Retail Observer

RETAILOBSERVER.COM JANUARY 2017 48 O utdoor living….really? By the time you're reading this, crimson & gold fall colored leaves have fallen giving way to bare, brown tree branches—stripped of their glory. Brilliant rays of sunshine are rare, compared to cloud laden, dreary days where going to and from work in the dark is the norm. So, why are we talking about outdoor living…..why now? Now, is exactly the time when you need to evaluate what's going to make the coming year different and better. Is outdoor living part of your plan? Revelation, probably not. Should it be a resolution? ABSOLUTELY!! Marketplace signs are all around us. Ashley Furniture's recent decision to get into outdoor furniture. "Big box" stores decorating their facades with outdoor living signage and dedicating significant square footage to these products. Website providers are busy improving the on-line shopping experience by calling out "outdoor living" as a category. New furniture and grill brands are popping up every day. Even publications like The Retail Observer are recognizing the craze. Why is everyone so stoked? Very simple, the market is very appealing. Are you as enthusiastic as these other guys? Some of you are saying, well I'm already selling outdoor appliances and/or grills. I sell some during the summer, but it's just too seasonal to get serious about. Many of you are saying that I just don't have the display space to commit to a new category. Outdoor living is a big category. Nearly $10B worth of grills, outdoor furniture, appliances, heating/cooling and audio video products are sold each year. It's growing at high single digits every year. However, it's not just about the size and growth rates. You should be attracted by all of the parallel benefits to what independent retailers are best at executing. Benefits like: strong gross margins, add-on accessory sales, ability to sell a richer mix, bundling of products/categories... and most importantly, you have pre-disposed consumers walking in your store every day to talk about their interior appliance, furniture or consumer electronic solutions. Let's break down each of those areas. • Strong gross margins—We hear all the time how appliance gross margins continue to shrink. How about a category like Grills, where you'll average 30%+? And when properly merchandised, grill accessory sales should generate 45%+ gross margin and represent 20%+ of your overall outdoor cooking revenue. • Richer mix—A recap of Nationwide members selling outdoor products found average sales prices (ASP's) on grills at double the industry norm. • Bundling—Nobody bundles interior kitchen appliances better than you!! What if you took that expertise to the outdoor kitchen/ living area? • Predisposed Consumers—This is probably the most important adjacency between outdoor living and independent retailers. You sell more built-in products and remodeled kitchen packages than any other channel of distribution. Consumers come to your store because they want to get honest, in-depth product knowledge on products that best meet their needs. Their desire to have a great place to host friends and families has and will continue to be the kitchen. However, the new entertainment venue is outdoors. No matter what the generation, people love to entertain and take great pride in their outdoor space. While Baby Boomers and GenX consumers will continue to be strong investors in this category, Millennials are also very interested in outdoor living. As cited in a recent Krystina Gustafson published by CNBC, "Near the top of millennials' wish lists are smart, energy-efficient homes with an inspiring outdoor space….". More to come on the consumer. For now, let's get back to your 2017 game plan. What's your 2017 business plan resolution? Are you considering new categories? Are there non-performing SKU's that could/should be eliminated? Have you done a GMROI (gross margin return on investment) evaluation of your existing categories/models to help make that determination? Are you maximizing all of your real estate? Have you considered extending your display outside to the front entry way or covered area adjacent to your building? Will you make time to dream about what's possible? Could your business become the Outdoor Living destination? Inclement weather will soon give way to spring. Make your resolution today!! John Laing Appliance Trends John Laing—Director of Business Development, Nationwide Marketing Group RO WHY OUTDOOR LIVING... WHY NOW?

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