Showrooms: Great place to showcase or waste of space?

For a variety of companies in myriad industries, a showroom is a great way to show off the latest and greatest products to new and existing customers.

Showrooms in the propane industry were once prevalent. Many moved away from them, but they have been making somewhat of a comeback in recent years.

Paraco’s facility in Purchase, N.Y., is a 1,500-square-foot facility with about 800 square feet dedicated to showroom space.

In a 2005 LP Gas Magazine Benchmarking Survey, 57 percent of 346 respondents said their facility has a showroom, with an average of 450 square feet devoted to retail display generating 32 percent of total revenue. Just 9 percent of the respondents who don’t have showrooms planned to add one in the following year.

Why have showroom popularity fluctuated over the years? What benefits do they offer, and what issues do they raise?

Showrooms vs. big-box

“The typical propane dealer does not sell anymore, he simply accepts orders, and the fall of the showroom is part of that,” says Benny Gay, general manager of Cooperative Propane Inc. in Andalusia, Ala.

Showrooms can be a great place to showcase new and seasonal items that can led to impulse buying.

“Often the sale is made on price per propane gallon alone with less emphasis placed on selling the benefits of propane, propane equipment, the company and the company’s people. Value-add is something most can hardly pronounce, much less deliver.”

Cooperative maintains showrooms at nine locations ranging in size from 500 to 1,200 square feet. The showrooms are typically in the front of the buildings, so customers must walk through the showroom area to get to the customer service desk to pay bills or place service orders. Point-of-purchase materials touting discounts, specials and other incentives accompany the products carried by the retailer. One to two full-time people work each showroom, including those who handle traditional propane service.

Gay says too many dealers have given up on selling appliances, claiming they can’t compete with big-box retailers who offer the same products at slashed prices.

A showroom can be utilized to show customers exactly what a product will look like in their home.

“This used to be the case with only household appliances, but I’m seeing it more and more with space heaters, logs and other traditional gas appliances as well,” he says.

“Many marketers have even moved away from doing anything more with their service departments beyond setting tanks. They are leaving repair service to the HVAC and appliance repair people. Unfortunately, showrooms are casualties in a fight our industry is giving up on.”

A. L. Allen Jr., senior vice president of Blossman Gas Inc. in Ocean Springs, Miss., agrees.

Blossman sells a wide variety of fireplaces, kitchen appliances and seasonal merchandise at their showrooms.

“As the big-box dealers moved in, many propane dealers felt they could no longer compete, and elected to either drastically reduce or completely phase out the appliance business,” he says.

Blossman maintains showrooms in its markets, in sizes from 1,200 to 1,800 square feet. All showrooms have built-in, live-burn fireplace display walls and appliance display islands. Displays include several varieties of fireplaces, kitchen appliances and seasonal merchandise. Two to four people staff each office/showroom, depending upon the size of the local market.

“Our company never completely phased out of the showroom concept. We have added new emphasis to their importance in recent years, though,” says Allen.

“In addition to the recent fireplace boom, our experience tells us that there is a niche market for full-service appliance stores. People like personal attention and the convenience of obtaining the appliance, installation, gas supply and follow-up service from one source.”

The personal touch gives independent marketers a step-up on the big-box retailers, according to some.

“The quality of some of the items sold by the big-box retailers is on the low end and customers have had problems with them,” says Don Schalk, president and general manager of EnergyUnited Propane LLC in Mocksville, N. C.

“In addition, the level of customer service as it relates to product knowledge is poor. We sell high quality products and focus on selling our knowledge and service. We’ve always sold them and we’ve never left the market place.”

EnergyUnited’s showrooms vary by location. Both customer service reps and managers sell products and service customers at all locations. They don’t stock big backup inventories; basically one to show and one to go. They focus on the high-end products on the market and stress after-hours service.

Year-round benefits

Despite the issues that come with maintaining a showroom, many in the industry still consider them vital to promote new products, stimulate year-round business and provide a full range of services and products to new and existing customers.

Paraco Gas, independent distributor in the New York metropolitan area, currently maintains a 1,500-square-foot facility in Purchase, N.Y., with about 800 square feet dedicated to showroom space. Two to three retail/office employees work the showroom. The facility opened in 2004, but the retail operations kicked off in fall of 2005.

“Our company initially moved away from the showroom concept because of the attention it required,” says Mike Gioffre, vice president of sales and marketing. “It meant that your office had to be in a higher traffic area, which normally can equate to higher rents, and it also meant that a portion of your space would need to be designated as retail. These factors take away from the core business of selling gas.”

Today’s customers use the mail or online payment services to handle billing and purchases, putting a crimp in foot traffic at propane sites. Ways to get past that are direct mailings and good-old-fashioned word-of-mouth.

“We have always had a big majority of our customers pay by mail, but the walk-ins for payments and new account sign-ups has still been fairly substantial. We use statement stuffers and direct mail advertising to generate walk-in traffic,” says Allen.

“Also, through these advertisements, signage at the branches and other means, as word spreads in the communities that we are in the appliance business, walk-in traffic does increase.”

In Alabama, Cooperative Propane never let go of the showroom.

“In fact, over the past year we have moved more into full-line household appliances, including electric appliances, as a means of generating additional revenues to offset slow winter propane sales, and as a foot in the door to get propane prospects,” Gay notes.

At some point, all propane customers are going to need new appliances. If a company can get them in the door for one of those, then also sell them a tank set, propane water heater or logs, a showroom is a great asset. Plus, existing customers are good targets because you already have a working relationship with them.

Besides, more and more products are introduced into the market every day. Showrooms can be beneficial as a place to educate your customers on what’s new and exciting.

“Product offerings have come a long way,” says Gioffre. “There are many new products that will help build a gas load and customers may not be familiar with them. We felt that if we could combine our office space with a retail presence we would get the best of both worlds.”

Showrooms help open customers’ eyes to the wide range of propane-fueled appliances that are available today. According to Gioffre, many customers are impulse buyers for items such as grills, patio heaters and mosquito magnets.

“We can assemble, deliver and service all the products we sell,” says Gioffre. “We’re finding that there’s a comfort level with consumers when they purchase propane appliances from a gas company. The showroom helps bring credibility to our commitment to the retail products we sell.”

Showrooms also help retailers keep a leg up on the competition – the real competition, not just the other propane guys in the area.

“Showrooms allow you to display propane products to customers,” says Schalk. “It gives you a way to show that there are alternatives to electric products and other competing products. In some cases, this is a good use of space that otherwise might be used just for storage, or end up as dead space.”

Another benefit is the opportunity for customers to get hands-on with the products.

“Customers are not going to purchase appliances, gas logs or grills without having the opportunity to see and touch them,” says Allen. “It’s an opportunity for us to talk with customers, generate more sales and foster more customer loyalty.”

“The showroom is the meeting place,” adds Gay. “Prospects have to know where we are and see what we have. The showroom display is part of what attracts the prospect, a silent salesperson.”

Niche markets

Another benefit of maintaining a showroom is the opportunity to showcase a niche product or service that is new or popular in your area.

Delta Liquid Energy has 10 locations around California, and a company highlight is a 3,000-square-foot showroom at their Paso Robles location that specializes in products for the state’s ever-growing recreational vehicle market.

“Besides our chairman being a RV enthusiast, we opened the showroom because there’s a great synergy between propane and RV’s,” says Delta’s vice president of retail operations Robert Jacobs.

“Many of the appliances in RV’s, as well as the heating and water, are powered by propane. Plus, we have a complete parts and service center, so we can maintain the RV’s as well as supply them.”

Delta also sells outdoor cooking supplies, like cast iron grills, for the camping and tailgating markets. The company went through phases of selling grills, gas logs and appliances, but ultimately stopped.

“If we can’t install and service it, we won’t carry it,” says Jacobs. “Besides being able to sell it cheaper, speciality stores can offer selection, service and installation like we can’t. Why go to a propane dealer for a dryer when you can go to an appliance store filled with people who specialize in appliances?”

Thanks, but no thanks.

Still, many companies shy away from showrooms, for reasons as varied as those for having them. The most common reasons are rapidly changing technologies and those dreaded big-boxes.

“Our showroom is more of a waiting room now,” says Jim Bishop, president of Enderby Gas in Gainesville, Texas.

“Nearly everything we used to sell is available at discount stores for less than we would pay for resale. Customers feel like we’re taking advantage of them if we have fair mark-ups on those items, so we choose to focus on customer service on current or future propane installations.”

Another problem is rapidly changing technologies that can be difficult to keep up with.

“We put in quite a few showrooms in the late 1990’s when fireplace sales took off,” adds Steve McKay, chief operating officer of E.O. Sharp Butane Co. Inc. in Smithville, Texas.

“Problem was, the technology changed so rapidly you were stuck with an appliance that was outdated and had to be sold at cost to bring in new items. Home Depot and Lowes were selling appliances for what we paid in most situations. In any case, our money is made in gas while appliances simply tie up good working capital.”

To show or not?

It can be argued that showrooms can provide propane marketers many benefits, such as enhanced, year-round business, an influx of new customers and the ability to offer a full range of products and services. Assets like that can be great for a company’s recognition, reputation and the all-important bottom line.

However, if the showroom isn’t properly stocked or maintained, or if the marketer is in an area saturated with big-box retailers and specialty stores, the propane showroom can quickly become obsolete and antiquated if it can’t keep up with the other stores’ selections, displays, installation services, and most importantly, prices.

But, if a marketer can provide a niche market and/or outdo the big-boxes with better service and knowledge – while staying competitive in price – a showroom can be a great addition.