Sales & Management: Five Tips for Competing Against the Big Box Stores
 
July 1st, 2006

By Craig Stimmel


July-August 2006

Tile dealers and distributors often worry about the Big Box stores encroaching on their product turf. They get upset, complain to their friends and contemporaries, try and get their local politicians to “intercede,” talk to their trade association about “protection” and more. Then, instead of really looking at the challenge as something that offers opportunity, they, generally, continue doing business as usual.

These competitors can be the DIY super stores (Lowes, Home Depot plus any number of regional players in this same category), consumer focused big box stores (Wal-Mart, Target), and specialty retailers. The threat is genuine but these companies are not “picking on you” or anyone. The trend towards consolidation in distribution is here to stay and it’s only a matter of time before almost every industry is faced with it.

Historically, the big boys have always had better buying power.

Opportunity Knocks

There is a solution, but it will take some thought, planning and effort to turn the big box challenge into an opportunity.

1) Specialize. If time is your enemy with Big Box stores taking a bigger and bigger chunk of your market share at the expense of your company’s profitability and viability, consider the specialization option. Specializing in one key area allows you to communicate a clear message—avoiding comparisons with the big box stores. Don’t try and be everything to everybody. Focus on your expertise in tile design and expert installation. Communicate this expertise to the marketplace—don’t be uncomfortable about blowing your own horn.

2) Local/Regional Branding. Companies who build a vision of the business that people will recognize always do better than companies who seek to be just like every other reseller. Think about some of the regional powerhouses who have created their own “vision” in the eyes of their marketplace. While they are regional in scope, they have separated themselves from the Big Box stores by offering a better value proposition than what the Big Box stores offer. And they’re successful with contractors who keep coming back time after time They make money because they haven’t confused what they are and who they serve. They’ve built their brand identity.

3) Sell your company’s value proposition. Unless you’re buying better than even your largest competitors, train your staff to compete against the Big Box stores by providing real value. Know your value proposition. What your value proposition is varies from dealer to dealer. Maybe it is:

  • Your product mix—you’re not selling anything and everything. You’re selling your company’s ability to efficiently deliver tile products and services. Besides the products themselves, you are selling your knowledge of how to enhance a room’s appearance, provide design recommendation and expert installation on practically any tile product. What else could you have in your back pocket which helps make you and your business development team “different”? With new designs coming fast and furiously from markets around the world, your product mix might be especially appealing to architects and designers. That is “if(?)” they know you “specialize” in that product area?
  • Your area of specialization.
  • A market niche e.g. designers/architects, NARI builders, high end residential GC’s, developers, agricultural, schools/colleges, government, etc.
  • The systems you offer to help make buying as painless and hassle free as possible. You need to make sure all your business development team know what it is and how to use it in the field.
  • Is your website (commerce site where people can place orders) user friendly? The author has found that many of them are so difficult to navigate that it amazing that people can actually find what they’re looking for. Is it fresh—or full of ancient news of little, if any, value to a visitor. Is it “sticky”—in other words will people who go there want to stay, click through to the “buy page” and buy something—or pick up the phone and call you to place an order?

4) Product knowledge. Train your business development team to ask relevant questions and lead a customer (or prospect) to make a more informed decision. By asking questions and getting an answer from the customer, you can utilize your product knowledge to ensure the customer buys the right product for the job.

5) Network. If you’re the best-kept secret in town, in your county, region or state, you’re not likely to begin to gain traction against the Big Box stores. Your market must know you exist and be familiar with your firm and its reputation. But you ask….how can I build visibility if I am struggling just to compete and make a living? Distributors and resellers can and do succeed! There are a number of possible avenues that can be used within their community and beyond. Search out local networking organizations, offer seminars and one-day classes to the design/build professionals in your area, or support local building efforts where you can show off your product, work and knowledge.

If you’re looking for the magic bullet, there is no such thing! But if you have an open mind, a willingness to try another way to build revenue, profits and make things easier, there are excellent answers.

Don’t be afraid to change.

Craig Stimmel, CMC MBA, president of Planned Growth Business Development Solutions LLC, is a Certified Management Consultant with offices in Tewksbury, MA. Stimmel has served distributors, resellers and contractors since 1971. Learn more about Craig by visiting Planned Growth’s website: www.plannedgrowthllc.com, calling (978) 640-0803 or by emailing him at cstimmel@plannedgrowthllc.com.

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