Retailing in America has changed dramatically in recent years.
The corner grocery is gone. The independent drug store is gone.
The neighborhood shoe store, paint store and hamburger restaurant
are gone. Drapery shops are gone. Chains and networks from Blinds-to-Go
to 3-Day Blinds, Next Day Blinds and Window Fashions Gallery dealers
by Hunter Douglas all present a professional appearance that homeowners
favor when they shop in stores.
Not only are chains expanding, non-store franchises have exploded in number and have achieved general acceptance. In fact, I am proud to have innovated the first van concept for window coverings with the Decorating Den ColorVan in 1973 (see D&WC, July 2005, page 22). It was the first time ever for an organized business to serve customers professionally without a retail store. With growth in blinds demand and decorating franchises, the non-store van concept has become an accepted form of retailing for window coverings in America.
In recent years, Budget Blinds has established world leadership in window coverings with more than 1,000 territories and retail sales estimated in the $200 million range (see D&WC, March 2006, page 19; April 2003, page 30). Another network of more than 150 BlindCrafter store and non-store businesses are upgrading their professionalism with the support of Comfortex Window Fashions, rolling out a van concept with growing dealer and consumer acceptance.
How does franchise competition affect your business?
Window products dealers in both stores and vans tell us competition is intensifying, driving margins lower and making it more difficult to get appointments. Internet and box stores are mentioned often, but those who track competition closely tell us franchises are a more serious concern. As co-founder of Window Coverings University (WCU), I request every attendee to do a home-study project to analyze competition. (In the interest of full disclosure, I also am co-founder of the Exciting Windows! Network, a branded service for experienced shop-at-home window coverings professionals.)
FRANCHISE COMPETITORS WIN MORE SALES THAN BOX STORES
I ask WCU attendees to report their results to the class. With more than 200 reports from all parts of the nation—from designers to workrooms, from businesses selling $50,000 to $5 million, from newbies to those with more than 20 years experience—the results indicate that competitors who have taken at least two sales from attendees in the past 90 days most often are non-store franchises. In fact, they are mentioned three-to-one compared to box stores, chains and local independents.
In addition, we take telephone soundings from over 100 dealers monthly, over 1,000 per year. The phone results match class reports.
There are sound reasons why consumers are attracted to chains, franchises and networks. They are the same reasons that millions of Americans buy their lunches at McDonald’s and Subway, buy their flooring at Abbey and Carpet One, and select furniture at Ethan Allen and Bassett. The names are familiar, the quality is assumed and service standards are expected to be reliable.
According to dealer reports the impact is growing. It wasn’t noticeable over recent years when explosive home building created a rising tide that lifted all ships, but today with home construction slowing, inventories of unsold homes rising and with and continued growth in franchises, dealers are feeling the pinch.
SLIDING SALES THIS YEAR
Early in the year we heard leads were down. First to feel it were resort areas in California and Florida where speculators pulled out of the market, representing some 25 percent of sales. In most regions leads were down this spring, but sales were steady thanks to bigger ticket sales. But by August, sales are sliding with 10 to 30 percent fewer leads than a year ago. That hurts!
This is the first time in 50 years that window coverings business owners are pinched from two sources at one time: a slowdown in homebuilding and serious competition from franchises and networks.
WHO ARE THEY? HOW DO THEY DO IT?
Who are your franchise competitors? See the chart with this article for a list of major window coverings and decorating franchises with more than 100 units.
How do they do it? I hear that question all the time. It usually goes like this: How can a new franchise owner with no industry experience sell more in his first year than I can after five years?
The answer is clear: training, marketing and a carefully thought-out system will beat experience 90 percent of the time. We will explore this question in detail next month in the second part on franchising. For now, it is enough to know that franchises are growing faster than any chain or network and are steadily increasing their market share in every major city in America.
WHAT’S IN STORE FOR YOUR FUTURE?
The change to our industry is new, but it’s often repeated in other industries from clothing stores to flooring to furniture. Thousands of small mom-and-pop folks work hard in their small businesses to make a decent living and send their kids to college. Then along comes a large-store competitor and elbows them out with advertising and careful research about what customers really want. Little by little sales deteriorate until there isn’t enough left to cover store overhead and provide a living wage. It is a guide to what you can expect in our industry, but there are differences unique to window coverings. Here are some of them:
• Major competitors may not be large stores. They are more likely to be van-based competitors with low overhead and no employees.
• Better customers in higher income brackets will continue to value service, assistance and professional ideas as well as products.
• Good training is a major edge of franchises. Franchisees invest tens of thousands of dollars for their new businesses, much of it for the training.
• Franchise training is not just how to measure, order and install. Training for marketing and sales is the real difference. To compete, you must do the same.
• Successful independents can compete if they follow successful models. For example, paying showroom rent when sales are under $400,000 is probably a mistake when franchised competitors operate from home at that level.
• Entering business with little investment is the American dream. But the fact is, there is a reason why businesses investing $50,000 to $100,000 grow and succeed more quickly.
Passion for window coverings is laudable. But those who earn bread-winning income must follow their heads as well as their hearts.
The bottom line is, most window coverings retailers will survive. But you may find you are working harder for less income. In other industries that faced transition as competition encroached—paint stores and carpet stores, for example——the dealers that didn’t change busted their hump to stand still. They survived, but had to abandon their dreams for a better lifestyle.
Is there hope? Of course! There are ways you can compete and win. But it will require education and change. Next month, learn how to win. You can do it!
INITIAL FEES, CONTINUING FEE AND ADVERTISING FEE
Total Initial Fee
$74,950-114,950 Assume $300,000 sales
3rd year $18,000 $18,000 contract, but currently $9,000 30,000 HH
about 80,000 pop. V2K Window Fashions Inc $44,500 Addition $0.85 HH Basis: 7%/4% $300,000 sales: $20,000 5% contract, but currently $6,000 30,000 HH about 80,000 Pop. Decor and You 1 to 4 units: $19,500-$37,500 Region: $75,000 to $225,000 Basis: 10% $300,000 sales: $30,000 3% of sales $300,000 sales: $9,000 260,000 to 780,000 per region Decorating Den $29,900 Basis: 7 to 9% $300,000 sales: $21,000 4% with cap
Source: California Dept. of Corporations online Franchise search, http://220.127.116.11/caleasi/Pub/Exsearch.htm
This article is based on Steven C. Bursten’s actual experience with sales and financial information working with hundreds of window coverings businesses. Whether you are a sole manager who aspires to higher sales, or you manage 50 window fashion decorators in a multi-million dollar business, this series will help you manage sales better and increase your profitability. Bursten is co-founder of Window Coverings University and Exciting Windows! service. He also is the founder of Decorating Den Interiors and author of a how-to book on new business start up, “Bootstrap Entrepreneur.” Questions and comments are welcome: email@example.com or call (888) 333-8981.