Some wholesalers have not only learned that showrooms offer a terrific opportunity to add to revenues and profitability, but they have taken the time to learn an all-new business.

This month I'm featuring a traditional wholesaler that I've been working with for the past two years: Castle Supply Co., based in Pinellas Park, Fla.

Castle Supply entered the showroom business in 1985. They even assigned a separate name to this new venture: Galleria Bath & Kitchen Showplace. They've really gotten serious about their showroom business in the last 10 years.

Parent company Castle Supply was started in 1952. Joe White is the owner and chairman of the board and Bob Cardwell is president. They operate seven branches (No. 8 will open in June). They have 96 employees - of which 10 are showroom salespeople - and this number will grow by four with the opening of their new store. Their business breaks down as follows:

Residential Plumbing 80%
(of which 12% is showroom generated)
Commercial Plumbing 10%
Repair 9%
Irrigation 1%
They don't share specific numbers, but say that they are in the upper quartile in gross profit margin and bottom line profitability of firms in the PHCC industry. Their market place is West Central Florida.

Asked what they feel makes them unique as a plumbing wholesaler, Joe and Bob responded: "It's not just one or two things that make Castle Supply successful, it's doing a hundred things well." They have more branches, delivery trucks and salespeople serving their market place than their competitors.

Both Joe White and Bob Cardwell have been, and currently are, active in industry activities. Joe served as president of the Southern Wholesalers Association and Castle Supply received ASA's Top Brass award in 1998.

The company currently has three Galleria Bath & Kitchen Showplaces: A two-year-old, beautifully done 6400 sq. ft. space at the Pinellas Park headquarters' building; the Tampa branch, which has 4500 sq. ft.; and the Hudson branch location, which has a 3500-sq.-ft. showroom. A 10,000-sq.-ft. showroom/branch in Brandon will be completed in June.

Without sharing specific numbers, showroom sales have tripled in the past five years and showroom gross profit margins are in the 30's - well over the national average for wholesalers in the United States. With a commitment from Castle Supply's top management, and continued encouragement and direction from yours truly, we expect this to grow by another two to three points. Joe and Bob would tell you that showrooms are the most profitable part of their business.

I asked Joe and Bob why they got into the showroom business and why they continue to emphasize it. Here's their answer: "It's an important growth area of our industry - especially as it migrates away from the plumbing contractors and toward the "big boxes" and other specialty sellers (independents, kitchen and bath dealers, designers). Showrooms offer the opportunity to earn high gross profit margins." Bob adds, "The company can continue to capitalize on other areas where we already own a competitive advantage?ncluding better customer relationships, locations, caliber of salespeople, marketing ability and vendor participation." Another important reason, they said, is that "it broadens their customer base." Top management at Castle Supply is not only sold on showrooms, they have made a very large commitment to them.

I am a huge proponent of selling directly to the homeowner and custom homebuilders. Currently about 25% of Castle Supply's showroom business is direct to the consumer. The rest breaks down as follows: 65% to plumbing contractors, 5% to builders, and 5% to designers. Even though the consumer is paying 25% of the invoices, in most cases the plumbing contractor either recommended the sale be handled that way, or encouraged the sale. At this point in time, Castle Supply does not actively solicit consumer business and they do take every opportunity to promote sales through a plumbing professional. However, I believe the strong trend crossing our fruited plains will reach Florida and other parts of our country where the plumber will lose the high-end plumbing orders and the consumer and builder will not only be selecting the product, but also writing the checks.

The Galleria Showplaces feature Kohler, Pearl, Jacuzzi and Capizzi fixtures. Their main faucet lines include Kohler, Grohe, Moen, Rohl and KWC. They show and sell bath accessories, door and cabinet hardware, medicine cabinets, steam generators and water filtration products. They have diversified their product mix by combining traditional plumbing wholesaler products with related decorative plumbing and hardware items. Smart business!

Showroom Operations

Training starts with the new person working closely with an experienced person(s). The showroom manager spends time with new people. They schedule one-on-one meetings with manufacturers reps. They do frequent product training sessions at the branch level and a monthly meeting with all showroom personnel. Plus, they bring in outside professionals. They are building a library of books, audio and videotapes and sponsor Dale Carnegie courses. They're serious about their commitment to training.

Showroom salespeople are compensated with a base pay plus commission (driven by gross profit margin) plus a bonus. I know their salespeople are paid more than the average wholesale showroom salesperson - but their productivity is also higher. (Pay more, get more!)

A Success Story

Joe and Bob said that one of the keys to their success has been in "investing in quality¿rom the facilities, to people, to training and to planning." Bob added, "You won't be able to consistently sell in the luxury market if you aren't willing to make the investment."

I asked Bob and Joe about their future plans for the showroom business. Here's a beautiful summary to this article and something that every wholesaler should read carefully. This is a direct quote from the owner and president of one of our industry's most successful wholesalers: "We will continually study the market with an eye towards offering those products and services that consumers want. Our experience has shown that affluent homeowners want to shop in facilities with beautiful displays, that have very competent salespeople and that project a professional image. As the buying decision moves more and more to the homeowner, a whole new range of opportunities opens up in related product groups, services beyond what the wholesalers traditionally offer, and selling through non-traditional channels. We are convinced that the showroom business is going to change dramatically and quickly in the next few years and will continue to grow as a source of sales volume and income for wholesalers that are willing to invest their time and resources in them."

Wow, I wish I had said that, because it says it all! Thanks, Castle Supply and Galleria Bath and Kitchen Showplace, for sharing your story with us.