Why showrooms are a win-win for all concerned.

Showrooms. Now here's a subject I love and really know something about.

I was a “professional manager” for a couple of very large plumbing wholesale businesses before I started my own showroom business in 1981. I learned a lot about plumbing contractors while I worked for the wholesalers and while running my own showroom.

When we sold it to a large plumbing wholesaler in 1997, it had three showrooms and was bringing in $10 million-plus in sales at about 39 percent gross profit margin. The showroom business was very good to me, my family, my vendor partners and our customers.

Ours was one of the first true decorative plumbing showrooms in the United States. Our first showroom in Sacramento, Calif., was 10,000 sq. ft. If it was made, we showed it! We opened the second showroom in Dublin, Calif., which is in the east bay of San Francisco. This showroom was another 10,000-sq.-ft. operation. The third showroom was about 2,000 sq. ft. in the San Francisco design center.

Yes, we sold direct to the consumer (about 50 percent of our sales), and we sold to builders and plumbing contractors (the other 50 percent).

I believed that a “one-stop shopping” marketing strategy would be good for our business - and our customers - so we expanded into decorative door and cabinet hardware, kitchen cabinets, countertops and high-end appliances. We wanted to sell as much product as possible for bathrooms, kitchens, wet bars, etc.

I am only giving you this background to underline the fact that I know showrooms, and - from personal experience - I know what a great business it can be.

Showroom Chronicles

How about a little history on showrooms? They've been around for a long time. Wholesalers started incorporating them into their businesses in the 1950s. They were very plain and basic, but so were a lot of the products.

There were no dedicated showroom sales consultants. In fact, the lights only got turned on once or twice a day when a homeowner would venture in. All sales went through the plumbing contractor, and they certainly weren't profit centers for the wholesaler.

By the 1960s, a select number of manufacturers were starting to make some very attractive “luxury” products, but for the most part the architect or builder would select the products that went into new homes. Very seldom were they the more expensive products.

The homeowner had no say in what was installed in his home, and the manufacturers were frustrated because sales on these “luxury” products were very small.

In the late 1970s I tried very hard to “sell” plumbing contractors on the idea of doing their own showrooms. It sure made a lot of marketing sense to me: The plumber would have a showroom in the front of his building, and run his trucks out the back. The plumber would become the source for the luxury products; it would add revenues and profits.

This message of mine fell on deaf ears. The plumber didn't want anything to do with the marketing and selling part of the process. He wanted to be the installer only. But, of course, he wanted to make a healthy mark-up on the products without doing any of the work. (I know I'm treading on a very sensitive topic, but it needed to be addressed then and still does today).

I was convinced there was an opportunity to make money by doing a showroom business. The end result proved this to be true.

Jumping In

I found the showroom business to be a fairly hard business. Almost 75 percent of everything we sold was “special order.” Because of the number of manufacturers, products, styles, colors, finishes, etc., there was much to learn about a lot of products.

Ninety-eight percent of the customers were great, fun and easy to do business with. But those 2 percent of harsh, unpleasant, mean, demanding, unreasonable (you get the idea) clients made it tough. This forced you to wear a bunch of different hats: you had to be good working with homeowners, building contractors, plumbing contractors, interior designers, architects, et. al.

The showroom business is much more retail than anything else. This means advertising, promoting, public relations - all retail-oriented. This also means hours of operation, paying attention to how you dress, what the showroom looks like, parking, signage, delivery, credit cards and so much more. It is all retail-driven.

But, as the title of this article says, showrooms truly are a win-win for all concerned. Here's why I believe that's true:

Why Are They Good For Manufacturers?

Products sell much better when they are displayed in a professional setting. Potential clients like to see, touch, feel, sit on and try out the products they may want to buy.

In addition, luxury products have become a big business in the past 25 years. They offer the opportunity for increased sales revenues. Most manufacturers make better margins on higher-end products; luxury products add depth and breadth to their product lines. This broader line of products makes the manufacturer a more valuable partner to the distributor and plumbing contractor.

Why Are They Good For Wholesale Distributors?

Most of the same reasons listed previously, plus the traditional “commodity” products sold by wholesalers are generally lower-margin sales. The showroom and higher-end sales would add sales revenue and raise the margin.

Also, showrooms open up the opportunity to sell direct to the consumer and homebuilder, which generates plus sales.

Showroom products require very little inventory backup due to the high percentage of special orders. And having a showroom strengthens the partnership with vendors that manufacture high-end products.

Why Are They Good For Plumbing Contractors?

The showroom gives plumbing contractors a source/resource to send their customers (builders and homeowners).

The showroom sales consultants do all the work; they take as much time as necessary to help clients select products for their home (an exercise that most plumbers dislike).

The showroom staff specifies and quotes the products, while the plumber adds a mark-up to the product. (I've heard everything from 5 percent to 30 percent. I believe 10 percent +/- is fair. The contractor can't add too much or they won't be competitive.)

The plumber learns to charge more for the installation of luxury products, thus adding to his revenues. Luxury products add revenues via both the mark-up and the installation. Do the math: 10 percent of $15,000 worth of luxury products is more than 10 percent of $10,000 for lesser-priced products.

With a showroom, the plumber has no marketing costs (advertising, promotions, etc.); the manufacturer and wholesaler do all of this. Showrooms are expensive to build out, staff and maintain, but the wholesaler absorbs this cost.

Why Are They Good For The Homeowner?

It's his money, his home, his style, color and finish preference, so he should be the decision maker in what products go into the home. The showroom gives homeowners this opportunity.

Many homeowners want to control the whole process (selection and purchase). Most showrooms today will allow the homeowner to purchase the product (some wholesalers have “rebates” for the plumber when this happens).

Selecting products from catalogues, like they were required to do 25 years ago, just isn't customer-friendly. Showrooms with the “show and tell” advantage eliminate this negative.

“Big Boxes” have evolved as sources for some luxury products. But, they can't offer near the value showrooms do. Big boxes have developed a perception that they sell everything cheaper than anyone else. This just isn't so! Sure they have leader items priced very competitively, but when they price out showroom-type luxury products, they make great big margins on these.

The showroom environment is much friendlier and more conducive to high-end shopping than the big boxes are.

There are a number of plumbing contractors operating very nice, very successful showrooms. These folks know that showroom operation is a whole lot different than doing rough plumbing and setting the finish product. I believe that most plumbers that have really taken a good, hard look at the showroom business agree that it's easier and more cost-effective to let the plumbing wholesaler run with this part of the business.

Many of the above reasons why decorative plumbing showrooms are good for everyone involved applies to building contractors as well. Most of the large national home builders are now doing their own showrooms to feature “upgraded” products in the areas of floor coverings, wall coverings, countertops and, yes, finish plumbing products.

Featured Showroom: Castle Supply

The showroom pictured in this article and on the cover is Castle Supply, headquartered in Pinellas Park, Fla. With a total of eight branch showrooms in the Tampa Bay area, these photos come from Castle's newest Galleria Showplace, boasting approx. 10,000 sq. ft. - the largest plumbing showroom in west Florida.

Castle Supply prefers to deal its all-plumbing, and bath and kitchen accessories through professional tradespeople.

“We like to think of Castle Supply and our Galleria Showplaces as trend setters in the industry,” says President Bob Cardwell. “We are dedicated to partnering with our core customer base - professional plumbing contractors - to grow the business.

“In a time when many of our competitors and contemporaries are conceding the luxury end of our business to specialty shops and big boxes, we see opportunity for both us and our traditional customers.”

You can tour Castle Supply online at www.galleriashowplace.com.