By Louis Iannaco
How do some of the most successful retailers in the country maximize their hardwood flooring margins? What do manufacturers believe dealers should be doing to increase margins for their wood products? Promotions, sales, education, training, product knowledge—which way is best?

Gary Cissell, director of flooring, Nebraska Furniture Mart, believes two types of education pay the biggest dividends—sales and installer training. “Sales staffs need to understand the differences and the subtle nuances of each of the basic hard surface categories in order to position the customer with the correct product for her particular application.”

Installation is the other area that can make or break the customer’s overall experience, he explained. “We SKU code each hardwood product with the type of installation method necessary to ensure complete satisfaction and minimize any mistake [from both the salesperson and the consumer].”

Cissell said displaying the product in large formats is a third factor beyond education. “On the floor in a minimum 4 x 4 foot sample is the best.”

He suggested this be followed by some other large format sampling, such as 2-1/2 X 4 foot sections.

According to Sam O’Krent, president of O’Krent’s Abbey Flooring Center, San Antonio, hardwood is no different from any other product category. “We take a basic belief that the consumer does not want the least expensive product—they’re looking for value and are willing to pay for the right floor.”

The challenge is to help her determine what she is looking for, he explained, which requires an educated salesman conducting a professional presentation. “Additionally, we pride ourselves on not being another ‘me too’ flooring company. Consequently, we do not emphasis the ‘standard’ brands customers can find all over town. This not only allows us to differentiate ourselves from our competitors, we still get to sell at fair margins.”

Cost control

Sam Roberts, owner of Roberts Carpet and Fine Floors in Houston, believes the question of how to maximize wood flooring margins is interesting because it doesn’t ask how to maximize profitability. “Advertising, reputation, store ambiance, display, salesperson quality and store location all play a part in creating profit, as does the control of costs.

“Margin is a function of exclusivity,” he said. “In a competitive environment, on a widely placed product, the market typically sets the price of a product. The dealer can create margin by adding value, purchasing inventory in quantity or negotiating an advantageous position with his manufacturer, distributor or both.”

Chris Thompson, vice president, sales and marketing for Boa-Franc, says dealers should not only focus on gross margin percentage but also on margin contribution dollars. “Making a high margin on a low-priced product several times does not produce the same amount of profit dollars as a sale on a higher-priced item sold for a lower-gross margin percentage. To sell at higher margins the salesperson must be educated and knowledgeable,” he explained. “This is the critical element to making a consumer comfortable in understanding the value in trading up to a better product.”

He also noted the retailer must have reputable brands that are known for quality in his store, and “these products must be effectively merchandised so the salesperson can effectively sell from the display.”

The dealer also must offer a total package for the consumer, Thompson continued. “Make it easy for her to buy the product—have the right types of floors available to install when she wants it, have all necessary trims and accessory products, offer financing programs. Offer any needed service after the sale and installation.”

Dan Natkin, Mannington Mills’ hardwood product manager, believes similarly to Cissell in that one of the best ways to maximize margins is to show large-format samples of the most distinctive, unique looks, but not at the opening price point.

“Showroom floors and vignettes are also great ways for the customer to visualize the look in their own home,” he explained. “The key is for the salesperson to win the heart and mind of the consumer—if she can imagine the floor in her home, you win.” 

He concluded financing deals and free room measurement are great ways to bring customers in. “Once the customer comes through the door, the salesperson has an opportunity to trade her up.”