Springfield Electric Supply was merchandising long before it became an industry buzzword. Now it's merely perfecting the skills of the game.
Unlike many electrical distributors, merchandising wasn't something Springfield Electric Supply Co. started in reaction to the big-box home and hardware centers that began to carry electrical products. Bill Schnirring, company chairman and chief executive officer says it was just part of the natural evolution of the Springfield, Ill.,-based company.
The company was founded in 1932 when Schnirring's father purchased a contractor business that quickly evolved into an electrical wholesaling distributorship. In those 66 years, the company has grown from one location in Springfield to 12 scattered throughout central Illinois and northward to the Wisconsin state line. Schnirring says they have been able to grow by seeking customers from across a broad spectrum of businesses. The market varies from city to city in Illinois, so they go after the markets available in each of their areas. Those markets have turned out to be a broad mix of industrial, commercial and residential business, as well as some government, institutional and medical accounts. The company also has datacom and industrial automation divisions at several branches, and even that business is evenly split. Schnirring says the datacom business comes mostly from the contractor/construction customers and automation falls on the industrial side.
"We're working real hard to achieve a balance company-wide between industrial business and the contractor-construction business," says Schnirring. Because a large portion of its business has historically come from contractors, Springfield Electric Supply's counters have always seen a lot of traffic. He doesn't believe recent merchandising efforts are a significant change in the way they do business. "I would hesitate to say that we emphasize merchandising more than other types of marketing efforts," he says. "In the big picture, we really emphasize education, technology and marketing. Merchandising is just a subset of that whole marketing effort."
Be that as it may, if you visit the company's new 30,000-sq-ft Peoria facility that boasts a 2,500-sq-ft counter area, you'll be hard pressed to consider the company's merchandizing efforts a subset of anything. The entire building is a merchandising machine. Every office, every area of the warehouse, every hallway serves to display some product the company sells. The offices and warehouse have different kinds of lighting in different applications. There are louvered overhead fixtures, cans, accent lights--even various types of emergency and warehouse lighting are displayed in actual applications. There are occupancy sensors and dimming systems installed throughout the building. The company sells all of the datacom equipment installed at this branch. The same goes for the control and distribution equipment, transient voltage surge protectors, UPS systems, and computerized power logic systems. Different products are shown in different applications throughout the inside, as well as the outside, of the entire building.
"This is a selling business," Harry Honings, the Peoria-branch manager, says of Springfield Electric Supply and its extended merchandising area. "If you look at any environment out there, whether it's street lighting, buildings, homes--anything that needs electrical equipment--this business serves it. If you look at our markets, which are about 50% industrial and 50% commercial, and you look in this building, it's stuff that our customers use. So we decided we ought to get some products up for everybody to see."
And there is plenty to see.
When you walk through the automatic sliding doors of the counter area, you'll get the impression that you've just entered a well-organized, well-stocked retail hardware store. It's bright, spacious and invites you to shop. The counter itself stretches across about three-quarters of the back wall, and behind it customers can see rows of warehouse stock, as neat andorganized as the merchandising area itself. Close by the front entrance is a smaller counter where customers can grab a cup of coffee. Not from the ubiquitous little, round coffee pot seen in every business in the free world, but rather from one of 10 vacuum-pump thermal pots--the kind specialty coffee houses use to keep coffee fresh and hot all day. Honings admits the pots seem fancy, but the purpose was to cut down on the number of times each day the counter people had to stop what they were doing to go make coffee. Kitchen duties have been reduced to about twice or three times a day, down from the usual 20, so service at the counter is improved ..
Service is the watchword at this distributorship. Schnirring says he believes the commercial and residential contractors who make up a large percentage of the company's walk-in business come to Springfield Electric because of the people who work there, because of the service they receive. He says any merchandising efforts are strictly to make the most of counter traffic already coming into the stores.
Mike Barker, company president, agrees that having better qualified, better trained and more knowledgeable people is still the reason, above anything else, that people come to Springfield Electric Supply, even when they could get similar products from one of the big home centers.
"Distribution, in general, used to spend a lot of time bemoaning the fact that the mass merchants, or alternate channels, whatever you want to call them, had electrical products to sell," he says. "We did everything we could to label them in a way that made them seem like if we wished hard enough, they would go away." But he says that a few years ago, Springfield Electric changed its outlook on them. "We decided these are people in business who compete with us and will continue to compete with us, and let's get over it," he says. "Don't get me wrong. Just like with any strong competitor, we will sit down with manufacturers and try to make it a level playing field to compete with them. We decided to concentrate on the business strategies that make our customers come to us in the first place."
First and foremost, Barker says management has continued to focus on having better selected, better trained and more experienced employees because those associates are the ones who service the customers--the ones on the front lines. They also have worked to broaden the company's product offering, and everyone has paid extraordinarily careful and close attention to customers' needs. This focus on the needs of customers led to incorporating many of the features in the final design of the new Peoria branch. Randy Germeraad, senior vice president of operations, says one of the most helpful things about the Peoria project was that the staff in that facility really understood what the customers needed and what they needed to do the best job possible. Plus, he says, everyone looked at the branch designs they'd done in the past. This branch is the fifth new facility with a major counter area redesign. "We've done enough of these buildings to know what little changes we needed to make, like the size of the counter space," says Germeraad. "The overriding feeling was that we needed to grow that space, especially in a branch the size of Peoria."
Future counter area designs and any redesigns of counter areas in existing branches will be on the same order as the Peoria branch, according to Germeraad, and the management team is working up a plan for those future designs. Over the years, they've learned that you need a master plan, as well as a master in charge of it. Germeraad says they always wanted to put more emphasis on merchandising, "but until we put someone in charge of it for the whole company, it just didn't seem to move as far," he says. "You'd find a champion at one location, and they would do great. But then in another location, it wasn't enough of a prime interest to the person."
There has to be a focal point because there are so many different duties involved with marketing, explains Jennifer Bryden, marketingcommunications coordinator. "You need one person being ultimately responsible for the merchandising efforts," she says. "When you try to give those responsibilities to people in other departments, they've got their own duties and their own focus, so it's hard for them to give merchandising the attention it needs. Previously, Bryden says it was left to the branches to do whatever they wanted with the counter area, which often meant the more aggressive sales rep ended up with more counter merchandising space for his manufacturer than he actually needed. "Now, we work closely with the branches to develop a master plan that fits the uniqueness and size of the individual branches and the markets they serve," says Bryden.
Creating a master plan has solved one of the company's biggest merchandising challenges. Regular rotation of all the displays allows the staff to be fair to all vendors, giving each vendor his turn in the spotlight. Additionally, moving the products around, facilitated by casters on the bottoms of the merchandisers and gondolas, gives the merchandising area a fresh new look on a regular basis to help recapture the attention of repeat customers. Bryden says most of the vendors agree with what they're doing now. They see the importance of it and understand that sometimes their display will be the first thing the customer sees when he walks in and other times it will be in the back.
Merchandising has helped the company broaden their product offering. They've even used merchandising to introduce new products, such as when the company got involved in datacom. "We put our datacom products out front (in the counter area) in a merchandise fashion just to plant seeds in the customer's minds that we have those products," says Barker. "Not necessarily because customers would select those products off of a merchandiser, but to make sure they realize we have all the products they need, to make datacom technicians think of us." Putting product in front of the customer to make him think is a tactic that has proved effective in the counter area. In the Peoria branch, instead of arranging product by vendor, as is the usual case, they have arranged products in the order or way a contractor would do a job from start to the finish. Bob Nickerson was Peoria branch manager at the time construction on the new facility began. Recently promoted to vice president of marketing, he says that if you study merchandising, you'll find the key word is functional. For instance, if a contractor is interested in pulling wire, all the key, or functional, products that he utilizes to pull wire ought to be in the same grouping.
"A contractor might need lube for a wire pull he's about to do," Nickerson explains. "So he goes to the lube, but he notices a brand new stainless steel fish tape. Then he thinks, 'Man, this fish tape will probably work better for me on this pull.' So you end up selling a group of products related to that particular project he was going to do."
Nickerson advises trying to get as much of the functional products together in one area as possible, so that when a customer is getting ready to do a job or is already working on one, if he needs to buy one thing, he may end up buying a couple more for that project. "If you have the wire lube in one place and fish tape in another place, you might not have sold fish tape that time," he says. "You try to keep them in a functional grouping as much as possible."
Grouping product by job is another way to save the customer time, too. "Remember that you've got people coming into your counter area that may or may not have time to shop," Nickerson says. "Incorporate the ability to add speed to your service along with your merchandising capabilities." This includes not interrupting the flow of the traffic with all the displays. "They tell you to make customers walk by your displays, but don't forget that electricians or owners may not want their employees, who maybe are paid by the hour, delayed in a counter area," he adds.
The owners of the companies, the ones who pay the salaries, are certainly interested in doing business with distributors that will get their people in and out. Ron Wanless, senior vice president of contractor sales, says he doesn't think they're competing with the owners by creating an atmosphere where contractors want to shop. "We also kind of want them in and out," he says. "But while they are here, while we're getting their order picked or cutting their wire or whatever they want us to do, then certainly we hope that they walk around or are observing what we have in our counter area."
Wanless says they have doughnuts in the morning, popcorn in the afternoon, sometimes lower prices on sodas, and a commercial ice maker so contractors can fill up their coolers with free ice--"so when customers have a choice of where they're going to go to pick up merchandise, they'll choose to come to us." They've also used co-op funds to purchase 10 ice chests that they have loaded with ice and ready to go when the store opens during the hot summer months. The first 10 contractors that show up at the counter each morning can take one of the coolers filled with extra ice for the day, then drop it back off in the evening. Wanless explains that's it's all part of trying to draw people into their company by reacting and responding more quickly to their needs than anyone else in town. Even if they just need ice.
"Put yourself in the customer's position," says Nickerson, explaining what led to the canopy that extends across the front of the building. "I hated loading conduit in the rain and the snow," he says. "The canopy was just another way of saying, 'Hey, come on over to Springfield Electric and get your stuff.'"
In designing the new branch, ideas and advice for the new facility were sought from high and low. Customers were canvassed, and CEO Schnirring spoke with associates from other Springfield Electric branches. They read trade magazines and newsletters. They talked to vendors. Anyone who attended distributor meetings or conferences talked to other distributors and visited their facilities. "That's what's nice about our industry," says Nickerson. "People aren't afraid to share ideas about what works and what doesn't work."
Nickerson, who has a degree in marketing and as branch manager headed up the Peoria project, was especially interested in seeing that the counter/merchandising area had optimum efficiency. He paid careful attention to traffic flow in and around the counter area at the old Peoria facility. He realized that the counter people, who are highly trained and knowledgeable on the products Springfield Electric sells, were spending a good part of their day shuffling will-call items. Nickerson took a different look at this and decided will-call was really closer in its function to shipping and receiving.
In the new branch, a corner of the warehouse extending alongside the counter area is arranged as a combination shipping, receiving and will-call area. Walk-in customers get to the will call area through an entrance located in the counter area. An interesting feature is that Springfield Electric Supply has created the capability for a future "drive thru" will call. Drivers will be able to enter the warehouse from the front, stop along the will call area where an associate will walk up to the vehicle, ask what order the driver is there for, retrieve it and hand it over. Drivers then will be able to continue on around to the left and out a side exit door.
Another element that creates counter-area efficiency is the new phone system.When a call comes in, a switchboard operator picks it up. Sounds old-fashioned, but Nickerson says they refuse to have an automated attendant on their phone system. "I would venture to guess the counter gets 60% of the calls," says Nickerson. "The last thing a customer wants, driving around with a cell phone and trying to place an order on will call, is to be put on hold." Instead of being transferred to the counter, the operator transfers the call to what Nickerson calls a "counter hunt group" that includes the three desk phones manned by experienced counterpeople. Plus all counter people have portable phones that tie into the system. Even if they are out in the warehouse, they can pick up a call because they each have a phone on their belt.
If a call isn't picked up on the third ring, the assumption is that everyone is busy, either waiting on customers or at lunch. After the third ring, the system automatically adds a second "hunt group" that includes all the managers, all the inside sales people and even a couple of warehouse people who can pick up counter calls.
"We did a study, and 99% of our counter calls were answered within the fourth ring--they never are put on hold," he emphasizes. "And nobody in our building had better avoid a counter call, because they're generally calling in to place an order."
Nickerson says that by the time sales had increased to the point that they could justify the new building, the old facility was bursting at the seams. When it finally came time to start designing the new building, the owners and management came to him with their corporate expertise, he brought ideas that he had stored away and associates from the Peoria branch had stored away, and they all sat down and made a list. Schnirring made sure all the associates, from the truck drivers all the way up to the managers, participated in the process.
Germeraad remembers how excited the Peoria associates were about getting the new facility. "Where they were before, they were just sitting on top of each other," he says. "Their market had really grown, and it had grown due to them, so there was this pride in all the good things they had done, and the fact that the sales they generated allowed them to get a new facility. They wanted to carry it the next step and be part of the new facility design."
"That's good for all of us," he adds. "It's part of our quality process, to make sure there's accountability, and that people are being empowered."
Springfield Electric Supply Co. By the Numbers Sales: $90 million in 1997 Number of employees: 308 Year Established: 1929 Locations: Headquarters in Springfield, Ill.; other locations in Bloomington, Champaign, Danville, Decatur, East Peoria, Kewanee, Mt. Vernon, Mattoon, Moline, Peru, and Rockford. Company philosophy: To differentiate itself from the competition through well-trained, motivated people who deliver enhanced service levels and who are focused on improving the customers' bottom lines.