Ask someone to describe the physical facilities at a typical wholesale distributorship and you might hear such words as functional, lackluster or maybe even boring. Then again, if you've visited some of the newer distributor locations lately, you might hear bright, interesting, or, dare we say it ...FUN! Electrical distributors are going out of their way to design locations that create an enjoyable purchasing experience for their customers and a pleasing work environment for their employees. With increasing frequency, distributorships are taking on the look of an upscale retail establishment.
Wholesalers are finding that incorporating good retailing principals into their branch designs or headquarter locations can increase sales significantly. This generally means increasing the counter and merchandising area and dressing it up to look more like a retail store.
David Hayes, manager of merchandising and promotions for Panduit Corp., Tinley Park, Ill., says the growth in counter area size is the biggest change he's seen in branch design over the years. Initially most counter areas were about 1,200 to 1,500 sq ft., but distributors who put in larger counter areas were paid back with bigger sales. Therefore, they would set aside a larger space for merchandizing each time they expanded or moved to a new building. Hayes, who has helped design more than 400 branches, is seeing counter areas ranging from 3,500 to 4,000 sq ft or larger now, and there's a good reason for it. Presenting as many products as possible, in an attractive manner, can-and will-influence sales.
"First, if customers can see the different items you stock and sell, there's no guesswork," explains Hayes. "It's not all hidden behind the wall somewhere. And second, they're constantly being reminded of the different products they need to complete a project. For instance, they come in to buy conduit or cable, and they're presented with wire-pulling products, conduit fittings, conduit benders--all the accessory items that maybe they didn't think about originally but might need to buy."
Steiner Electric Co., Elk Grove Village, Ill., recently completed a new branch in Rockford, Ill., and is expanding its Elk Grove Village headquarters. Both locations feature large and well-appointed merchandising areas, and the Rockford location devotes 5,000 sq ft to the counter area. Jeff Izenstark, Steiner Electric's inside sales and counter operations manager, says they have increased sales by 56% through merchandising. "We emphasize making our counters look good, but the key is to have enough space between the aisles and to merchandize as well as you can," says Izenstark. "We feel that putting products in front of the customer is what makes it appealing." From the automatic glass entrance doors to the counters stacked with an incredibly diverse assortment of electrical and non-electrical products, this counter area has a distinctly retail look about it.
Within the 150,000-sq-ft, two-building, headquarters complex, Steiner Electric has devoted 4,000 sq ft to a high-tech training and conference room, complete with remote-controlled audio and video equipment. The recently acquired 65,000-sq-ft building across the street from the existing location adds an additional 50,000-sq-ft of warehouse space, and will store overstock from the main warehouse. In each building conspicuously empty areas await future growth.
Building or expanding a facility is a costly strategic move, one that can cut deep into profits if not done with the proper planning, say some distributors.
Planning for the future heavily influenced Steiner Electric's choices for design and location for the new 40,000-sq-ft Rockford branch. From the moment Rick Kerman, Steiner Electric president and chief operating officer, began designing the new facility, he had an eye toward future growth and expansion. His uppermost thought was to never move the facility again. "We wanted to do it right the first time," he says. "We were willing to invest more now andnot have to worry about it again because building and renovating is very disruptive."
Planning for future growth included locating the facility on four and a half acres of land so that the building could be enlarged when necessary. The old Rockford facility was land-locked, which eliminated any expansion capabilities. The new building is pre-cast concrete except for the back wall, which is all metal and can be easily removed to add on more space. "We can actually build 100,000 sq ft here if we ever need to," says Kerman.
Other expansion features include 27-ft ceilings and an 8,000-sq-ft mezzanine, currently vacant but ready to be finished when more office space is needed. Kerman even had an elevator pit constructed under the wooden flooring of the "visitor's office" so they can easily comply with the Americans with Disabilities Act (ADA) when the mezzanine is ready for occupancy. The visitor's office will become an elevator shaft that goes up to the mezzanine.
Kerman designed the Rockford location to project the image of a stand-alone, headquarters location. In spite of its close proximity to Chicago, Rockford has a tremendous sense of being its own community with its own market, newspapers and radio and television stations. "It's important that our customers realize it's not just a branch. It's our Rockford headquarters," he says.
The entire office area is tastefully decorated with hardwoods, earth-toned fabrics and artwork created by Kerman's grandmother, Jane Steiner, whose works have been exhibited at the Chicago Art Institute.
The love of art that runs deep in Kerman's family can bee seen throughout the Rockford location. Along with his grandmother's artistic talents and his interests in architecture and photography, his mother has a flair for interior design. She helped planthe location's decor, which reflects the tasteful trappings of a five-star hotel rather than a typical electrical distributor.
Kerman, who describes the look as "tasteful but not fancy," admits that achieving the home-office look cost more than building a typical branch. However, he says the added investment will show customers how serious Steiner Electric is about the market and will cut down on the cost of future building or renovation.
"We considered our future growth and expansion," he says. "The cost to modify or expand will be less disruptive and will cost much less due to the additional planning we did during the branch's design and construction."
Competing on a big scale sums up the look of the Rockford facility's 5,000 sq ft counter area. With wide aisles, 12-ft ceilings, sporty store furnishings a la Eddie Bauer, and a knock-your-eyes out hickory and brushed-aluminum center island counter with recessed computer terminals, this merchandising area could take on any retail hardware store. Kerman says the DIY centers have changed the customer's perception of what to expect when he walks through the door to make a purchase.
"We owe our innovative merchandising to Jeff Izenstark," says Kerman. "His retail background adds a whole new dimension, and helped us win a promotions award from Affiliated Distributors.
"You can't be operating your counter area like it's the back of your warehouse anymore. We must get customers back to the job site as fast as possible." Kerman even incorporated a small loading dock especially for counter customers that is near the full-sized shipping and receiving dock. Both docks are covered by a canopy-like overhang extending the length of the building for protection from bad weather.
The people at Colonial Electric Supply Co., Inc., Warminster, Pa., have also seen the value of giving the store a more "retail" look. When the company moved to its present 11,000-sq-ft location, a major remodeling effort included a big, white stucco facade on the front of the building, custom windows, a heightened ceiling and state-of-the art lighting. Steve Bellwoar, Colonial Electric Supply's president, says they really invested in the facility's image because the building was in a prime retail area, and they had to compete with local retail merchants. They never got the counter activity they wanted at their old location, so the move was planned to capitalize on a location where customers had other business to transact: banking, getting lunch or picking up materials from other businesses in town.
Although the company is commercially rather than residentially focused, Bellwoar says the showroom is designed for small contractors and self-service. "Those guys can come in, get their stuff quickly and easily, bring it up to the counter, get in and get out," he says.
Similar to Steiner Electric, Colonial Electric Supply's counter forms a center island. The design makes it easy for a customer to approach the counter from any area of the store to check out or get help from a salesperson. "We were looking for an open feel," Bellwoar explains. "We wanted a system that kind of directs people around through the aisles."
Jay Bellwoar, Colonial Electric Supply's vice president of branch operations, says they got ideas for their design almost exclusively from retail stores and advises against looking at other electrical distributors. "There are so many other people who do it better," he says. "Look at the big home centers, because they're researching it and dropping big bucks into that research."
Both the Bellwoars attended seminars on retailing to learn how to better design the facility and set up the counter area. Jay Bellwoar recalls that in one seminar presented by Jolynn Rogers, who recently joined Square D Co., Palatine, Ill., as a regional sales manager, Rogers said there are good, bad and ugly wholesale distributors. She cited statistics that show the "beautiful" ones that have that "mall" feeling are doing wonderfully. The little "hole-in-the-wall" places are doing hideously, and whenever the home centersmove in, they are the first to go.
David Borovsky, owner and president of Bright Electrical Supply Co., Chicago, Ill, also looked at the retail paradigm and tried to replicate it when his company relocated to Chicago's West Loop neighborhood, a few blocks from the city's downtown office district. Retail stores make it easy for you to come in, buy your products, enjoy your shopping, then move on. So a prime consideration for this distributor was to find a building that came with ample parking. Borovsky's goal was finding a place where customers had easy access-where they could park nearby and get in and out quickly with the products they required. "The electrician's time is very valuable, and we wanted to minimize his transaction costs in dealing with us as his distributor," he says.
In designing the layout and renovation of the 25,000-sq-ft facility, a lot of consideration was given to materials that are fragile or are difficult to handle. Spaces were designed so these products can be stocked and shipped with minimu handling. For instance, such orders as full pallets of 8-ft florescent lamps now can be loaded and unloaded with a specially equipped forklift, rather than warehouse workers having to load and unload the lamps by hand in a small area. Becuse this setup can handle larger orders, it has also reduced the number of shipments to process while earning a cost break on the orders. "Our old location didn't allow us to handle pallets well," Borovsky admits. "Now we purchase every item we can in full-pallet quantities."
Borovsky also wanted to create a more professional and comfortable working environment for his staff, so he invested in the right equipment in each area: the proper racking, forklifts, safe ladders in the warehouse, spacious packaging tables, proper wire and conduit racking, first-class work stations in the office areas and retail-style displays and gondolas in the merchandizing area. His says this extra investment was money well spent. "The immediate benefit was just a more pleasant atmosphere for our entire staff, which was a big boost for all of us," he says. But the real payoff was in sales. The number of line items sold in his counter area increased by 30% between first quarter 1997 and first quarter 1998. Gross profit generated at the counter has increased 60% during that same period.
Whether upgrading an existing facility or building a new one from the ground up, distributors who have been through the process agree that time spent researching design options will pay off. Aside from securing the right location, Borovsky says planning is the single most important thing a distributor can do to ensure a well-designed facility. He not only worked with his own management team, but also an outside warehouse management consultant and a friend in the retail business to get the right "look" and layout for his new location. Steve Bellwoar of Colonial Electric advises researching the latest concepts for setting up a retail environment. That system has worked: Since relocating and redesigning their Warminster branch, invoices from walk-in customers have increased 40%.
When the time comes to design or redesign your distributorship, look at your present facility and ask yourself what's working and what isn't. Bring in industry experts to help you with design and layout problems. And if, like so many distributors today, you decide that a disctinctly more retail approach is the way to go, visit the places that you think do a good job of retailing. David Hayes of Panduit says the grocery market and the mass retailer have conditioned the public for retail sales. Look at their lighting, signage and the way they lay out their stores. Step back and ask yourself, 'Why do I shop here? What is it that draws me into the store? Why do I keep coming back?' Once you have those answers, consider how you can apply them to your own establishment. "At heart we're all consumers," says Hayes. "That doesn't stop when a guy walks through the door of your distributorship. He may be an electrician, but he's still a consumer."