Lumber Liquidators 2010 Annual Report Download - page 10

we have grown, we believe our relationships with our suppliers have strengthened. We believe our commitment to
merchandise inventory throughout our distribution network allows us to meet the delivery needs of our customers
better than our competitors.
Our Growth Strategy
We intend to continue to increase net sales and profitability by strengthening our position as a leading provider of
hardwood flooring. In recent years, home-related discretionary spending has been weakened by a difficult economic
environment. As a result, we have grown primarily through share gains in the highly fragmented hardwood flooring market.
We expect to continue to gain market share, and specific elements of our strategy for continued growth include the
following:
•Improve Market Breadth and Profitability. We believe there is a significant opportunity to expand our store base
in both existing markets and new domestic and international markets. We expect store base growth will drive
market productivity and operational efficiencies. We plan to open between 40 and 50 new stores during each of the
next several years, including our first Canadian stores in the first quarter of 2011.
•Commitment to Merchandise Inventories. We believe our commitment to merchandise inventories enhances our
value proposition and further distances us from the smaller, independent flooring retailers, thereby increasing our
market share. We expect net sales growth will continue to benefit from a strengthened commitment to in-stock
positions of our top selling products and an effective logistics network. We believe our profitability will increase
from a continued investment in merchandise planning and allocation on a regional and store-level basis, coupled
with further development of logistic initiatives.
•Leverage Brand Marketing Across Multiple Channels. We use our advertising and marketing activities and our
multiple sales channels to help educate potential customers about hardwood flooring. As customers learn more
about hardwood flooring and how best to shop for it, they also learn more about our products and value
proposition, which we believe drives customer store visits and purchases of our products. We believe that as we
continue to leverage our multi-channel strategy, we will drive repeat customer traffic. We have made a significant
advertising and marketing investment to link our brands to our value proposition. We believe our marketing and
branding activities will become more efficient and targeted as we grow, and our customer acquisition costs will
decline on both a per-customer and per-store basis.
•Expertise and Customer Service. We position ourselves as hardwood flooring experts and believe our high level of
customer service reflects this positioning. Key elements of our service include product education on species and
construction so that our customers can select flooring that is best aligned with the use of the room, site conditions
at the house and local climate factors. Our regional and store managers, supported by a call center staff, are trained
to understand the characteristics and installation method for the broad range of hardwood flooring and accessories
that we offer. Residential customers are generally less familiar with the range of products available and with the
purchase process itself. As a result, we believe our attention to service provides a competitive advantage.
Our Brands
We believe both Lumber Liquidators and Bellawood are well-known national brands. We have positioned Lumber
Liquidators to represent an attractive value proposition to the customer, and believe we offer superior service and hardwood
flooring expertise. We are committed to supporting our brands and products through diverse national marketing campaigns
that reach a wide variety of potential customers.
We offer a large selection of hardwood flooring year-round at everyday low prices primarily under our proprietary
brands, ranging in quality from our premium Bellawood brand to our more economical brands.
Our Integrated Multi-Channel Sales Model
We have an integrated multi-channel sales model that enables our national store network, call center, website and
catalogs to work together in a coordinated manner. We believe that due to the average size of the sale and the general
infrequency of a hardwood flooring purchase, many of our customers conduct extensive research using multiple channels
before making a purchase decision. Our sales strategy emphasizes customer service by providing superior convenience and
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