Redesigning a showroom brings positive ROI

This is a sidebar of the article Creating a buying atmosphere

Looking at every aspect of the showroom, from in-store features and fixtures to merchandising and traffic flow patterns, one might wonder if it’s all worth it. Experts and dealers agree, it is.

A dingy, not-well-planned, warehouse-looking showroom creates a discounting environment, Jim Rasmus, president of Retail Design Associates, explained. Customers who don’t see anything intriguing instantly think about box stores and large discounters who focus on volume more than margin. On the other hand, a clean, well-designed showroom with adequate traffic flow creates the opposite effect.

“When they design it properly, it will actually create a buying atmosphere,” Rasmus said. A professionally presented dealership can demonstrate to customers that the store is providing value and is not the place to seek discounts.

In addition, impulse buys can contribute to up to 65 percent of retail sales if those products are properly displayed, he said.

Though doubling the size of the parts and accessories department at Marine Center of Indiana in Indianapolis meant displaying fewer boats in the showroom, the sacrifice has its benefits, owner Mike Hoffman said.

“You can’t rely in this day and age on boat sales,” he explained. “Bottom line is people are still out there boating, and they’re going to have to have a part for their boat.”

With parts and accessories bringing in 40 percent margins, new boats drawing about 14 percent, and used boats reaching 18 percent, Hoffman looked at dollars per square foot and decided to give up some boat space for parts and accessories. Though he hasn’t reached his ultimate goal in that department yet, he’s already seeing returns.

“I wanted to double my parts and accessories sales. Did I double my parts and accessories sales? No, but parts and accessories were up,” he said.

In 2012, the store’s total sales were up more than 26 percent, in line with many top dealers, however margin increased even more, with a 28-percent-plus improvement over the year before. Though Marine Center of Indiana has built up an inventory of $600,000-$700,000 in parts and accessories over the years, Hoffman reported that if he had an extra $100,000-$200,000 laying around, he’d invest all of it back into that department.

“People still have boats, so the closest thing to recurring revenue is parts and accessories,” he said.

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