The Pros and Cons of Owning a CI Showroom

7/29/2014 3:46:00 PM

 
 
When I started in this industry—back in 1998 for those keeping score at home—there were basically two types of CI firms: those with a showroom and those without whom we less-than-lovingly referred to as “trunk slammers.”

At the time, our company, Custom Theater and Audio, had a showroom that we were renting—a space next to an interior decorator that we thought created a wonderful synergy as they would undoubtedly send us all of their clients once they finished selling them window treatments and couches and chandeliers. (Never worked out that way. Turned out that in the late ‘90s interior decorators still hated all of our “black box” stuff and the idea of “ruining” their design space with something as horrible as a TV or speaker system was just a slightly better idea than suggesting they go with a camouflage design theme.)

Having had the “luxury” of working out of a showroom for the past 16 years, I often wonder, if we were opening our business now, would investing in a showroom make the most business sense? Or would a more streamlined approach make us more fiscally successful? Here’s a list of pros and cons on having a showroom…

Pros:
 
Business Credibility—There’s no doubt about it, a tangible, physical storefront where people can come and visit any time they feel like it adds a huge amount of credibility by conveying a sense of permanence. The words “brick and mortar” just have a sense of gravitas to them. If you are just working out of your house and decide tomorrow that this whole install thing isn’t working out, it’s pretty easy to just close shop. Take the magnet off the truck, change your phone number and poof! You’re gone. A showroom also suggests that you believe in your business and that it will be around for a while and that you’ve attained a certain amount of success to be able to invest in a showroom. Also, some people are just more comfortable spending money on luxury items with a company that has a storefront.

Demonstrations—The band Rush has a song titled, “Show Don’t Tell,” and that’s exactly what a showroom allows you to do. With a showroom, you have a variety of systems set up and always at the ready for demonstration. Instead of trying to TELL someone about something, a showroom allows you to SHOW them that concept in action. Want to explain exactly how easy a Sonos is to operate? Want to demonstrate how well a housewide HDBaseT HDMI-over-Cat-5 matrix distribution system works? Want to show someone how to tame and control their movie collection with a Kaleidescape? Want to let someone know how powerful an iPad can be when it’s controlling a housewide lighting, security, HVAC, AV system, and more? All of these things are part of the everyday life of having a showroom.

Logistics—Got a big job coming up where you are going to receive a massive shipment of speakers, theater seating and TVs? Have a fleet of vehicles that employees use for service calls? A showroom is a great location to receive shipments and park vehicles. Plus there is a ton of paperwork and files that you will accumulate on clients and projects and billing. Sure, you could have things drop-shipped to a job site and let employees park vehicles at their own homes and set up a large home office, but a storefront just eliminates a lot of variables like some other person signing for a damaged or incorrect shipment.

Meetings—In the course of your business, there are going to be numerous times when you’re going to need a place to have a staff or client meeting. Sure you could pull the Jerry Maguire “crowded restaurant so there won’t be a scene” move, but a showroom with a conference/meeting area is so much more professional.

Close Rate—The showroom is my home field advantage—my sanctum sanctorum. My Thermopylae. I feel if I can get a genuinely interested customer inside the showroom, then I am going to close them. When I get them inside my store, and I’m calling the shots, working the demo, and showing off the high-end room, there is no way I’m going to lose that sale. A showroom gives you a powerful amount of confidence, and it’s far more impressive–and controlled–than just meeting someone on a jobsite.

Cons:
 
Cost—Behind employees and hardware purchases, a showroom will likely be your largest monthly expense. Between rent/mortgage, insurance, electricity, water, trash, phone, internet, etc. having a showroom is a pretty major drain on the bottom line. And the cost is constant, whether you are killing it or struggling to find the next job.

Inventory—Besides having to pay for the showroom, you’ll need a pretty major cash outlay to fill it with gear to demonstrate. Not only is this a cost, but there is the on-going issue of regularly needing to turn over that outdated demo stock. Want to show the latest 4K or curved TV? Great. In six months that model is likely no longer available and/or will see a massive price drop. Want to show off several AV receivers? Fine, but count on them being replaced by new models almost every year. When an in-wall/ceiling speaker line changes, hope that the new models fit your existing cutouts or you’ve got sheetrock repair. I can’t tell you how many *thousands* of dollars we’ve lost on projectors used for demonstration. We had two Runco models that retailed for nearly $17,000 each. One, a CRT, we eventually sold to an employee for $500, the other, a DLP, became so outdated so fast compared to modern units that it would be difficult to even give away and now, so it’s just languishing in a box on a shelf.

Manpower—Having a showroom means paying someone to keep it open during regular business hours. If you want a smart and savvy salesperson, they’re going to want a decent salary/commission. You could hire a low-wage employee that just meets-and-greets and answers phones, but that might cause you to miss out on sales when people come in looking to get some information and be wowed. If the experience they’re getting isn’t better that a Big Box store, why would they bother? Of course, you could run the store yourself, but then you won’t be free to go out and service other projects.

Appearance—First impressions carry a lot of weight and when someone walks into your showroom you want it to be a “Wow!” and not a “What the?” It can be easy to get caught up in all the other things that occupy a custom integrator’s life, but a showroom is a big space that needs regular cleaning and maintenance. Things like dusting the racks and displays and electronics, making sure there are no spider webs (we have this one corner of the store that is a bug corpse graveyard), carpets need regular vacuuming, windows need cleaning, etc. You’re also going to have a guest bathroom that will need to be stocked and kept clean.

Fewer Visits—It used to be that we would meet with every client in our store at some point. Whether it was going over blueprints or demonstrating something or just some actual face time meet-and-greet, a showroom visit was inevitable. Today, however, fewer clients feel the need to actually come into the store. Whether it is because they live out of town or are just too busy or have worked with us in the past or just don’t care, we increasingly deal with people that never come in for a visit. In fact, my mega-install client has never stepped foot into our store despite numerous invitations. People are used to buying “remotely” and are increasingly comfortable without needing to visit a physical location.

Over the past few years the landscape of custom installation has certainly changed, and now there are lots of companies doing great work without needing a showroom to be successful. Further, there are tons of creative options—using your own home’s AV or automation system, making appointments at client’s homes, setting up an office space in a strip mall-type location—that have created multiple shades of grey between owning a showroom and just being “a guy-in-a-truck.”

If you have a showroom, do you love it or hate it? And if you don’t have one, do you wish you did or are you glad you don’t?
 
John Sciacca is principal of Custom Theater and Audio in Myrtle Beach, SC. 
 

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