After years of intense competition from Home Depot and other big-box retailers, residential lighting showrooms are banding together in an innovative co-op to pool their purchasing power and learn how to run their businesses more profitably.
The three-year-old Lighting One now has 75 members, but hopes to grow to about 500 members in the next four to five years, said Jeff Carmichael, president and founder of the Atlanta-based lighting co-op.
Along with volume-based discounts from manufacturers, the co-op organization provides lighting showrooms with assistance in advertising and marketing; private branding of lighting products; a comprehensive schedule of training programs; and national contracts covering workmen's compensation, health insurance, waste management and credit cards. Lighting One is a sister company to Carpet One, an organization that provides similar products and services to more than 1,000 flooring stores nationwide.
“We exist for the independent lighting showroom,” said Carmichael. “Our goal is to create a level playing field so our members can succeed in the face of competition from ‘big box’ stores. Our products and services are geared to provide our members with a complete package that meets their needs.”
Carmichael said while Lighting One is aggressively looking for new members, the co-op does not take start-ups. It screens potential members with certain criteria, including sales volume and credit worthiness.
“If we decide it's a good fit, they're invited to become members,” he added. “Our potential members may be the largest or they may be the No. 2 lighting showroom in their market. We're looking for members who have vision and a desire to grow and improve their profits.”
In addition to leveraging its strength when purchasing lighting products for its members, Carmichael said Lighting One helps out with marketing because of the size of the organization.
“Combined with what Carpet One does for its members, we're able to print circulars and direct-mail pieces internally at tremendous costs savings,” he said. “Together our two organizations have more than 2,000 stores and we print more than 10 million circulars a month.”
Although Lighting One utilizes Carpet One's resources in some areas, its training is geared specifically to the educational needs of lighting showrooms.
While similarities exist between his organization for lighting showrooms and marketing groups that serve electrical distributors, Carmichael said Lighting One's role is unique.
“The marketing groups that electrical distributors belong to primarily focus on repeat customers. Our focus is on selling directly to the end user and homebuilder,” he said. “Lighting One advertises to those customers and develops traffic for our showroom members.”
Harry Clark, manager of The House of Lights, a lighting showroom in Scarborough, Maine, said his company joined Lighting One as “a means of survival,” and that he has been a member of the co-op since its inception. The House of Lights showroom caters to the residential, retail and building trade and last year did business of $2.6 million.
“We are one of the 11 original members of the group,” said Clark. “It's the products and services offered by the organization that levels the playing field and allows us to stay competitive. For instance, any type of promotional effort that would include printed pieces and direct mail would be too costly for us. By working with Lighting One and their staff of more than 300, we're able to get the job done.”
Clark added that in the area of training, the organization would offer off-site and online training for the showroom's employees. “We would never be able to afford that on our own,” he said.
Much of the training is conducted at the organization's biannual meetings, which take place during the residential lighting industry's major lighting shows in Dallas. During the last such meeting, 12 seminars on marketing, finance and sales were offered.
Marilyn Schulman, president of Bay Shore Lighting and Electrical Supply, Bay Shore, N.Y., and a charter member of Lighting One, said the co-op is much more than a buying group. “We're looking for help with marketing and training. What we've received thus far has revolutionized our business,” she said.
As a testament to the organization's training efforts, Schulman said a two-day training session that she attended in Chicago that happened to begin on September 11 had a major impact on her company.
“How they were able to put on a session that held our attention after what happened in New York is beyond me,” she said. “But that's exactly what they did. They provided us with so much innovative marketing information that it transformed my business.”