All Under One Roof

Item: Abt Electronics
Rating: 5
Author: Kimberly O.

Home Remodeling Retailers Flourish In Multi-Showroom Settings

By Joanne Cleaver
Posted: July 4, 2007

Delafield - Whatever glamour clings to the notion of home remodeling can wear off like cheap paint during the ensuing marathon of shopping for cabinets, tile, paint, wall coverings, appliances, and integrated digital music, video and security systems.

Bob Tobe doesn't like running around any more than the next person, and as president of Floor360, a Madison retailer and wholesaler of flooring, he was in a position to do something about it.

Four years ago, he opened the Design Mart in Verona, south of Madison, to house a collection of seven independent showrooms - a high-end mall for home remodeling retailers. Floor360 occupies one of the showrooms; the others house independent retailers with complementary home improvement fixtures and finishes, such as wall and window coverings.

Customers and designers liked the concept. Participating retailers saw sales jump - Floor360's own sales rose from $5 million in 2003 to $9.5 million the next year.

Now, Tobe is taking his showrooms on the road. The second Design Mart cost $3.5 million to build and opened last fall in Delafield. Tobe has plans for additional Design Marts in Wisconsin, northern Illinois and possibly elsewhere, aiming partly to expand Floor360 in mart settings and partly to diversify his real estate investments. Tobe expects Floor360's 2007 revenues to hit $17 million, with $2 million coming from the Delafield location.

"It's innovative to bring it to this market, bringing a regional approach to a local level," said Michelle Kowalski, manager of Kohler Store development for the Kohler Co. "The test will be, who did they get there?"

The under-one-roof convenience draws customers to multi-showroom marts and explains why more of them are opening across the country, especially in major cities, Kowalski said. Kohler is in the Luxe Home ultra-premium, open-to-consumers, building goods mart opened last year by Chicago's famed Merchandise Mart.

This fall, Kohler will open another showroom in the Abt store in Glenview, Ill. Abt's new design campus will include a 4,000-square-foot coffee shop where designers can meet with customers, said Michael Abt, president of the family-owned store.

The main Abt store, now 70,000 square feet, "still has acres of appliances, but we evolved the showrooms by partnering with vendors," he said. Abt's full-size kitchens exhibit appliances from Gaggenau, Bosch and Miele, and its cavernous electronics studios are wired with Bose and Bang & Olufsen.

Showrooms, he said, have to be carefully managed to make money.

"Per foot, it's not such a payoff. You need a lot of volume to make it work financially."

Tobe is taking the Design Marts in a slightly different direction. The Delafield Design Mart has only three showrooms, instead of the seven in Verona, Tobe said. Each showroom costs about $350,000 for the retail tenants to outfit with working models of the fixtures and finishes they sell.

"I wanted three quality partners, but when you have six or seven, it's not always so easy to find them," he said.

Tobe believes that metro areas the size of Milwaukee are big enough to support a couple of Design Marts. His plan is to open them in northern Illinois, elsewhere in Wisconsin, and possibly Minneapolis and beyond.

Delafield Design Mart stores landed orders and projects from the day it opened, said Terri Schmidt, president of the showroom division of DreamKitchens.

While homeowners like marts for browsing and shopping, designers use them to save time and money, said Katie Carlson, a designer with I-Design Inc. in Pewaukee.

Even small marts offer discounts of 15% to 25% to designers. Easy access to a vast array of materials such as wood, stone and flooring relieves designers of the hassles of buying samples and either returning or keeping them in inventory, she said.

The biggest savings, though, is reduced errands to multiple building supply retailers.