By Bob Clements
By Bob Clements
While recently at an airport en route to working with one of our dealers, I heard an announcement that my flight was delayed. Being an avid reader and with some newly found time to burn, I headed to the airport bookstore to see what I could find. As I entered the store, there was a display with about a dozen books staring me in the face, when I noticed one that seemed to jump out at me. Its cover caught my attention and made me want to pick it up. As I opened it up and read the first few pages, I knew I had to buy it and was glad that I did because it made both the waiting and the flight time fly by.
I find that a great dealership is a lot like that book I found and purchased. It has a great cover — an outer presence and look that is intriguing, captivating and well planned. Once you pull up to a dealership with a great outside presence, you have a desire to go in, check out the inside, and find out a little more of the story. In this article, I will focus on some basic merchandising strategies. From the outside of your dealership to its ceiling, walls and floors, how you position your dealership and your products becomes a part of merchandising your dealership. Does your store grab people’s attention in a good way? The moment they see your store from a distance, are they interested in stopping and looking? If not, there are some easy ways to improve your ability to grab their attention and create more sales.
Merchandising strategies are simply the way you select, price, and display products and services for sale. As we work with dealers, we stress the importance of starting with seven basic elements in merchandising their dealership: signage, exterior image, showroom layout, lighting, product placement, impact marketing, and maximizing floor space.
1) Signage: How’s your cover looking? Let’s start with the book title, which is your signage. If I were to pull into your dealership today, what would I see? Would I see a sign that grabs my attention or one that is in a state of disrepair, faded, and unappealing? Would your storefront be pasted with manufacturers’ signs to a point that your brand — your company sign — is just a part of the background clutter? Keep in mind that every sign that you add to the outside of your dealership simply clutters your message and the front of your store. It also usually becomes a distraction rather than the attraction that your manufacturers tell you it will be. I have no problem with a dealer having one or maybe two, non-competing manufacturers’ signs (think of them as subtitles) on the outside, but more than that starts to take away from the impact of your own signage.
2) Exterior image: As customers look down from your sign, they see your parking lot, landscaping and building exterior. This becomes the colorful and interesting part of the book cover. If customers pull into the parking lot of your dealership and it is full of potholes with weeds growing out of the cracks, you have just communicated a lot about your story. If your landscaping is nonexistent or poorly maintained, you’ve told them a little more of what they will find once they come in. If they pull into your parking lot and see that your storefront has faded signs or is in need of paint or cleaning, you’ve created an image in the customers’ minds that will affect their impression of what’s inside. Keep in mind that it’s just as important to merchandise your outside showroom as it is your inside showroom.
Shawn Blatt, co-owner of KC Power Equipment in Blue Springs, Mo., is a great example of how you can make a powerful impact on your customers from the moment that they pull into the dealership. Blue Springs is very restrictive on signage, but Blatt has creatively overcome the city’s restrictions by using flags from his primary manufacturer to border the front of his dealership and draw people’s attention. As you pull in, you find a parking lot that is well maintained and equipment that is prominently displayed on a well-manicured lawn with flowers and shrubs. Blatt takes to heart that a great story starts with a great cover. From the moment you arrive to the moment you leave, Blatt has KC Power Equipment telling a great story. I know that people say you can’t judge a book by its cover, but I will tell you the cover is what makes you pull it off the shelf.
Rohde’s Sales & Service Inc., which is owned by Ellen Thomas, has created an atmosphere that encourages buyers and their children to experience all the Pardeeville, Wis.-based dealership has to offer. (Photo by Ellen Thomas)3) Showroom layout: When merchandising your store, always keep in mind that your goal is to develop a strategy that will convert shoppers into buyers. As they walk from the outside to the inside, your merchandising must encourage them to pick up, touch, get on, or hold your products so that they start to develop some ownership. To make that happen, you first must have an understanding of the traffic flow inside your store. It’s important to remember that in North America, people have a right-hand bias, so that when most people walk into your dealership, the first place they tend to move to is the right. You want to take advantage of this fact by putting your higher price-point products to the front right section of your showroom.
4) Lighting: As you consider your overall strategy, you have to start at your ceiling, move to your walls and then your floor space. At the ceiling level, you are looking for a couple of things: cleanliness and light. If your ceiling is dirty, then go buy five gallons of white ceiling paint and a roller, and paint it. There is nothing worse than walking into a dealership only to look up at the ceiling and see that it is falling apart and dirty. It is probably the least-expensive item in your store to improve and the one that is most often overlooked. Do yourself a favor: Invest a few dollars, and take the time to brighten your ceiling.
The second item you are looking for at the ceiling level is your light levels. There is not a major store you can walk into today and not be blinded by its level of light. Why? These stores know that light sells merchandise. As a part of our business, we use a light meter to determine if the light levels in our dealers’ stores are proper. Our goal is to have the showroom and the service department both lit at 700 lumens. Since most of you won’t have a light meter handy, a quick trick is to notice the difference in light levels from your lighted borders on your handheld displays relative to your showroom. If you walk into your dealership and the lighted signs on your handheld displays jump out at you, then you don’t have enough light. You shouldn’t notice a significant difference between the overall lighting in your showroom and your wall displays. Keep in mind that the light in your showroom sets the stage for the merchandise you have on both your walls and your floor.
5) Product placement: From your ceiling, let’s take a moment and move your eyes to your walls. In retailing, you measure your success by gross profit per square foot of retailing space. As you look at your wall space, keep in mind that every square foot of it should be producing you money. How much depends on several factors, but, as a rule of thumb, we tell our dealers that they should expect a square foot of wall space to generate a minimum of $100 in gross profit per year. So, 200 square feet of wall space should produce a minimum of $20,000 in gross profit. How you merchandise your wall space has a big impact on the level of profit it produces.
When it comes to merchandising your wall space, it all starts with the customers and where they focus when looking at what you have to offer. Using North America as a guideline, the average customer tends to look up slightly when searching a wall for products. Your key products should be placed somewhere at the 5-foot-7-inch level to gain maximum exposure.
The other thing you want to do is bring similar products together within the same wall space. For example, if you handle two handheld lines, don’t separate them with one on one wall and another on the opposite wall. Bring them together on the same wall and, if possible, on the same display. Think about it this way: If you went to the grocery store to purchase cereal, you would find more than one manufacturer displayed, but the grocery store doesn’t have one brand in one corner of the store and another in the opposite corner. They are all together because they sell more that way. If you have two lines of string trimmers, bring them together. If you have two chain saw lines, bring them together as well. Will the manufacturers like what you do? Probably not, but remember we are in business to sell more products, faster, and with better margins to turn shoppers into buyers. That’s what merchandising is all about.
6) Impact marketing: As part of your wall space, consider using flat-screen TVs, along with the DVDs that manufacturers have produced, to add impact. An average-size dealership could easily handle two flat screens running information about the manufacturers it represents and a third running behind the parts counter talking about all the services it has to offer. One of the flat screens should be running information about the dealership’s handheld lines and the other about its mowers or other wheeled products. If you have multiple lines, find a high-school student with DVD-ripping software and an inexpensive video editing program to put highlights from both lines on one DVD that you can run. For behind your parts counter, you can hire your local wedding videographer for about $500 to put together a small DVD that highlights the benefits of your dealership, focusing on the knowledgeable employees and services you have to offer.
7) Maximizing floor space: The final chapter of your story is your floor space. Just as you should have profit expectations from each square foot of wall space, each square foot of your showroom also has to produce profit. Your display area outside of your store is just as important as the display area inside your store, and you should expect both to produce a minimum of $125 gross profit per square foot per year. So, if you had 2,000 square feet of showroom space, you would expect it to produce a minimum of $250,000 in gross profit.
The key to making your floor space profitable is having product that people want to buy, with professional-looking price tags, at a price point they want to buy at. That means you need to evaluate your marketplace and determine if the products you are currently carrying give you the mix your shoppers are willing to buy. As a rule of thumb, most of your customers are looking for mid-price-range equipment. If you were to look at your total wholegoods sales, you would most likely find that about 80 percent of your total sales comes from about 20 percent of your inventory selection. With that in mind, the majority of your showroom space should be dedicated to your mid-range equipment. It doesn’t make sense to have 50 percent of your showroom filled with products that represent only a small portion of your total sales volume. Increase your display of mid-range inventory, and watch your sales increase.
Ellen Thomas, owner of Rohde’s Sales & Service Inc. in Pardeeville, Wis., is a perfect example of what can be done with a properly merchandised store. Thomas remodeled her store this year, and from the moment you walk through the door, you are knocked off your feet. From the lighting to the walls and on to the showroom floor, you are met with a store that makes you want to buy. The exciting thing is not only has the store had a positive impact on her employees and customers, but that her sales have exploded when other nearby dealers are struggling.
Yes, your dealership is like a book, and the story you tell will have an impact on the money you take home at the end of the day. The question you have to ask yourself is, “Do I have a book that people are drawn to pull off the shelf and take home with them?” If you can’t answer with a resounding “yes,” then maybe it’s time to put a new merchandising strategy in place. If you are willing to step up and make the commitment, then success will be yours.
Bob Clements is the president of Bob Clements International, Inc., a consulting firm that specializes in the development of high-performance dealerships. His organization works hands on with dealerships throughout North America, helping them attain the personal freedom and financial wealth all entrepreneurs strive to achieve. For more information, contact Bob Clements at (800) 480-0737 or firstname.lastname@example.org or visit his Web site at www.bobclements.com.