Marketing Locally Made Wood Products to Retailers

Transcription

1 Marketing Locally Made Wood Products to Retailers Kanawha Extension Office Tuesday, June 7th, 2011 Charleston, West Virginia Harry W. Watt Business Improvement Specialist Wood Products Extension NC State University

2 Discrimination Policy Statement The work upon which this project is based was funded in whole or in part through a grant awarded by the Wood Education and Resource Center, Northeastern Area State and Private Forestry, U.S. Forest Service. In accordance with Federal Law and U.S. Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color, national origin, sex, age, or disability. (Not all prohibited bases apply to all programs.) To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 1400 Independence Avenue, SW, Washington, DC or call (202) (voice and TDD). USDA is an equal opportunity provider and employer.

3 Retailers-a Key Component in the Sales of Wood Products Buy From Manufacturers and Wholesalers How Products Are Sold Is According to the Economy of Scale Cabinets, Furniture and Millwork Wood Products Have Multiple Channels to Get to Buyers The Current Trend is for an Explosion of Options for Manufacturers, Wholesalers and Retailers = Lots of Room for Value, Profits and Losses, Chaos and Confusion

4 One Interesting Old Statistic In the Early 1960 s US Households Spent 4% of Its Income on Furniture Bought at Retail Today That % Has Dropped to 0.9%! Lots More Buyers But Much Smaller Slices of Pie! Why/How Did This Happen?

5 Less Furniture Sales $ Now Than Before Mindset-Depression Era Children Put An Importance of Spend $ on Good Home Furniture Lots More Excitement in Cars, Vacations and Electronics Than in Furniture Today Trend Towards Asian Imported Furniture Dumbed Down Furniture Trends and Focused on Dropping Price Points A Recent Furniture Today Magazine Survey Found 19% of a Sample of Recent Furniture Shoppers Did Not Buy Anything!

6 What About Cabinet Sales in the Same Period? Cabinet Sales Would Likely Be Higher % Now Than in Early 1960 s Old Styles of Cabinets Were Boring! Design Software Shows Customers Lots More Design Options Manufacturers Now Offer More Species/Finishes/Styles Kitchens Are Used Lots More for Status and Entertaining

7 Construction Drives Sales Cabinets-New Construction Drives the Majority of Cabinet Sales Millwork-New Construction Drives the Majority of Cabinet Sales Homeowners Often Have Spent Their Budget When Its Time to Buy Furniture and Will Postpone Buying

8 Housing Bubble and Recovery The Housing Bubble is a Long Way From Recovery The Best Way to Grow Cabinet and Millwork Sales is New Styles and Working Closely With Prospects to Identify and Meet Their Needs More Success May Come From Trying to Create a Customer Than to Bid Lower Than the Competition

9 Manufacturing Trends Order and Lot Sizes Are Getting Smaller Demand Up for Modified and Custom Items Versus Down for Standard Items in the Catalog Requests Up for Faster Delivery Customers Want Products and Processes to Be Environmentally Sustainable = Green

10 How to Make $ Selling to Retailers Modify the Business to Make-to-Order Instead of Shipping From Inventory Create Standard Lines of Products in Dynamic Designs Designs Modify With Unit Dimension Changes Looks Change With Changes of Shapes and Add On Mouldings Take Advantage of CNC Machinery With Little Set Up Time = Quick Changeovers

11 Inventory Management Strategy Buy Lumber and Plywood in Quantity to Gain Lower Prices Have Materials On Hand When Orders Arrive + Pre- Engineered Designs = No Waiting Manufacturing Use Standard Sizes in Designs to Simplify Designs and Manufacturing

12 Selling to Furniture Retailers Almost No Competition for Local Furniture Manufacturers Selling to Charlotte Metro Retailers No One is Knocking On Their Doors to Sell To Them The Retailers Would Love to Buy Local at Affordable Prices Local Manufacturers Must Make the Case for Prices Higher Than What Global Manufacturers Charge for Commodity Low Style Furniture

13 Selling to Cabinet Retailers Cabinets Traditionally Are More a Local Product Than Furniture Can Focus on Things the National Manufacturers Don t Do o Minor Species Hardwoods o Softwoods o Wooden Kitchen Tops o Better Finishing

14 Selling to Millwork Retailers Smaller Runs for Mouldings is the Trend, Must Be on Board! National Sources Greatly Limit Their Species Can Offer Grades/Quality From Rustic to Select Use Dynamic Designs to Modify Standard Items Being Fast to Manufacture Can Support More Sales

15 Business Strategy-Design/Build A Shop With a Design Center Showroom Use 3-D Software to Design Product Lines Sell the Whole House/Whole Room Solution Charge for the Design Work = New Profit Center Offer a Classy Showroom That is Impressive

16 Business Strategy-Design/Build Offer Those Services Valued By the Customer Design Services Wide Selection of Wood Species Green = Environmentally Sustainable Installation Services

17 Business Strategy-Product Lines Develop Product Lines for Specific Furniture Types Stock a Small Number of Items in Inventory In a Limited Number of Finishes-Key Is To Watch Inventory Turnover (Annual Sales $/$ In Inventory) Use Dynamic Designs To Offer Modifications at Higher Prices Go Out and Find the Correct # of Retailers Who Can Support Your Business

18 Summary-Marketing to Retailers Retailers Would Love to Replace Global Suppliers With Local West Virginia Manufacturers Local Manufacturers Must Become Serious On Issues Important to Retailers o Price o Delivery o Quality o Product Features