“I have to cut my margins to compete,” a floor dealer recently complained to me. This is something I hear fairly often. So what’s the solution to preventing margin erosion in a market full of box stores, online discounters, and other cheap price competitors? In a word: differentiation. If you don’t create differentiation, you are forcing your customer to buy on price.

Imagine a consumer visiting three different flooring stores to look at beige carpet. If none of those dealers create differentiation, as far as she’s concerned the products are all the same. Those dealers have forced her to make her decision this way…

Imagine going into a grocery store and seeing two displays of oranges, one for $0.50 and the other for $1.00. No explanation of the price difference, just two displays of identical-looking oranges. Which would you buy? Absent of any explanation, there’s a good chance you’ll buy the less expensive ones. Now imagine that the $1.00 bin had a sign saying: Organic, locally grown, pesticide-free, double the vitamins, triple the flavor. Odds are a lot better you’ll opt for the more expensive product. Flooring is no different.

At Surfaces, I met with Michael Raskin, President of Raskin Gorilla Floors, and we discussed the importance of creating differentiation.

Michael, what are your thoughts on the importance of creating differentiation?

It’s huge. If you don’t, you wind up competing on price. One thing you should do as a retailer is, if you don’t know design and color, find someone who does. It’s very important to bring style and design to the consumer. It’s easy to forget that we’re in the fashion industry.

What do you see top retailers doing to create differentiation?

One thing is moving quickly. We work hard to separate ourselves by doing what big boxes cannot do, which is moving where the trends are, quickly. Home Depot is a slow-moving ship. The retailer needs to move quickly and stay ahead of the box stores.

Creating a good first impression with the layout of your store is also important. I visited a retailer in the Southern California, and when you walked in, they made a very good first impression. When you looked at a floor you understood it. You saw how it would look in your home.

How important is differentiation in getting referrals?

Well, my father was the first to bring imported resilient products into the U.S. way back in the early 70’s. And one of the things he said was that only 11% of flooring consumers buy flooring on the brand. The rest is word-of-mouth. If you get a happy customer who likes your floor, they’re going to talk about it. They’re going to brag about it.

So if you want to get referrals, it’s important to create differentiation by paying attention to the details (in customer service and installation), because that’s what’s going to separate who’s going to be around and who’s not going to be around down the road.

You don’t promote your business as being the “low price leader,” and yet you’re successful.

Right, we don’t sell by promising to be the cheapest. We do have entry-level products, like for multi-family residences, but that’s different than promising to be the cheapest. We differentiate by design and through our marketing. This is something the dealer can duplicate at the retail level.

In conclusion, hopefully as a retailer, you understand why differentiation is key to succeeding in the competitive world of flooring. With that in mind here are some more quick tips for creating differentiation:

    • Wear shoe covers in the home
    • When someone walks into your store, hand them a laminated beverage menu and ask them what they’d like to drink
    • After the installation, surprise your customer with a goody-laden gift basket or some other memorable gift

In the last installment, I interviewed Pat Theis, Vice President of Sales and Marketing for Herregan Distributors. If you have an idea for a future interview, drop me an email.

To Tons Of Customers!
Jim Augustus Armstrong is The “Coach”

Jim Augustus Armstrong is the President of Flooring Success Systems, a program that equips dealers to double their profits, cut their work hours in half and beat the boxes! Many dealers have totally transformed their businesses and their lives for the better after joining Flooring Success Systems.
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