Behind the Counter: Managing Decorative Concrete Inventory

The market has discovered decorative concrete in a big way. The days are gone when contractors and DIYers had to hunt down that one place in their region where concrete countertops or acid stain systems could be found.

Michael Harrington, manager of product development and technical services at Cleveland-based construction products distributor The Chas. E. Phipps Co., sounds a bit nostalgic when he talks about the old days. "Initially, we drove the market," he says. "But now the customers drive it. The market has broadened. Outlets have exploded and fractured the old distribution avenues. We have to work hard to stay ahead."

Cost, convenience, sustainability
One way Harrington and others stay ahead is through savvy inventory control. Carrying the right mix of product lines and stock can help today's decorative concrete retailer keep costs low and margins as high as possible.

Gary Weisman, sales manager of Extech Building Materials, with four showrooms in New Jersey and the greater New York metropolitan area, offers an easy set of guidelines underlying the decisions his company makes in stocking up: "Recognition in the marketplace, quality, the competitive situation - for instance, lines with limited distribution but large demand - and cost."

Concrete Design Center, in suburban Dallas, maintains cost control through strategic ordering and shipping, says Zach Ellis, the company's assistant manager. "Artcrete is our main line. It's a quality brand, and we also like the one-day shipping."

Ellis says that vendors such as Stegmeier Corp., a supplier of decorative concrete forms, offer the profit-enhancing advantage of being in the same metropolitan area. "We can avoid shipping charges altogether by sending out a truck and picking up our orders right on their dock."

In addition to the cost savings, getting inventory from the source has the added advantage of maximizing working capital through the just-in-time purchase of only the products most needed, when needed most.

Vendor proximity is also a concern for Mike Murray of Murray Decorative Concrete Supply Inc., but the reasons go deeper than cost and convenience. The Shawnee, Kan., retailer is eco-conscious. In addition to carrying product lines compatible with LEED and green building standards, he makes it a point to contain his company's carbon footprint as much as possible.

"We do business with local suppliers, such as SpecChem, wherever we can," he says. "When we must order from out of town, we keep it to a 500-mile radius. Miracote and TK Products are in Minneapolis, 480 miles away. That pretty much represents our outer reaches. In addition to doing our part to protect the environment, that decision helps keep us competitive on cost."

Green thinking also comes into play when he stocks his shelves with materials used often in Kansas, such as sealers. "We're home to one of the harshest freeze-thaw cycles in the United States, and porous concrete is very vulnerable to that," he notes. As a result, his customers buy a lot of sealer. "That's why we're very selective on (choosing low-VOC and LEED-compliant) sealers. We're looking out for the environment."

Cost consciousness in inventory management means reducing waste in all ways possible, without unduly affecting consumer choice. Maintain close geographic ties to vendors and you can afford to run lean without compromising customer relationships.

Shelf care
Respect for product shelf life is another factor of successful inventory cost control. Know those expiration dates and save money.

"It's a pretty good rule of thumb," says Murray, "that if it's in a bucket you'll get two to three years' shelf life. If it's in a bag, it's generally good for about six months."

He tracks critical use-by dates by Excel spreadsheet. "We know when products are nearing their expiration dates, and that's when we discount them." While he occasionally has to toss old stock, it's a pretty minimal amount, he says. "We throw away less than $2,000 worth of inventory a year against 2 million dollars in annual sales."

Weisman's story is similar. Extech invested a year and a half ago in "a very sophisticated (inventory control software) technology that's helped reduce our throwaway costs to practically nothing," he says.

Showrooms designed to sell
Smart retailers appreciate the difference that aesthetics can make in moving inventory. That's why they try to make even the most utilitarian warehouse showroom space more inviting - and have the sense to do so by putting to good use the very decorative products they bring to market.

For instance, Ellis of Concrete Design Center admits that, with pallet racking along one wall, its high ceilings and wide-open space, his location is "more of a warehouse" than a glitzy showroom. But the company has parceled out and remodeled nine separate areas of the floor. Each roughly 8-by-10 section showcases stenciling, acid staining or another technique. The physical display helps generate questions and motivate buyers.

Harrington of Chas. E. Phipps says that his company has taken a similar approach at its warehouse showroom in Cleveland. "Around the perimeter of the building we've stamped the concrete. Inside, in the middle of the floor where we give demonstrations in polishing, staining and densifying, the training areas stay up when we're done. People can walk on it and see for themselves a broad spectrum of what we carry and what they can get out of it."

Counter intelligence
Finally, successful retailers confront ever-changing marketplace conditions by strategically controlling costs even while staying responsive to customer demand. But the response to that demand isn't to blindly follow the "customer is always right" principle and continually add brands or product lines.

"In this day and age, it's a fight between trying out new stuff and tying up your money," says Weisman, in New Jersey. "We try to be as responsive as we can be, but it's not a loose decision. First we'll find out if we already have a comparable product and then we'll see if the customer's brand request is more a matter of force of habit."

A brief education campaign, says Weisman, can sometimes change minds and effect switches in brand loyalty.

He says that he also relies on "counter intelligence," the buzz picked up by his people who are in the most direct contact with customers. This, he feels, is the best way of gauging what's exciting the market.

Murray, in Kansas City, also listens to customer input, but that's only the first step in introducing a new product or line in his showroom. "We'll test for performance failure for up to a year before we put it on our shelves," he says.

Your product offering might not vary all that much from that of your competitors, but your displays and in-store merchandising can draw customers by looking a lot sharper. That's the takeaway when stocking your store for success - think about what your customers will gain from the cost-effective decisions you make.