Benefits and challenges of a remodeling showroom

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Adding  a showroom to a remodeling business isn’t a cheap undertaking. Is it worth the expenditure? Professional Remodeler’s Tom Swartz talked to remodelers Dennis Gehman and Bob Sturgeon about their experiences with showrooms. Excerpts appear here. To listen to the full discussion, click here [1].

Tom Swartz: Describe your showroom: Square feet, types of products, things of that nature.
Bob Sturgeon: We’re just under 2,000 square feet. It’s combined with offices and desks and what not. We’ve got kitchen vignettes, a couple bathroom vignettes, we have cabinets, countertops, molding, windows and doors, knobs/pulls, some plumbing fixtures and that’s it.
Dennis Gehman: I usually think of it in terms of 1,500 to 1,800 square feet that’s dedicated showroom. We have office space that’s the other side of the same floor, that’s very open and we have different cabinetry in each of those working spaces.
Our main focus is cabinetry-related things, kitchens and baths. We do have a media center, a small home theater. One of our kitchens is a good size. It’s a fully working kitchen where we can do some demonstrations.

Swartz: Dennis, why did you start a showroom?
Gehman: We really wanted to get stronger into kitchens and baths and felt like in order to do that, it was a necessary step. We had the floor space. Prior to that we called it a showroom, but it was more where one of our manufacturer reps would say, “Hey do you want this for your showroom?” and we’d say, “Sure,” or we’d mis-order something and you can’t return it, put it in the showroom. It was more haphazard, and we wanted to plan a space that we could be proud of and would show off our design skills as well as our craftsmanship.

Swartz: When did you formally open the showroom?
Gehman: May 2005

Swartz: Bob, when and why did you start a showroom?
Sturgeon: Similar reasons to Dennis, wanting to do more kitchen and bath work. I had a designer that I was working with and she had a line of cabinets and she was looking for a place to land as well, so we got together. We started with a selling center for Omega Dynasty cabinets and now we’ve got five different lines of cabinets and a full showroom. That was 10 years ago.

Swartz: Bob, you wanted to do it to get more into kitchen and bath. Did it happen the way you thought it would happen?
Sturgeon: It definitely did.

Swartz: What made it happen?
Sturgeon: Bringing that designer on board was one of the big ones, and then having the cabinetry and being able to invite people in to see it. It definitely works. Our thought at the time was to have kitchens and baths be our bread and butter, and the additions and whole house remodels could be the bonus to that. I’m glad I did it.

Swartz: Dennis, did it happen the way you thought it would happen?
Gehman: Yes and no. Yes in that it got us a good bit more into kitchens and baths. The no part is that we thought we’d put a showroom in and we’d put a sign out front and people would come in here. We don’t get near as much foot traffic as we were hoping.
Once we are working with people, the showroom has definitely been a benefit. They upsell themselves as they see the different products and features and so forth.

Swartz: What did you do differently when you didn’t get the foot traffic?
Gehman: For a number of years, nothing. Then we said, we’ve got this space, what can we do to get people in here? We tried a few showroom events, a cooking class, those kind of things, and initially we were disappointed. We were thinking we’d get 25, 30, 40 people in here, and I think the most we got was 18.
But what we realized after we started talking to other people around the country, was if you get 12 to 15, you’re doing pretty good. Unfortunately, we’ve backed off the last couple of years. We were more in a survival mode and just didn’t have the manpower to put into those events, but that is a renewed focus for us this year.
The other thing that we’ve done that continues to work quite well is we began letting non-profits and civic organizations know that if they need a place to meet, our showroom is available. We don’t charge anything. We figure that it’s worthwhile.

Swartz: What’s the best thing about your showroom?
Sturgeon: This is our second showroom. We had another showroom and it was in an industrial area. You couldn’t find us unless you knew about us. This one is freeway-visible, and there’s also doctor’s offices, office buildings, up and down the street from us. We get a lot of people driving by. Freeway visibility is one of the best things.
Gehman: I think the best thing is it shows our design capabilities. We wanted to show some outside of the box kind of things and I feel like we’ve achieved that.

Swartz: What is the biggest problem with your showroom?
Gehman: I think it’s the ongoing expense, maintenance of keeping it up to date and current. 1,800 square feet is not that much, so how do we get people to come in next year again. We always need to have something new.

Swartz: If a remodeling contractor wanted to do a showroom, what’s the start-up cost?
Gehman: Start-up costs probably depend how much you’re able to work with your suppliers, manufacturers, subcontractors, that type of thing. We don’t use subcontractors. The labor’s all on us, so that  added some more expense to it.
The fact that we decided to put in the full working kitchen, we have a full master bath with spa shower, and the home theater works, it costs a bit more because you have to run the plumbing and the wiring and all those kinds of things.

Swartz: Could you quantify what you think that showroom cost you when you first set it up?
Gehman: It was about $275,000.

Swartz: Yeah, it cost us a quarter of a million dollars to set ours up. Bob, can you talk about costs?
Sturgeon: I have an interesting situation because we had the previous showroom at the industrial spot. When the economy went south, this showroom as owned by a competitor of ours. He had a designer working here that set the whole thing up and when that company was spiraling down … she came to work for me.
Then these guys finally went bankrupt and the owner came first to her, asked if she wanted to buy the showroom … she said you should sell it to Bob. I came in and made an offer on it. He told me he had put $300,000 into it and I bought it for a third of that.

Swartz: Do you get discounts from manufacturers or money for co-op advertising?
Sturgeon: The answer to that is yes. We have changed one display since we got this showroom and the manufacturer of the cabinets not only paid for the cabinets, they also gave us $1,500 credit to do the labor to change it out.
Gehman: We do get discounts and co-op money. We haven’t changed out a complete display yet. The big plan going into this was were going to do that in four to five years, then the recession hit. This year, we’re making some small changes.

Swartz: What lessons have you learned and what do you wish someone had told you before you started a showroom?
Sturgeon: The way it’s worked out for us, I just wish I did it earlier, really. I wish I was ready to do it earlier, but I probably wasn’t in terms of having a handle on business.
Gehman: I think it would be about talking to more vendors. We basically went with the vendors we had been working with. We knew their products and had a good relationship, but if we had gone outside of that, I think we could have gotten more help financially, whether it’s discounts or co-ops.