Remodeler's Exchange: Do showrooms work for your remodeling business?

Depending on who you ask, showrooms can be a risky investment for remodelers. When investing in a showroom, is there a viable return on the investment? Professional Remodeler’s Tom Swartz talked with Bob Sturgeon and Shawn Nelson about how they built their successful showrooms.

April 23, 2013

TOM SWARTZ: Describe your showroom in terms of size and what is on display.

SHAWN NELSON: Our showroom was built when we built our office building, in 2001 and into 2002. The showroom is about 800 square feet, and it has a fully functional and operational kitchen and a couple other vignettes that show cabinet styles, different countertop styles, tile—things of that nature. It is a place that we have help seminars; that’s worked out well for us in the past, to bring people in and show them how we help people through the design-build process. It also operates as a selection center, so we have tons of samples of various materials that people can look through and see which direction they might want to go.

BOB STURGEON: We’re about 1,400 square feet of showroom and office combined—it’s all together. We have probably five kitchen vignettes and two bathroom vignettes, a functional kitchen, and the desk areas are just displaying our cabinetry and what not as well.

SWARTZ: When did you decide to build a showroom, and how did you go about it?

STURGEON: Well, it was an evolutionary process. We started by having a normal office with no showroom at all—it was just an office. Then we became a cabinet dealer and we got what they call a selling center and started with that. Then we moved to a new location and built a really small showroom with just a couple of kitchen vignettes. Then with this recession, when it started, one of our weaker competitors went out of business immediately and had this showroom right around the corner from my house. He went under real quick, but he was selling two of the cabinet lines, which were the same as what we were selling at that time. We also took on a couple more cabinet lines that he had. I bought the contents at fire-sale prices and we moved into the space.

NELSON: Similarly, in the late ‘90s we started to take on cabinet dealership because we needed better control over that component of our remodels. So we put in a very small vignette in our office that we had before our current location. Frankly, we just outgrew that space. We had people doing desk share. Designers would come in and there was only one space for them, and then they had to schedule their time around that. It became unworkable. We needed a bigger space just for our office and found a piece of property. We were able to build our own office building at the time and wanted to show more of our cabinets. We found that it worked really well, even on a limited basis, just to have people come in and see what we can do and really build up our credibility as a remodeler. That was the driving force behind the bigger, expanded showroom.

SWARTZ: I get a sense that people are saying you don’t need a showroom because of today’s technology. How does technology play into today’s showroom versus what I would call a traditional showroom?

Bob Sturgeon, President

Westside Remodeling Inc.

Thousand Oaks, Calif.


Westside Remodeling has been serving the greater Los Angeles since 1985. Specializing in design-build, the firm has completed more than 810 projects, approximately 30 per year. The firm currently has 10 employees.

 

Shawn Nelson, President

New Spaces

Burnsville, Minn.


New Spaces has served the Twin Cities since 1980. The family-owned design-build remodeling company has completed more than 1,000 projects, and currently has 8 employees.

NELSON: In one of the areas of our showroom we have a conference room and a 50-inch plasma TV, and we can use Chief Architect on there and show people all the 3D views. We can jump right onto the Internet and look at various products. But we still find that people want to touch, feel, and see the actual product that’s going to go in their house before making a decision to spend tens of thousands of dollars. We still believe there is a need for the actual product there. You can filter; you can reduce what you have to look at by using the Internet, but I don’t think for a lot of our clients that it’s the final selection. One of the things we do—because it is very difficult to show every single possible cabinet door and style and color and everything like that—we build our sample library, so when people make a selection we just order a sample door from the factory for them. Because we believe if you’re going to spend $20,000 on something, you really want to have a good idea of what it’s going to be. I mean, you wouldn’t go buy a car without going and looking at it, so I don’t think you should do the same thing with your cabinetry.

STURGEON: I agree with what Shawn said. With the iPad, the computer, and the Internet you can see it but you can’t touch it. You know a picture’s not quite exactly the right color, the texture is hard to convey; so without seeing and touching products, I find that it’s difficult for people to make a final decision. So the showroom, to me, is still very much needed, although the people walking in the door are a lot more educated than they used to be.

SWARTZ: What kind of cost is a remodeling contractor looking at to get to what you think would be a good level in a showroom?

STURGEON: I don’t have a good grip on that because I did not build the showroom; but I would probably guess $150,000-plus. I’m not sure.

NELSON: At a base starting point you could probably get something fairly nice for around $30,000. You can spend a lot more to have many more options than vignettes, fully functional kitchens and bathrooms. One of the areas that people should explore if they’re looking at a showroom is what they may be able to get in terms of participation from various vendors. Cabinet companies have great programs for it. Maybe you have to pay somewhat up front, but you can earn back the cost of those displays through purchases with them a lot of times. You know, they usually have very good discounting programs when they want to show the things in there. I think you had mentioned earlier that they all have this kind of pre-packaged sell center, which are usually very affordable, maybe $1,000, $2,000. So you could get started with something like that. The other thing is, when you’re able to put the cabinetry in there and become a dealer, you’re probably getting better pricing than you would going through a lumber yard. So that can be an advantage as well that actually reduces your job cost and can carry forward and make you more competitive and more profitable.

SWARTZ: Can you make money with a showroom?

STURGEON: I do believe that you can make a profit. I know for a fact that having a showroom has helped us. The location we have is freeway-visible. There’s also a frontage road and medical office buildings around us. We get a lot of people who have been driving by, and they see our sign and they finally come in. Maybe it was partially mentioned before, but when people come in and they’re just starting the process, I hear a lot of, “We’re just looking around,” or, “We’re starting the process”; because it takes time for them to walk through the showroom. You can talk with them and maybe build a rapport, and try to bring them into the fold of your business. We’ve seen here that a walk-in for us is just short of being the equivalent close ratio of a referral lead for us. So it’s pretty powerful.

NELSON: It does help, particularly on the cabinet side, with the cost side of your business so that you can be a little bit more competitive there. We also use it to bring people in as part of our marketing in terms of seminars and other events. That has been very effective for us in the past. It’s an integral part of our sales process as well. We control that process better, and we are able to show people how we can save them time during the design process. They don’t have to drive all over the metro area to visit different showrooms. They can come in here and do a large majority of the selections, and that’s very appealing to people. That helps with our close ratios and get us a return on that investment.

SWARTZ: Does your showroom have set hours of operation or is it by appointment only?

NELSON: Because our office is here, we’re open 9 a.m. to 5 p.m. Monday through Friday and then by appointment only. We don’t have any evening or weekend hours on a regular basis. Honestly, we have not had much demand for that. We don’t sell very much product just directly on a retail basis. So it’s all people who are already working with us.

STURGEON: Set hours. We’re open 9 a.m. to 5 p.m. Monday through Friday and 10 a.m. to 2 p.m. on Saturdays. Just one person can cover the showroom on a Saturday. We rotate them through.

SWARTZ: Do you show pricing on the displays, or do you give strictly install prices?

NELSON: We do not show any pricing on there just because it would be difficult for us to do that exact kitchen in somebody’s home, so they’ve got to go through and design a layout and then figure out all the boxes. But in general we do try to be very transparent about where the pricing is so we can show them that this is the cost on the cabinetry; and obviously in our remodeling contract we have all of the required cost for managing the project, overseeing it, building it, installing it, and all that in there. But people do see that this is what the cabinets cost, and this is what the countertops cost, so they can make a decision on those.

STURGEON: We do not show the prices on the cabinetry. Generally it’s an installed price, a lump sum for the entire project. If they’re asking for options on something else on the job, then we’re happy to say, “Well that part of it is this much.” But we do not break down the cost of every trade. That just never seems to lead to anything good, so we don’t do it.

SWARTZ: How often do you have to change out your products and showroom to keep up with today’s times, and is that a costly activity?

STURGEON: Well, so far we have not had to do that; although, for another one of our displays, it might be about time. With the ways things are, I’m pretty sure I would be able to negotiate something with one of our various manufacturers to get it done as cost efficiently as possible. I don’t think it’s necessary to change out every year. If I was to put a time frame on it, maybe every five to seven years you’d have to do something.

NELSON: We have not updated our main functional kitchen since we built the showroom in 2002. We updated a couple of the other ones about five years ago based on the change in cabinet company. We would like to update our kitchen that we have; but with the economy the last couple of years, that just wasn’t a cost that I that I’ve been willing to pull the trigger on at this point. One of the things that we keep in mind is that to our clients, it’s probably the first time they’ve seen it. It’s new to them; it’s fresh to them. We’ve tried to deliberately do something that showed a lot of different woods but was still kind of timeless. So we run into our own perception versus what the perception of our client is a lot of times.  

SWARTZ: What advice would you give a remodeler who’s thinking a showroom can serve his remodeling needs well?

STURGEON: If you’re currently buying your cabinets from some other place or a subcontractor’s doing them for you, look at the volume of your cabinet sales and see if it makes sense to consciously attempt to ramp that up by having a showroom, or at least start with a selling center. Hook up with a kitchen designer; that’s pretty much what we did, and it worked for us. If they’ve had experience with certain cabinet companies in their current business, and they’re buying them from somewhere else, you can approach those companies and see if they’re wiling to open up another dealership if it’s not too close of a territory.

NELSON: First, let me just jump on the cabinet thing and the selection of a company. I think that it’s important to try to find a manufacturer that can provide cabinetry at different price points, or to have a couple different manufacturers because different situations call for different cabinets. A mudroom is going to be a different cabinet than maybe the kitchen, and so that’s important for people. We haven’t found that one line works for everybody. In terms of looking at the showroom, I think the focus should be on what your clients, and what your market, are looking for. Which decisions can you help them make in that showroom? Then show as much of that as possible. One of the things that we would do differently at this point is we would have more vignettes that are smaller and able to show more installed product and more design styles to help people through that part of the process a little bit more than our showroom is capable of right now. PR

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