Should retailers pay for the displays in their showroom? It’s a perennial argument but, Toby Griffin asks, is there a solution that suits everybody?
As the old adage goes, there is no such thing as a free lunch. But, as we all know, there are many things in our industry that can be received for ‘free’, or at least feel ‘free’ at the point of use.
For example, product samples are free from most suppliers. Brochures, swatches, POS, factory visits, brand promotion and training are also generally provided free to retailers; and this is all done on the understanding that these help sales in lots of different ways, which benefits both parties.
But there are also those things that retailers are expected to pay for. Mainly, of course, the products ordered for their customers, but also staff wages, signage, website and last, but by no means least, their own showroom.
But it seems that these defined lines of who’s paying for what can become very blurred when it comes to displays.
‘Should retailers pay for their displays?’ was the question I posed on a recent LinkedIn poll, and although the headline figures were somewhat expected, reading between the lines, it showed the heart of this issue.
Six out of 10 respondents thought that retailers should pay for their displays, but at a discounted price; 21% thought that the displays should be provided for free; 13% thought that displays should be loaned to the retailer, and only 5% thought that they should be charged out at full trade price.
But on closer inspection, a more enlightening set of numbers emerged. Of those that thought the retailer should make some contribution to the cost of displays, 75% worked in B2B roles within the KBB industry (suppliers), with 25% working in B2C roles (retailers). Of those that thought displays should be given or loaned by suppliers, only 20% worked in B2B, and the other 80% worked in B2C. It seems then that the cost of displays is generally seen as something that the other party should foot.
Let’s consider some opinions on this topic. Kristian Tolbod, managing director of kitchen and bathroom retailer Premiere Klasse in Basingstoke and Ascot, states: “We don’t pay for displays – that’s my starting point. I ask: what is this supplier doing to encourage me to remove another brand?” He also adds that he “will not put a new brand on display until I’ve done some business with them and am satisfied with the service”.
Some retailers go a step further in their assertions, with Tony Robson, CEO of retailer Day True in London, asking “should manufacturers pay for display space in our really expensive showrooms?” A similar thought is echoed by Paul Mason, managing director at Bathroom Village, who suggests: “As a retailer, if we have to pay for displays, should the supplier rent the space?” Interestingly, as pointed out by Tolbod, and crossing industries for a moment, such is the power of grocery supermarkets over their suppliers, that they charge so-called ‘slotting fees’ for brands to be given preferential positions on the shelves, and at the end of aisles.
The balance of power between the retailer and supplier in the KBB industry is also highlighted when Jobe McCann, design consultant at Cuckfield Bathrooms, states: “It depends who wants who more! I think maybe when first investing in a brand, you should show some level of commitment by way of purchasing a display, but if you have sold lots of the brand’s goods and want a refresh of their displays, these should be free.”
Other retailer thoughts include those of Ashley Chapman, design consultant at Cameron Interiors in Scotland, who says: “Displays should be part of marketing and advertising and should not require payment from [the] retailer. It should be worked into the business model of the manufacturer.”
Meanwhile Emma Reed, owner of Kitchens by Emma Reed in Swansea, remarks: “I agree we should pay, but heavily dis-counted. It’s a commitment to the supplier and helps loyalty between both parties.”
Talking to suppliers and manufacturers, they have their own perspective on this topic.
Hamish Smith, managing and creative director at Sarsen Stone Group, which includes brands such as Ca’ Pietra, feels that: “When a retailer pays (even in part) for a display, the product holds more value to the retailer.
“There is more consideration around the products displayed, it’s not a quick decision because something is free, it’s part of a retailer’s overall plans for their showroom and there is more thought behind it, I find. If a retailer is prepared to pay for it, we believe that it means more to them and they are more committed to the brand and selling our products.”
This sentiment is echoed by Dawn Short, chief executive of furniure manufacturer Masonhouse, which produces the Callerton brand. She says: “We strongly believe that our relationship with our retailers is about partnership – both financially and through mutual commitment – therefore we always offer a discount so that there is a cost to both parties.”
With all of this hassle and expense, it must be considered – particularly in the internet age – whether having products on display really makes that much difference to sales. Original Style sales director Rob Auld states that “fixed displays are definitely proven to help sell products… it’s the inspiration behind the decision. If a product is not visible to the consumer, it’s unlikely it will be chosen”.
Cameron Interiors’ Chapman feels that it’s important, “especially [for] high-value projects. Customers don’t spend a lot of money on something they’ve never seen or touched”. Sarsen Stone’s Smith points out the effect of displays on the retailer’s team too, saying: “It’s essential to have products on display in showrooms. Customers buy what they see and it’s more likely to be specified because the in-store designer/salesperson is on-board and can see it too”.
But Emma Reed has noted that she “was quite shocked as my clients will buy if I suggest a product from the brochure let alone have it on display”. Nevertheless, she believes that “seeing appliances live and working is a huge bonus and to be able to touch and feel the quality”.
With suppliers looking for commitment from retailers, then one way to do this is through the amount of floorspace that is dedicated to their brand. What does the industry feel about this?
James Mulholland, general manager at appliance specialists Donaghy Bros, tells me: “A well-known appliance company we deal with has an audit system that penalises you for having other brands on display. Also, having a large showroom, it is harder to fill with a narrow range of brands, and so we are penalised.”
Reed feels the same way, disclosing that she decided not to go with a brand “as they demanded a certain [showroom] share. Another manufacturer offered to finish my whole showroom free if I stayed solus. I had to remind them I was building my brand, not theirs”.
Sarsen Stone’s Smith feels that expecting a good share of a showroom is right. He says: “If a brand is offering value – pushing consumers to their showroom through marketing campaigns, so the consumer can see the products in situ. We don’t want any disappointed consumers when our marketing pushes people through their doors”.
At Masonhouse, Short adds: “We don’t insist on floorspace as such, but ideally would ask for at least two displays – one traditional and one contemporary.” Cuckfield Bathrooms’ McCann makes the point though that “if a showroom can put one item on and do the figures then why argue about showroom space?”.
Which brings us to the expectations by suppliers to produce the sales that the investment in displays should deliver. I asked retailers whether they were open to methods such as turnover targets linked with the supply of free displays.
Tolbod, Chapman and Reed agree that this is something that they would consider. Suppliers too seemed to be open to this idea, with Smith at Sarsen Stone saying: “We are more than happy to look at rebates / turnover targets. Incentives for showrooms are the perfect way to work with retailers when it comes to displays.”
Graeme Newby, area sales manager at kitchen furniture brand TKC, offers a suggestion that display products could be “supplied FOC with target to achieve”, although Original Style’s Auld expresses some concerns, saying: “Nice idea, but relatively admin-heavy to manage.”
Both Mike Skelcher, retail sales manager at Rossendale Interiors, and retail kitchen business owner Matt Stringer, offer similar suggestions, with Skelcher suggesting that “the best deal for both retailers and manufacturers is for the display to be charged from day one, but for every order placed by the retailer in the next 12 months, an amount is credited back by the manufacturer”.
Stringer agrees: “I’ve been party to both sides of this argument and my personal thoughts are the display should be at a discounted price, then the remainder credited back over a set number of orders.”
Interestingly, Mulholland at Donaghy Bros tells me that, despite their well-established business, he has “been asked by some brands to create and send them business plans” before agreeing to displays.
On a similar topic, how do suppliers look to reward the showroom display commitment of retailers through improved buying terms and/or rebates?
Adam Freeland, showroom and design manager at UK Bathroom Warehouse, does say that “some brands have specific criteria, such as a minimum number of displays, linked then with terms and rebates”.
Chapman at Cameron Interiors believes that it is a two-way street, stating that “if brands have exclusivity, buying terms and rates should be lower as there is no direct competition”, as does Reed at Kitchens by Emma Reed, who says that a retailer should have the best terms available if they are “committing to 100% say of the furniture and appliances”.
But one day, there will come a moment when it is time to change a display, as it is discontinued or not generating sales. But when a retailer has bought these display products at highly reduced prices (or even been given them for free), a cynic could suggest that these changes are sometimes brought forward by the temptation to cash in. How long, therefore should be the minimum time that a display has to be on before it is sold off?
McCann states: “I would say give it six months and get feedback from everyone that comes in”, but Reed thinks it should be longer, saying: “I would say 12 months minimum especially with fashion doors. Within 12 months, if it’s not working for you, the supplier shouldn’t be able to dictate that you need to keep it. I do agree, though, this should be substituted with the same brand. It’s disrespectful to clear it and put in a different brand in a short space of time.”
And when it comes to setting the pricing for these, Reed continues: “I just sell displays off at very low prices to sell quickly. I see many showrooms showing the retail and giving 30% to 50% off and it sits there for months.
“If I decide to change a display, I want a quick turnaround as it’s better to get the newer product in if the old isn’t working.”
Freeland’s approach at the UK Bathroom Warehouse is: “We normally discount at around 50% off retail, but we won’t put a new display on, until the old one is sold off.”
There may be no such thing as a free lunch, but that’s not to say you can’t get a lunch without charge – and we all know someone or some company is paying for it at some point.