Fear of raising prices could come back to haunt dealers, Meekings said.
COO Dave Meekings does the math at General Session
By Alan Wolf, YSN
BrandSource members are selling themselves short when it comes to delivery and installation charges.
Building on CEO Jim Ristow’s four-point action plan for dealers, AVB’s chief operating officer Dave Meekings exhorted members to get what they deserve for services, especially in the current inflationary environment.
It’s easy to understand why this potential profit center has been overlooked of late, he said, citing what was perhaps the most profitable run that many have ever enjoyed. “We weren’t chasing thin margin promos, we didn’t have to liquidate closeouts, and if you had the product, most customers were buying without shopping around,” he said. “All good conditions for a profitable business.”
Today, however, costs for fuel, wages, leases and equipment have all gone up, Meekings said, while a return to a promotional marketplace would put margins under pressure — making it important to find and capture every profit dollar possible.
But why raise delivery and install charges? While it’s never easy to implement a price hike, increases are more accepted today, he argued, as consumers have become accustomed to surcharges for airline flights, concert tickets, hotels and other purchases.
Moreover, most BrandSource members are undercharging for these services compared to the competition, while delivering a superior experience to customers. Specifically, a recent AVB audit revealed that box stores charge an average of $525 to deliver and install a four-piece kitchen package (excluding full-price accessories) and haul away the old appliances.
In contrast, Meekings said, members roughly charge an average of 45% less to perform the same task, representing a significant price gap with the box chains. Based on a typical sale price of $4,000 for the kitchen suite, establishing an equivalent rate for delivery, install and haul-away would add over 5% of margin to the sale, he said, while a furniture dealer can readily add upwards of 8% in profit per delivery.
To help dealers make their own calculations, AVB’s membership teams are providing delivery- and-installation worksheets to show how much money can be added to their bottom lines, and how much they’re presently leaving on the table.
“If we don’t adjust our charges, we are the ones taking it away from ourselves,” Meekings said. “It’s not right and we can stop it today.”
BrandSource, a unit of YSN publisher AVB Inc., is a nationwide buying group for independent appliance, furniture, mattress and CE dealers.