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How Regional Dealers Beat 2012’s Toughest Challenges

Falling profits, paying for healthcare, hiring good employees top the list

November 15, 2012 By Nancy Klosek

We recently spoke with several regional CE and appliance dealers about a number of issues for our annual roundtable that will appear in the December issue of Dealerscope. In this section, we asked them about the biggest challenge they had to overcome this year and how did they do it? Here’s what they had to say.
Jeff Clemens, Electronics Sales Manager, Grand Appliance and TV, Zion, Ill.: The biggest challenge we face as an organization has been and continues to be dealing with growth. We’ve been fortunate to have increased sales steadily over the past several years, and2012 was no different. In 2012, we’ve opened two new stores and enjoyed double-digit sales growth. This has challenged us in a number of ways, but in sum it has significantly impacted our ability to maintain the high-touch, customer-focused approach our customers have come to expect from us.

     To overcome these challenges, we made major investments in human resources and technology. With regard to human resources, we’ve hired more than 25 employees in sales, delivery and customer service to deal with more deliveries, inventory and store traffic, and to allow for better communication with customers before, during and after the sale. In addition, we’ve empowered employees at virtually every level to make important decisions quickly rather than forcing a customer to go through multiple levels in order to get information, advice or solutions.

     With regard to technology, we’ve launched a completely new, much more functional and informative web site for our customers. In addition, we implemented new logistical technologies to make the process of receiving, pulling and delivering merchandise as efficient and transparent as possible. For example, our new truck-routing solution allows our salespeople and customer service personnel to monitor our trucks in real time and get instant notifications of delivery status to keep our customersinformed of their delivery status, and also to pro-actively deal with any issues that might occur during a day’s deliveries.
Terry Oates, President, King’s Great Buys Plus, Evansville, Ind.:  The biggest challenge is margin degradation, particularly the way vendors choose to go to marketplace with IRs (instant rebates) and whatnot. You look at your margins on the front side, and there really isn’t any profit in it until you get the money on the back side, and they don’t pay quickly; you’re in a losing proposition.  But for the most part, most vendors pay their bills pretty quickly, so it’s not as big an issue as it once was. But if you’re looking at a statement just based on what the surface margin is, there’s no money in it. Therein lies the challenge.

     Quite frankly, I think that’s one of the reasons why the vendor community has chosen to go to UMRP (Unilateral Minimum Retail Pricing) on a lot of their products. There is a contingent of retailers out there that chooses not to make any money, or that chooses to use the advantages they have from a buying perspective to drive the price down.  

Oftentimes, the big boxes are merely delivering product; they’re not selling anything. In fact, we’ve seen with some big boxes that they don’t even have certain products on the floor, but will put them on their web sites and they’ll destroy the margin opportunity for all their competitors by destroying it on their web site, and then have somebody fulfill the sale. It’s just a strategic move. And I understand, I get it, but I don’t agree with it – particularly from the vendor’s point of view, because they’re getting no value at all.  And I think at least the smarter vendors are starting to wake up and smell the coffee. Dealers like ourselves – and I’d say most regionals fall into the same category we do – we stand and deliver the message and sell better product. At the end of the day, if we don’t tell customers the value proposition that product offers, it never gets delivered, period, because they’re certainly not going to get a very good presentation in a big-box store.  That’s our reason to be, if you will.

      The UPP policies are a step in the right direction, but I think there’s going to have to be a further analysis of that, and I think we’re going to see a proliferation of programs that resemble them, and maybe even product that’s differentiated for our channel that ultimately can allow the manufacturer to make money, because if they can’t make money on better product, then there’s no reason for them to be, either.
Ed Robinette, Morris Home Furnishings, Fairborn, Ohio: The biggestchallenge is finding good, qualified salespeople. We had a couple of people who left and opened their own businesses, and we were lucky enough to have them for a very long time.  That’s been a difficult thing to do. In fact, I’ve put myself back on the sales floor quite a bit to help. We do have some really good people, but they’re spread more thinly, and it’s difficult to find new good people and to train them. We are continuing to use every method we can think of, but the best way to get good people is networking through other employees, and finding them that way. Wehave several hundred employees, and all of them know several hundred people.  We’ve also found people in other jobs in the company who felt they were not sales associate material, but they really are. We’ve actually developed a couple of very good people that way. It’s working out pretty well.
We have a sales floor with furniture specialists, electronics specialists and bedding specialists. So the other thing we’re doing is to let people know in all areas that they have an opportunity; if they want to step up and become part of other areas, they can. If you’re selling furniture but really do like electronics and want to be able to sell both, if you can demonstrate your ability to do it and you will come to all the trainings and learn it, then we’ll allow you to sell that also. That’s allowed us to have people that can work both areas and as backup when we need them.
Alan Lavine, Percy’s, Worcester, Ma.: How to get around the online sales tax issue. When customers come in, and we have the same goods and services as online, as well as the same prices with the same shipping, delivery and everything, then the customer wants us to eat the sales tax. That’s one of my biggest issues, a major issue. What we do is talk to the customer and tell how important it is to pay sales tax, because that covers all the municipalities, the police, the firefighters.

We tell them, granted, it can be a large number, but think how good you’ll feel when you have all the goods and services that you expect in your towns. Plus, we try to explain how important it is to support the local economy, because people like us support the highschools, baseball and football teams and all the other stuff.  All my people are in the community, so we’ve put all those dollars back into the community. It doesn’t go outside the state.  We give ’em a little bit of guilt, and it usually wins them over! Ultimately, they want to buy from us but because of the 6.25 percent in Massachusetts, it’s a big number. But 99 out of 100 – once you talk to them, they understand it. And they understand we’re here, before, during and after, and that we’re part of the community, like them. We say, you know, we don’t want to pay tax, either. I’m not standing out over at the Capitol Building in Boston saying, ‘Take my customers’ money.’ But it’s a huge hot-button issue.
 The second thing is the cost of health care for the employees. The only way to get around that is to either raise deductibles or have the employees pay a larger part of the share. What we do is have a meeting, and I tell them there are only so many things I can do. I can’t give 10 paid holidays, three weeks’ vacation, five sick days, and infinite health care. So I let everyone pick; I say, ‘You can’t have everything because we can’t afford to do it and keep everyone employed. Pick one through four. What’s the most important and what can you do without?’

Everyone says health is number one, so we put more money into health care. Vacations are important? Great. You don’t need 10 paid holidays? OK. Take it down to four. I use the money saved from one section and put it into another section.  It’s a team approach, because you can’t have everything; I’m included in it, because it’s my health care, too. Whatever we all decide, we all decide.



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