide pride of ownership

For,nei$hbors;.DHP products:

.,,,, ,,

(1) Add prestige

;(2) Are pleasing, and exCitin$ to look at (3),Attract positive attention

(4) Provide inspiration to others in neighborhood to upgrade their homes

,,:(5) Make a:statement to others:that occupants have ,,,,,indiiiduality and good taste in style and design'

These highly visible architectural embellishments produce warm, positive desires and responses in the buyer. Displaying upscale amenities in room settings actually lets the buyer see how these unusual and unique treatments add warmth, beauty and status to a home to make it one-of-akind.

The importance of qualified and knowledgeable sales- people in selling upscale products cannot be stressed enough. They must be available to inform and present the buyer with the option to select from a variety of designs and products. Sound information, specialized knowledge, and an extensive upscale vocabulary can justify any purchase price. It reassures buyers, who may often feel vulnerable and apprehensive because of their lack of experience with building products. Specialized information will also reinforce the buyer's purchase-making decision and will contribute toward securing the buyer's confidence in the purchasing process.

Utilizing these upscale amenities increases the potential to attract the sophisticated buyer by enhancing his perception of the home. Selling these upscale amenities also allows the seller to increase gross margins. Currently two of every three homes built are being bought by the larger population of baby boomers in the "move up" category, increasing the demand for more homes with upscale amenities.

Making these amenities available for both new construction and the remodeling sector provides opportunities for additional business and increased profit margins. The remodeling market is a particularly profitable sector for areas in which existing homes were built primarily with utilitarian function and design in mind. These homeowners too are looking towards upscaling as a way to distinguish and customize their homes.

A number of dealers have set up DHP Millwork Showcase Showrooms as companion extensions of their existing businesses to meet the demand of the expanding upscale housing market. Custom home builders who don't have model homes featuring decorative millwork and upscale amenities, take their clients to such showrooms to show them and demonstrate the many upscale options.

Showcase Showrooms also provide dealers, manufacturers and builders with a way of diversifying from the volatile new construction market. In this way they can have additional revenues coming in from the remodeling market when the primary market (new homes) for their products slows down.

Although many forward-looking, progressive dealers have upgraded their display rooms, research shows that nationally there are very few that have become involved as they should in utilizing this marketing technique. The majority are doing nothing other than continuing to do business the way they always have; by doing so they are limiting their potential for additional future growth.

Dealers interested in pursuing this new market should search out qualified sources ofunbiased information focusing on DHP millwork, upscale amenities and establishing a Showcase Showroom. Most important is that the information acquired is accurate, and provides the latest successful techniques and strategies. Using a specialized consultant is one way to get started for a trial and success approach. Many times the trial-and-error, "we'll do it on our own" approach can be more expensive, since valuable time and money may be lost during the learning period.

Story at a Glance

It /TORE with less. It's difficult to IYlpick up a business publication these days and not see some article or snippet on the "business reality of the '90s": having to do more with less. More sales, less margin. More service, less margin. More work, less time. Why does it seem the ledgers are weighted with more, more, more expected from small business? Is all the "less" doomed to come from the bottom line?

Virtually all these "more with less" scenarios can be addressed with gains in productivity, and the good news is that the explosion in technology is putting the possibility of benefitting from these gains within the grasp of almost everyone. When we think technology, we generally think computers, and when we think computers, we most likely think accounting. But for the same reasons computers have found their way into automobiles (for example, to provide better fuel economy, i.e., more miles with less fuel), they're also finding their way into niche jobs within today's building material sales organization.

Many lumber dealers do material take-offs as a service to their customers. If the dealer's customer base is growing, then they can be expected to do more take-offs as time goes on.

If the dealer's customers are beins