By Gordon Hecht and Rich Lindblom
The grass is always greener on the other side, right? But as we learn in this debate between two diehard mattress and appliance devotees, BrandSource dealers can have the best of both worlds.
Gordon Hecht: Even in the best situations, retail is difficult — especially for appliance dealers. Many are dissatisfied with their current profit margins, store foot traffic, and the overall future of retail in their market. No need to live with basement-level margins in the high teens to low twenties. Now is the time to work on developing a new revenue source.
Rich Lindblom: True, appliance margins aren’t as good as furniture or bedding and I won’t argue that point. But there are other reasons to consider appliances beyond margin:
- Appliances deliver a very high dollars-per-square-foot return on investment of floor space. Why do you think the big-box stores are so heavily invested in appliances these days? Their appliance departments are among the stores’ most profitable areas.
- The typical U.S. home has somewhere between five and seven major appliances, vs. three to four mattresses. That is why there are nearly twice as many major appliances sold every year as there are mattresses.
- Unless you’re the rare example of a store that never has a moment without a customer in it, appliances can help bring more shoppers to your showroom and fill up that downtime for your sales staff. Simply put, more appliances sold each year = more customers walking through your doors every single day of the week. And isn’t that the goal of every retail store?
- And unless your delivery trucks are always 100 percent full day in and day out, here’s another opportunity to send out a full truck daily.
Hecht: Mattresses also have several advantages that you’ll like. Size or “no fit” is rarely an issue. If the customer has a queen-size mattress now, the next queen size will fit just fine. Also, mattresses are flexible and have no hard corners, meaning less chances of scratch-and-dent, easier delivery, and fewer returns. Mattress deliveries can be as simple as drop-at-the-door, or at worst, some minor assembly and plugging into an outlet.
Further, mattresses don’t need a plumber, electrician or gas company to complete delivery, which reduces operating costs for you and means less hassle for your shoppers.
Lindblom: Delivering appliances is really not all that different than delivering big, bulky, heavy pieces of furniture. In fact, if you exclude refrigerators, your delivery people might actually thank you for selling white goods. I know I’d much rather deliver a 24-inch-wide, 100-pound dishwasher than a 5- or 6-foot-long, 200- to 300-pound sleeper sofa any time.
Hecht: The ideal solution is to get into the mattress game. Think about it: The target market for mattress products are shoppers who are:
- Female, ages 25-54
- Earning between $55,000 and $200,000 or more
- Fashion- and color-conscious
- Willing to spend more on technology and innovation
- Haven’t bought a mattress in 10-15 years, expect to pay $600, and wind up spending $1,500 to $2,000.
That shopper should sound familiar to you — it’s the same customer that’s looking for new appliances.
Lindblom: Yes, selling is selling. It doesn’t matter if you sell furniture, bedding or appliances; the important thing is that your staff is experienced at selling high-ticket items, and that really is all that matters. Once you know the product, the selling really isn’t all that different.
Hecht: To be fair, adding mattresses into your line-up will mean sales training for your staff. But while a major appliance can have thousands of component parts, mattresses have springs, foam layers and fabric. In mattress sales, “the feel is the deal,” meaning your shopper can actually experience how the mattress will work for them. You can’t get in that your showroom with a washer, dryer or a dishwasher!
Lindblom: Yes, but if you can squeeze out as little as 300 square feet of showroom space, you can put together a very respectable display of 24 appliances (four from each major category). So, shove a couple of furniture pieces together; take off that dog of a sofa that’s taking up 200 square feet of floor space; maybe stand up a few mattresses; and you’d be amazed at just how many appliances you can fit in a small area.
Hecht: My math is a little different. Every mattress sale will get you gross margins in the high 40s to mid-50s, so 600 square feet of mattresses (about nine floor samples) can earn you the same dollars as 1,500 square feet of appliances. And AVB/BrandSource has programs to get you into the mattress business with less than 100 square feet of floor space. I know that you have room for that.
Rich Lindblom: I want to let you in on a little secret: There are margins to be made in appliances! In fact, margins in the appliance industry are as good as they’ve been in a very long time, typically running between 25 percent to 35 percent, and that is excluding back-end money such as advertising, volume rebates and merchandising allowances.
From a warehousing perspective, appliances take up less room than most furniture and, depending on the product, can be stacked two- to four-high by hand or as high as you want with a forklift. The old saying in the appliance business is that you stock “one to show and one to go.” And, from an advertising standpoint, the more products you offer, the more effective your advertising will be. Plus, you’ll earn even more co-op dollars, allowing you to do more advertising.
Hecht: Is the mattress business easy? No, but it’s simple, profitable, appeals to your shoppers, and fits into your promotional and operational wheelhouse.
You may be thinking that your market is saturated with mattress stores; it seems like there’s one on every corner. Yes, there’s competition out there, but every advertisement they run raises awareness for mattress products. What they don’t have is your existing operations, loyal customer base and experienced sales team, along with the buying and marketing power of AVB/BrandSource.
By adding mattresses to your name, you’ve given your existing customer base a new reason to visit your store and have given non-appliance shoppers a reason to see your white goods.
Lindblom: Look, I get it, appliances might not be for everyone. But if you want to keep up the momentum we’ve all experienced over the past year and a half, maybe adding appliances to your mix is something you should give serious consideration to.
Gordon Hecht is a business growth and development consultant to the retail home furnishings industry.
Rich Lindblom was a longtime BrandSource member and Maytag Leadership Council officer who sold his business, Advanced Maytag Home Appliance Center in Schaumburg, Ill., after more than four decades in independent retail.