It's no longer about the price

September 2, 2008
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Stone fabricators can gain an edge in the marketplace by offering stone cabinetry for customers.


The concept for this article began with a sales call to a well-qualified client. We had done the granite in his neighbor’s house and came highly recommended. I had made two trips to the client’s house and had everything ironed out. He also wanted to replace his cabinets, and I recommended several of the cabinet shops that we work closely with. He assured me that after he had nailed down his cabinet situation the next week, he would go forward with the granite order. I considered it a done deal.
 
When I called him several days later to follow up, he was very apologetic and embarrassed and informed me that he had already placed a deposit with someone else. He stated that he was happy with us and that our price was within 50 dollars of the other company. But, since he was buying cabinets from the other company in addition to the granite, they were able to give him a package price he could not refuse. I thanked him for considering us and hung up the phone, and then it hit me. We pride ourselves in offering the best quality around. We guarantee seams that cannot be felt and under-polish all overhangs, and if it isn’t right, we tear it out. Our prices are very competitive as well. So why did we lose the job? It was not because of the price or the quality; it was because we do not offer cabinets directly. I realized that it is now more about the “how” than the “how much.” It seems the industry has finished its “race to the bottom.” Most markets are there; some will follow soon enough.
 
Business in general in the U.S. is moving at the speed of light. What worked yesterday may not work today, and tomorrow will certainly hold something new. Consumers seem to almost be bored with their purchases and just want something new, no matter how vain or ridiculous it may be. Business ideas and consumer needs are almost in a fluid environment. Companies that fail to react fall to the side, while breakout companies rocket to the top quickly. Many household company names that were world leaders 10 years ago no longer exist. It is also hard to determine the best way to brand and advertise. Every time I get a new soft drink or toothpaste, it has a new label. They are just changing them to stay new.


Product expansion

Stone shops, of course, are no exception. Soon enough, dusty disorganized medium- and large-sized shops will have difficulty luring customers if they fail to react. 

In the Tampa market, kitchen and bath stores are popping up everywhere. Many are granite shops that now offer cabinets and lavatory fixtures. Some have tile as well, while still others offer the whole enchilada.

Most such kitchen and bath stores just subcontract out their stonework. A few of these companies are very well run and offer very attractive showrooms that rival the Big Boxes. I assume at this point that the Big Box stores are for the most part steering clear of this new phenomenon, as they do not want to compete with themselves. Satellite granite showrooms are also a large industry trend. Many granite shops are opening sales offices in mall kiosks and strip shopping centers, and they are utilizing outside sales agents to increase their reach and visibility. There are also granite franchises being offered across the country.

Moreover, the customer now has more choices other than granite and marble. Offering quartz, granite, marble and soapstone is now almost a requirement. Try to look forward at diversifying your offerings as best as you can and increasing your reach into more lucrative markets.

Outside of stone materials, we are now offering a pretty good line of prefabricated breakdown cabinets. We sell the cabinets and subcontract the installations.

Quality of service is paramount in all industries, and this goes beyond the stone materials. You now need to offer a quality finish as well as a quality buying experience. Not having a showroom - or one that is not professional - will certainly become more important as time goes on. I have heard talk of “digital showrooms” and large flat screen monitors to enhance the buying experience. The industry is maturing, and your shop will have to mature with it. Turnaround times will also be increasingly important.

Controlling costs is yet another thing we are confronted with. Because we have hit bottom in most markets, there is very little room to raise or lower prices. A microwave oven is now $100 and will not likely go lower, but I can remember when they were $1,500 and up. Thus is the case with granite. You can charge a reasonable amount for quality service, but there are limitations to that. Therefore, we must now focus on our costs and keep them in line. Large stone plants continue to be funded by deep pockets. Their cost of production can be very low, and thus yours must be as well. The cost of labor and insurance increases every single day, and that trend is expected to continue. It is difficult, if not impossible, to compete as a manual shop in some markets.

Luckily, there are also new machines on the horizon that will offer freedom to the small- and medium-sized shops, and they offer fabrication costs and digital capability close to that of the large “super shops.” This technology is a 100% digital cutting and profiling center that can produce a slab’s worth of parts to full polish in a couple of hours. It will also significantly reduce material handling, which is a large part of what we do.

Software is also being improved rapidly. Now it is possible to select a slab digitally and show the customer a dynamic rendering that includes edges, cutouts and grain patterns exactly as it will appear in their house. No more tripping out in the remnant yard looking for that special piece that is 1 inch too short. It is also good if you are operating a remote sales center where you do not stock the material. Digital images can be displayed, and customers can choose their slabs from 100 miles away.

I am glad that we are finally in a position where it is no longer about the price. Most shops around here have already gone as low as they can go in terms of price.

The market jeer is at the bottom. Fortunately, those that can run a business and offer a quality service and diverse product line while controlling costs will succeed, and those who cannot will fail. It’s time to sharpen your pencil and keep your finger on the button at all times. Keep your business fresh and new, your costs where they need to be and, as always, your quality near the top.

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