Hank Darlington 2013-08-08 02:11:17
San Diego-based Fixtures Living has developed a revolutionary showroom business model. The company I’m about to describe has a business model I’ve dreamed about. When my wife, Carol, and I started The Plumbery some 30 years ago we built a business plan that was not dissimilar to what I’m about to describe. We just didn’t have the depth of experience or capital this new business has. I am so excited and pleased to see someone finally do something in this great kitchen and bath industry that can make us all proud. A new standard is being set. The relatively new business I’m referring to is Fixtures Living, which is changing its name to PIRCH (as in perch, roost, nest, home) effective at the end of August. After being in business less than five years, the company discovered its name is a bit misleading (many people come in looking for lighting fixtures). The business has stores in the California locations of San Diego (headquarters), Rancho Mirage and Costa Mesa. By the end of 2014, it will add five more locations in Glendale, Calif., Chicago, Dallas, Atlanta and San Jose, Calif. A new headquarters building in San Diego will be completed in the fall of this year. It will accommodate 100 employees plus the University of Joy Training Center (more on the topic of joy a little later). The store sizes range from 23,000 sq. ft. To 32,000 sq. ft. They’re big! The Costa Mesa location took just 111 days to build out (Fixtures Living benefits from having an in-house construction team). The main products being marketed are decorative plumbing, appliances and outdoor kitchens. The company markets a wide price range of products, but definitely zeros in on the higher-end segment of the market. In 2009, the business was started by a small group of like-minded people who looked at our industries and felt there was an opportunity to provide a richer, more rewarding experience to the consumer. After nine months of hard work putting together the vision, strategic and business plans, as well as an “operational excellence map” and a “clarity plan,” Fixtures Living officially launched in March 2010. The flagship store opened in Costa Mesa in 2011. The rollout business was self-funded by the original three partners: Jeffery Sears, Jim Burke and Kevin Burke. Realizing they had “invented” an all-new business model with incredible opportunities, they brought in consumer-focused private equity firm Catterton Partners as a minority partner. This gives them the capital to help meet their goal of having 20 stores doing $1 billion in revenue by the end of 2018. Talk about exciting and ambitious! Grand presentation I’ve known for years the showroom business models being used were antiquated, broken and not nearly as effective as they might be. For the most part, plumbing wholesalers and independents are doing a better job with their showroom business models, but this Fixtures Living business model is so much better than anything I’ve seen. It’s almost hard to articulate the differences, but you know me, I’ll give it my best shot. First, the showrooms are, by far, the nicest built-out facilities I’ve ever seen. They are clean, open, beautifully appointed and accessorized. Almost all displays are set up in vignette style – and every tub, toilet and faucet works! There are 14 plumbing vignettes and the same number of kitchen vignettes. In addition to decorative plumbing and appliances, the company displays and sells outdoor kitchens. It promotes kitchens, baths, laundry, outdoor and joy. Yes, joy! To give you a feel for the tremendous depth of product being displayed, There are 40 refrigerators, 40 ranges, cook tops and ovens; 22 tubs, 150 faucets and a couple dozen built-in barbeques. The signage throughout the showroom is beautifully done. In each vignette area there is an 18-in. By 42-in. Storyboard describing what “joy” you would receive by having this in your home. Plus, there is signage showing the item and manufacturer (no model numbers). It also shows a price range for each item. This signage is printed today, but in future stores it will be digital. A customer will be able to touch the screen and learn more about each specific product. Talk about high-tech. There are a number of working kitchens, including one main area (400 sq. ft.) Known as “Bridget’s Kitchen” where there are always three or four sous-chefs on the floor continually passing out samples of a variety of foods being cooked on the display/demo kitchen appliances. I asked why they would have a world-class executive chef on the payroll. “Fixtures Living is all about memorable experiences and about creating meaningful interactions,” Sears says. In addition to this, a client can make an appointment, bring in his/her own bag of groceries and cook on the appliance of choice. The showroom is, by far, the most well-lit showroom I’ve ever experienced. I was told it took 1,200 lights to accomplish this. The music in the showroom resonates through 330 speakers and there are some 3,800 songs that continually play for the enjoyment of both clients and staff. There is a wellness center (aka The Sanctuary), which is a spa area complete with a working sauna, steam room, two massage tables (which Fixtures Living sells) and a full dressing/shower room. Clients are encouraged to come in and try these areas. The customer service experience Fixtures Living hosts multiple events per month and has reached out to the design community, architects, other kitchen and bath businesses and the various building trades. Attendance at these events averages more than 50 people. This is another excellent marketing tactic I used and have encouraged each of you to use. There are a number of “Dream” rooms used by the various “influencers” (designers, architects, etc.). Vice President of Business Development Danny Swaim tells me almost 85% of the homeowner clientele end up with one “influencer” or another. If a client doesn’t start with one, the salesperson will offer to set up “interviews” in a Dream Room to facilitate beginning the relationship. What a great resource for all involved! These rooms are equipped with flat-screen monitors and everything a designer or architect would need to work with a client. The design trade is loving it – and using it! I asked Sears who the company’s target customer is. With a smile on his face he replied, “All human beings.” He then qualified it to say all professional trades and market influencers, plus the all-important homeowner. I asked Sears and Swaim how they market the business. The answer was by “tribe marketing.” Here’s how I would define this: Tribal marketing is a strategy that identifies social or professional groups centered on a line of products or services. I follow and participate in several different LinkedIn blogs, so I guess I’m a member of that tribe. To clarify, Fixtures Living brings in “tribes” of designers and/or other professional trade groups and presents them with ideas and opportunities they can bring to their clients. Yes, they’re counting on a lot of referrals and word of mouth to make their marketing successful. Since the Costa Mesa store is averaging about 1,650 people coming Through its doors on a weekly basis, with as many as 550 on Saturdays, I have to believe the “tribal call” is working. The Saturday figure reminds me of when I owned The Plumbery. We did a great job attracting folks on Saturdays, but a lousy job servicing them. I asked what Fixtures Living is doing to counteract having 550 shoppers come in on a Saturday with “only” 20 sales consultants to handle them. Sears took me into one of the Dream rooms, and using his iPhone, iPad and a flatscreen monitor, he walked me through a new electronic system. In summary, a receptionist meets, greets, offers a customized beverage and asks why the client has come in the store. The client is advised that it may be +/- 20 minutes before someone can assist them. The client’s name and cellphone number is entered into the system. The client is then free to browse in other mall stores and will be called when a sales consultant is available. The call is made, the client returns and they meet a salesperson and get started. Everything is entered into the electronic system (selected products, wants, likes, dislikes, projects, etc.). When done, the salesperson walks the client to The door and before the client gets home a quote has been emailed. How can they do it so fast? There is a staff of six project managers who put the quote together from the gathered information. The system was developed in-house and is proprietary, so don’t ask! Historically, our products have been sold on a “need,” not “want” basis and everyone selling them sold on price. This meant there was very little “creative selling” and it resulted in our products having prices and margins erode to a point that it almost wasn’t fun or profitable to sell them. Fixtures Living sales consultants have turned these words around and sell on a want strategy. They find out what dreams and lifestyle the client is hoping to accomplish by changing or adding things in the kitchen, bath or outdoor living area. They don’t ask the customer what they need to buy.They ask them “how do you want to live?” Customers feel like they are working with someone they can trust, someone who will listen to them and someone who will embrace the vision they have for their home. Yes, they will be competitive on an “apples vs. apples” proposition every time. They stress the value in everything they do. Throughout the showroom nicely printed cards say, “Presenting the Equal Value Assurance.” This is followed by: “Ah-h-h – It’s time to take a deep breath. To release the apprehension and doubt. Because our exclusive Equal Value Assurance makes certain you’ll always receive the best, most competitive pricing in the marketplace. It’s exactly the kind of honesty we believe you deserve – and can only find right here – at Fixtures Living.” Sure those are words, but it’s also a promise and credo. The company further states its mission is “to realize your every dream – about saving on budget.” It then refers to its Equal Value Assurance statement. Location, location, location Just like there is a Fixtures Living selling strategy, there is a real-estate strategy that includes guidelines for where stores will be located. Since it is showing and selling mainly higher-end products, showrooms must also look and feel high-end. The store must be located in a luxury retail center that features only other high-end stores. When higher-end clients go to one of these centers, they expect to see only the best products and receive the best shopping experience. Fixtures Living has a formula and demographics guideline that helps it determine where stores will be located. I mentioned the company plans to Open four stores a year for the next five years. It has identified as many as 50 aforementioned “high-end” geographic possibilities. Most of us can’t begin to comprehend that you could take a tub, toilet and appliance business from zero to $1 billion in just eight years. This takes vision, smarts, money, great people, great planning and flawless execution. When I first heard this I was a doubter. Today, I’m a believer. I asked about the company’s salespeople, who are affectionately referred to as “lifestyle advisors.” This is what I learned. They have to fit the culture. They have to be kind, caring and passionate about what they do. In fact, Fixtures Living empowers each employee to deliver “joy,” and the employees feel free to do just that. The company is confident it will attract the “bestin- class” in a given market. What I experienced in Costa Mesa tells me they have been successful. Each showroom will employ 18-25 salespeople and will have a total staff of 30-35 people. The company currently employs 140 people. It will need to add about 200 people per year in order to meet its schedule of four new stores per year. The lifestyle advisors are trained at the in-house “University of Joy” in San Diego. I asked how the salespeople were compensated. The answer was “an extraordinary culture, a caring company, fabulous benefits and a draw against commission on sales productivity.” The company does not allow any “spiffs” from the various vendors. It wants the sales staff to sell what the client wants, not what the company and the salesperson want to push.Average annual sales per salesperson range from $1.5 million to more than $3 million. That puts the averages we now have in both wholesaler and Independent showrooms to shame. Sears also shared that the company’s sales per sq.-ft. of showroom selling space is one of the highest in the world. Are you starting to understand why I’m so impressed? Fixtures Living has a central purchasing department in San Diego and delivers to jobsites. Everything still is in the box so the client can see everything in its original packaging. It installs, services and warranties the appliances it sells – all done with in-house employees. Fixtures Living also operates a central distribution center out of San Diego, but that location inventories very little product. The company has negotiated agreements with vendor partners (wholesalers and manufacturers) to make the sold product available in the shortest possible time. Like-minded philosophies I asked why there were no lighting fixtures, door hardware, tile, etc. Fixtures Living focuses on its core competency and builds trusted partnerships with companies who share its philosophy and culture. In order to fulfill the needs of the new “want-based” clients, Fixtures Living works with SieMatic, El Dorado Outdoor, Eleganza Tile, Oceanside Glass Tile and a local countertop fabricator in each market. There are no kickbacks to Fixtures Living. Swaim says the local design community is an important part of the company’s customer base and value-added programs are being developed to support those relationships. All displays are the company’s design and making. There is no signage to identify various manufacturers, but at the same time the company doesn’t hide names or brands. It uses visionary pricing and shows a range of pricing on each display item depending on color, finish, etc. Fixtures Living displays no model numbers and explains to the customers that an appointment with one of the lifestyle advisors is the best way to understand the scope of the project and develop a “joyful” living environment. In terms of the Internet, Sears tells me Fixtures Living stays away from brands that do not manage their Internet policies. “We believe ‘showrooming’ is a condition of not connecting the experience with the customer and not properly communicating the ‘value exchange,’” he says. This means the transaction must have value for both the buyer and the seller. Both Sears and Swaim admit they won’t get every order, but everyone (clients, Fixtures Living and its vendors) will benefit from the experience of having been in their store. The company won’t share what its close ratio percentage is, but is confident that its lifestyle advisors close ratio is one of the highest in the industry. That tells me this new revolutionary way of taking these products to the marketplace is working very well. I believe Fixtures Living is revolutionizing the shopping experience the way Apple has for electronics, Tesla has for cars and Wegman’s grocery stores have for their products. I believe it’s the most exciting thing I’ve seen during my wonderful career in this great industry. There may be a Fixtures Living/PIRCH location coming to your area in the near future. Don’t be scared! Be proactive and upgrade how you operate your business. My dad once told me, “Never steal an idea from one. It’s plagiarism. If you steal an idea from two or more, it’s market research and that’s OK.” Do your market research and be ready for the new wave of selling our great products. This is going to be terrific for our industry. Good selling!
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