An NT tile retailer has increased its in-store sales conversion rate from about 30% to about 70% by changing the way tiles are sold.
| Entrepreneur |
Robert Sheppard |
| Company |
Rob Sheppard Tiling, trading as City Ceramics NT |
| Business type |
Ceramic tile retailer |
| Founded |
2002 |
| Employees |
11 |
| Head office |
Darwin, NT |
| Contact details |
+61 8 8984 4436 |
Key Learning Points |
|
Business expansion
Rob says: "If the market is right and your business is right, it's worth committing to the next level - so long as you've got the resources, the energy and the passion to invest ... and your bank is behind you."
Staff investment
The consultants who guide customers through the decision-making process are central to the success of the business. Rob has paid for five of his six tile design consultants to undertake tertiary studies in interior design and related fields; three have already graduated.
Customer focus
Understand your customer. Rob says: "When I started City Ceramics, I owned the biggest tile-fixing company in Darwin and consequently was the biggest tile buyer in town but I was treated like I didn't matter. My competitors made it easy for me. Never underestimate your customer. My customers don't really want the cheapest tiles; they want a fashion statement that would will enhance their home and reflect their good taste."
|
The City Ceramics Story
Here's what work-life balance was like back in the old days. When 21-year-old Rob Sheppard earned his tiler's trade ticket in 1977 he moved straight from Rockhampton to Darwin. Why? Because Rob wanted to spend half the year tiling and the other half surfing in Bali.
Fast forward to 1991 and Rob, now in his 30s, realised that it was time to take the work part of life more seriously. He cut his hair, shaved off his beard and began building a business. By 2001, his company - Rob Sheppard Tiling - was employing 50 tilers and that year it won the Telstra NT Small Business of the Year Award. But that was just the beginning of a shift to a whole new level of operations.
Rob had been dissatisfied with the service he was receiving as a high-volume tile buyer and in 2002 he decided to start his own tile retailing business. City Ceramics began operating from rented premises with four staff. It was a low-capital, low-risk outfit. But in 2008 Rob decided to do "the scariest thing I have ever done": to borrow money and build a $5-million, 5,000-square-metre retail showroom. It would be to Rob's design and reflect a new philosophy to selling tiles. He wanted to shift from retail based on massed "aisles of tiles" (sold as cheaply as possible) to a value-added service.
The Challenge
To move from being a debt-free, self-financing business with limited overheads into costly new premises, risking Rob's personal assets to get $2 million in finance. The loan and normal business overheads had to be serviced during the 14 months it took to complete the new premises.
The Solution
Faced with a market that was almost completely commoditised and driven by price cutting (mainly on cheap tiles from China), Rob's investment depended on creating a new paradigm for selling tiles in Darwin. To succeed, he needed to win a larger share of the Darwin home-renovation sector and gain access to the profitable high-rise construction market. And he needed to achieve these objectives at better profit margins than existing sellers.
Rob felt that existing tile retailers had turned tiles into a commodity product that was steadily losing ground to hard flooring, polished concrete and other contemporary floor coverings. He says: "I decided I was going to be in the fashion industry, not the tile-flogging industry."
The interesting part of Rob's plan is not the impressive new $5-million showroom but the operational thinking behind it. When he first started selling tiles, prospects would travel from retailer to retailer, picking up a few tile samples on the way and often making the buying decision at home. In the original City Ceramics premises, the in-store conversion rate was about 20-30 %. Rob's breakthrough came when he realised that if he could empower customers to make the buying decision in his store, he had a better chance of getting the sale.
Rob designed his new retail outlet to get away from the conventional aisles-of-tiles approach and focus on creating customer decision-making areas. In these hot sales zones, customers are offered a huge range of tiles, bench tops and accessories and advised by a trained design consultant. He sources a unique range of medium- and high-priced tiles from Europe, Indonesia and China and markets them as distinct brands, creating meaningful consumer choice.
The tiles-plus-expertise approach adds sufficient value to enable many more customers to make a purchase decision without leaving the showroom. The prospect conversion rate has climbed to 60-70% since the showroom opened, according to Rob.
On the second floor of City Ceramics' new store, Rob set up a Tile Library where trade customers - architects, designers and builders - could examine many different tiles and accessories with the help of a professional consultant. This innovation resulted in City Ceramics increasing its turnover by 40% thanks to winning more tiling contracts in Darwin's high-rise construction boom.
Rob is a keen sportsman in a sports-mad city - and he combines his passions with those of his home town. City Ceramics sponsors everything from basketball to AFL. It also responds generously to requests from schools for unwanted tiles for use by kids to make mosaics, making the business a true part of the community.
Sheppard has been closely aided by his twin sister, Sue Swindale, who is City Ceramics' general manger. They have the closeness of twins - they finish each other's sentences - and operate as if they were one person, able to both lead and implement change.
The Result
Between 2008 and 2010, City Ceramics increased its turnover by 40% a year; nationally, the tile and ceramic market declined in volume by 30% during this period, according to Rob.
City Ceramics has begun winning business beyond its established Darwin base. The company recently won a four-year, $15-million contract to supply and attach tiling for the federal government's Strategic Indigenous Housing and Infrastructure Program.
In 2010, City Ceramics won the MYOB Small Business Award and the Northern Territory Business of the Year at the Telstra Business Awards.