Mining The Retail Home-Kitchen Market
By Howard Riell, Contributing Editor -- Foodservice Equipment & Supplies, 2/1/2004
 Sales at Fein Brothers' 30,000-square-foot showroom benefit from both brisk foot traffic and strong word of mouth. |
Fein Brothers Inc., Milwaukee, Wis.
"Leveraging the Media"
Fein Brothers Inc. in Milwaukee is using a savvy combination of media, celebrity endorsements, word of mouth and networking to promote retail sales to consumers, which now stand at about 30% to 40% of the company's total revenue - on the way to 50%.
Sales of E&S to the general public are "growing every year," said Fein's Floor Sales Director Sandy Doran, who sees the retail part of the business rising to 50% before long. Selling to the public began in earnest at this dealership just a decade ago.
"There are an awful lot of people who are very much into cooking at home," noted Doran. "They find they can get the same heavy-grade aluminum pans used in restaurants for under $20. We have everything from very low-end products for people just starting out all the way up to $100 sautŽ pans."
This dealer's 30,000-square-foot showroom (Fein also has another 30,000-square-feet in warehouse space) has always drawn good foot traffic, and the 75-year-old company enjoys strong word of mouth.
"We are still first and foremost a restaurant supply house, but the extra cash doesn't hurt," Doran noted. Consumers increasingly "want professional-grade equipment. They're tired of working with aluminum pieces that burn and scorch."
Fein's big upturn in consumer retail sales is also in part attributable to television. Noted Milwaukee chef/restaurateur Sandy D'Amato does a segment on a local weekend cooking and restaurant review show called "Always In Good Taste" with Willard Romantini in which he talks about products and recipes. Fein Brothers advertises on the show.
"When D'Amato shows something on his segment we often sell out of it," said Doran. "Several years ago, he had shown silicone baking mats, which go down on sheet pans in place of parchment and can be reused 500 times. They start at under $19. In two days after that broadcast, our stock of that item was wiped out."
Other popular cooking shows help, as well. Said Doran, "People will see Alton Brown [the host of the Food Network's show "Good Eats"] using something and come in and say, 'That is what I want.'"
Fein's showroom has been set up to promote product merchandising. The makers of one cookware line provide large, colored signs bearing brief descriptions of items. Most of the consumer buying here is done one on one with any of the five showroom employees on duty at a given time.
The far-and-away top sellers to consumers, according to Doran, are heavy-grade aluminum and stainless-steel pots and pans. She added that consumers "want pots and pans that last." Fein Brothers does not sell heavy equipment to retail customers. "Those products are not coded for use at home. In Wisconsin, we have very definite codes."
Blenders and food processors also sell well to consumers, she reported. "We have people who come in and buy professional drink blenders, which sell for a little under $400, and don't blink at the price. A typical retail customer could be a family with three or four teenagers that is tired of burning out what they bought in a department store."
Fein Brothers also started offering gift baskets to retail customers three years ago. Ranging in price from $20 to $200, they can contain anything from pizza prep tools such as a dough cutter, knife, rolling pin, cheese shaker and more (for $100) to a soup pot filled with "all sorts of gadgets" for $200.
Management at Fein Brothers is "always pushing around different ideas" about how to build retail sales, Doran added. The company has partnered with a couple of cooking classes in the area, offering student discounts. Coupons are also being placed in programs throughout Milwaukee's theater district.
 S.S. Kemp & Co. merchandises its showroom similarly to department store giants like Hecht's and Macy's. |
S.S. Kemp & Co., Cleveland, Ohio
"We can do it, we do do it and, generally, we're successful at it."
S.S. Kemp & Co. in Cleveland is very definitely in the business of selling restaurant-grade equipment and supplies to ordinary consumers. Said Showroom Manager and Customer Service Supervisor Anne Ladd, "We can do it, we do do it and, generally, we're successful at it."
Though a "very small" piece of the business, Ladd noted, retail sales remain a stable and growing revenue stream. Kemp & Co. traditionally presents eight promotional events - a pair of theme-driven culinary demonstrations per month from September to December featuring local chefs - designed to bring consumers into the store to examine the wares. "We started in 1995 and it has just grown," Ladd advised.
The year just passed, however, was the first in which the firm "did not actively pursue the retail market," according to Ladd. "That's because we did a huge commercial event, an American Culinary Federation competition, that took most of our energy and time." What tells Ladd that retail sales business remains stable is that a great many consumers came in anyway. The events aimed at these customers will likely return this year, she added.
Kemp organizes its showroom presentation much as does a department store such as Hecht's or Macy's, said Ladd, with gondola fixtures and departments for each of the various lines, including china, silver and glass. Indeed, these items are merchandised according to department store "plan-o-grams."
Popular items among Kemp's consumers include small appliances like high-end food processors. "We specifically look at crossover pieces such as some manufacturers' processors because they're not just for consumers. Some chefs also have a real use in their kitchens for smaller appliances," she said. Hoods are another popular line with Kemp's retail customers.
The challenge when members of the public want to buy a piece of commercial equipment such as a refrigerator for their homes, according to Ladd, is "acclimating them to how commercial appliances work. They're not like the refrigerators they have at home. People look at you like, 'Well, you just don't want to sell [a professional-grade product] to me?' No, that's not it. I want them to be informed so that when they see an increase in the electrical consumption or they wonder why their basement is so hot or a product doesn't hold temperature, they understand the reasons. That way, consumers are basically forewarned, because they will have to pay for service calls."
Refrigeration is the least complicated piece of large equipment to sell, Ladd noted, "because it doesn't require flame or heat. You plug it in and it either works or it doesn't. When you get into ranges, you're talking about a hard wire of at least 208 or 240 volts just to get enough heat. In most homes you have 220 [volts], so that line has to be pulled and ranges and such have to be hard-wired in. They do not come with a 'pigtail' [cord and plug] on them. If you're talking gas then, once again, you've got to get a plumber involved because the gas outlets and inlets in a home are different than what you have in a commercially zoned building for foodservice." Kemp delivers and sets equipment in place for retail customers, but does not install.
At all times, however, Ladd and company remain clearly focused on who pays the bills. "We're not Diller's," she noted. We are a commercial distributor of foodservice equipment and supplies. You can see the pained look when a commercial customer comes in to pick up an order and you've got a showroom full of consumers. That's why we can only [open the showroom to consumers] on certain days at certain times, when I'm pretty sure we won't have any commercial people coming in here."
 Lippert's test kitchen, built for commercial use, has proven a great help in luring retail customers via TV ads. |
Lippert Inc.,
South Holland, Ill.
"Open to the Public for Decades"
South Holland, Ill.-based Lippert Inc.'s history of selling to the general public goes back decades - before, in fact, its current president first came in to help the family-owned concern as a child.
"We have been open to the public for a long time, since way before my time," said President David Wax. "Ours is a family business and, by the time I came into it when I was about 13, we'd been doing business with the public for years."
Wax said he views retail sales as a different sort of a business activity, but only "up to a point. We've always been a commercial equipment and supplies distribution company, and where we sell retail is where there's an overlap. That means that we rarely bring products in specifically for the retail trade. Is that market a different animal? A little bit."
The company has been operating out of its Chicagoland main branch for most of its 70-year history. When it opened its second location, in Peoria, Wax recalled, "We figured we'd do the same thing - just kind of sit back and watch people come in. Well, it didn't happen like that."
To help spur consumer traffic, the company started presenting cooking classes about six months ago. During those classes, a test kitchen originally built for commercial use takes center stage as eager students and potential retail customers crowd in to learn the secrets of the professionals.
"We've always had a showroom, and it's always been mixed use," said Wax. In both of its display areas, Lippert exhibits the "vast majority" of its products the same way. "As far as selecting a product category or something like that to showcase," he related, "we've got it all out there, so we've never really had to make that decision." Glassware, cutlery, pots and pans are all popular categories with consumers.
Lippert also reaches out to consumers through a more direct means: advertising, primarily in local newspapers. It also pays for some television spots over the holidays, featuring both its products and cooking classes. Said Wax, "I'm not sure how effective our TV ads have been. But the newspaper ads have been very, very effective in promoting our classes and showroom."
Wax does not believe consumers need any extra instruction on the equipment itself, and noted, "You have to educate pretty much everybody along those lines. As far as heavy equipment is concerned, we sell very little of it to the retail market. We do sell consumers refrigeration units every now and again, but when they get involved in cooking equipment, for example, the expectations of consumers are far, far different than those of the commercial customers. When you're selling cooking equipment you have to be aware of many of the safety issues that, as full-service dealers, we take for granted."
The fact that an oven or range, for instance, may contain a different amount of insulation than traditional consumer models is "very important when you're putting it into somebody's home," said Wax. "They need something that is properly insulated. They also need to have exact clearances around some pieces of equipment and many consumers don't understand that."
In addition, he pointed out, retail buyers need to know that "delivery charges and things like that are typically significantly higher when a product is going into a home as opposed to being installed in the back of a restaurant."
Before Christmas, Lippert staged a live cooking demonstration on a Peoria-based morning TV show. "We had a local chef preparing a holiday menu," Wax recalled. "One of the show's anchors was live with five segments totaling about 20 minutes in different areas of our showroom. That publicity generated 40 new visits on day one."
 About 30,000 cars per day pass Peerless' showroom, which notched $150,000 in retail sales last year. |
Peerless Restaurant Supplies, St.
Louis, Mo.
No Regrets"
Gary Leabman, president of Peerless Restaurant Supplies in St. Louis said his showroom "has had an 'Open to the Public' sign for years, and that's something about which I have no regrets." Leabman, an FE&S Young Lion in 1987, noted that consumers seem to like his direct, up-front approach. "We don't have a two-tiered pricing structure. The price we present to restaurateurs is the same price we offer retail customers. That makes all of our signs and price tags real simple. We try to conduct a transparent sale, no matter who is coming in.
"To the public we say, 'We're selling to you at the same price as your local restaurants,'" he continued. "To restaurateurs we say, 'If there's a line forming, the individual who is standing there with two tongs and a spoon has to wait.' We'll take care of operators first and get them back to work."
Leabman noted that he has watched Peerless' sales to consumers grow to over $150,000 a year. Margins are good, he added, as is the fact that selling to the public allows Peerless to clear out much of its unsold inventory.
Consumers, he said, have recently been "hauling stuff out at an unprecedented rate." Much of the merchandise they select comes from open cases of "things that just weren't selling by the case anymore, like martini, cordial, sherry and champagne glasses, and the old 5.5-oz Manhattan glasses. These are the glasses we can't sell by the case anymore as the cocktails they were designed to contain have become less popular. As a result, we broke them out and sold them by the piece and actually attained a higher profit margin."
This strategy, he added, has proven to be "a great way to get rid of our dead stock, and members of the general public have become our best customers. They took the stock the restaurateurs didn't want." Admittedly, the profit margin is "not a lot" higher, he pointed out, "but the point is we move the goods. We round things off to the nearest dollar and give shoppers a round number."
The main driver of consumer sales, Leabman maintained, is simply the Open to the Public sign on the outside of the building, since about 30,000 cars a day drive by his showroom. Nor is the selling proposition inside much more complicated.
"Once we put price tags on every item or on the shelves, retail sales really became seamless and easy," he asserted. "Before we did that, before we had the cash-and-carry program, it was more difficult." Advertising to consumers was tried about 15 years ago, Leabman recalled, "and it didn't work, so we gave it up. We'd get an occasional interesting item in and we'd put it in certain periodicals but we just didn't see any worthwhile results."
Peerless does business from 9 a.m. to 1 p.m. on Saturdays in November and December "partly to pick up that more active home-kitchen business at that time," said Leabman. It's a strategy that works: Approximately 25% of all annual retail sales come during those two months.
Top sellers include bar blenders, which Leabman called a "good item." In fact, he added, sales come "more from tabletop products than anything else. Other strong retail sellers include good-quality knives, strainers and stockpots. I should add that stainless-steel worktables under $200, of all things, have done quite well in our consumer market, as have, occasionally, butcher-block tables."
Leabman also sells a four-slice heavy-duty toaster every once in a while, "but that's more likely to be bought by a bed and breakfast operator than a typical consumer."
 Schweppe's tag line, "Everything for the Professional Kitchen," draws large numbers of professionals and home retail customers alike. |
Schweppe Inc., Lombard, Ill.
"Treating All Customers Equally"
Jeff Schweppe, president of Schweppe Inc. in Lombard, Ill., said that he's not sure that his showroom staff approach home-kitchen customers any differently than they do those in the trade - which is a good thing.
"We try not to differentiate them," he noted. "We try to treat them the same. Our tag line says, 'Everything for the Professional Kitchen.' We advertise that we're knowledgeable in the commercial foodservice supply and equipment area, and that many of the items we stock are not normally found in a retail situation because they're commercial-grade."
Thus, consumers know up front that Schweppe is a place to shop for items they're not likely to find at conventional retailers. The company was founded by Schweppe's grandfather back in 1932. Selling to the home market "probably started in the early 1960s," he recalled. Today, approximately one-third of this dealership's business comes from walk-in customers, though "a big portion of that is restaurant owners who come in and buy." Consumers purchasing for their homes account for an estimated 25% of total sales, he added.
Retail sales have grown along with the firm's contract and supply businesses, said Schweppe. The bulk of his home retail business comes from kitchenware and paper and janitorial supplies. There is no single employee in charge of retail sales at Schweppe. Rather, he explained, it is a team effort. "We have purchasing people who are also tied into selling the merchandise. We also have a store manager who handles the scheduling of the personnel and my brother, Randy, handles the training."
Marketing to consumers has become somewhat easier for Schweppe, given its history and reputation in the community. "Because we've been in the E&S business for so long, we've benefited a lot from word of mouth," he remarked. "When my grandfather and grandmother started out, we simply began by opening the doors, saying that we were open to the public."
As with most businesses that sell to consumers, location plays a role, as well. Said Schweppe, "The consumers want the convenience of being able to visit a store near an expressway or a main road."
Schweppe's showroom sits at what he termed a "very consumer-friendly" spot at the corner of a major state highway and interstate expressway.
Just as important to achieving success in the home-kitchen market, as well, is for dealers to remember at all times that they are addressing the buying public. "You've got to begin thinking like a retailer," said Schweppe. "You've got to put shelves up, you've got to mark prices on your products and you've got to price them competitively. You've also got to have cash registers and maybe a point-of-sale system to serve those customers.
"A lot of dealers in our business have the warehouse and inventory and trucks, that sort of thing," he continued. "However, you also have to have a storefront and the people to service those customers. And that's a commitment; quite a commitment."
Interestingly, Schweppe said he finds it easier to deal with the public at large than foodservice professionals. "Consumers tend not to negotiate prices like the commercial operators do, so they're not likely to pit you against your competitors. They come in, they have a need to fill, they're looking for a particular pot or pan or a gadget. When they find what they want, they look at the price and they buy it. That's a nice market to serve."
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