In today’s hyper-competitive market, the allure of selling products at rock-bottom prices to attract customers can be tempting for many floor dealers. However, history has shown competing on cheap price comes at a significant cost. Not only does it hinder the ability to grow your business but it also affects your personal life, restricting financial stability and overall enjoyment.
While home improvement giants like Home Depot can sustain low prices due to their vast volume, the flooring industry operates differently. The notion of making up in volume simply doesn’t apply here. Cheap price creates the illusion of having a market advantage but it’s shattered when someone else figures out how to sell even cheaper.
Once a dominant force in the cheap-price retail kingdom, it seemed inconceivable the retailer could be dethroned. However, Walmart emerged and Kmart is virtually extinct. Now other discount box stores and online retailers are chipping away at Walmart’s market share. Their underpaid workforce, inadequate staffing and deteriorating customer experience have driven consumers elsewhere. When cheap price becomes the sole driving force, critical aspects like customer service suffer.
Recently, I coached a flooring dealer who had been facing numerous challenges. For a decade, he had been selling at margins in the low 30 per cent range, which had resulted in a stagnant business and accumulating debt. However, his belief was he had to compete on low prices to survive. I focused on transforming his mindset and helping him implement strategies for commanding higher prices. I showed him why it was not only possible but essential for him to sell at higher margins, specifically in the 40 to 50 per cent range. By implementing strategic changes and emphasizing the value his products and services provided, his margins have significantly improved. This success has paved the way for him to pay off his debts, reinvigorated his business and ignited enthusiasm among his sales team.
This example demonstrates flooring dealers can break free from the cycle of low-price competition. Premium pricing is not only achievable but can also be a game-changer for your business.
Jim Augustus Armstrong is founder and president of Flooring Success Systems, a company that provides floor dealers with marketing services and coaching to help them attract quality customers, close more sales, get higher margins and work the hours they choose. To obtain a free copy of Jim’s groundbreaking flooring industry report, Stop Leaving Millions on The Table, visit FloorMillions.com. Jim can be reached at 530-790-6720 or [email protected].