Lumber Liquidators 2011 Annual Report Download - page 10

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 Growth Strategy
We intend to increase net sales and profitability by strengthening our position as a leading provider of hardwood
flooring. In the last three years, we have grown primarily through share gains in a highly fragmented wood flooring market
that we estimate has contracted approximately 13.5%. Our share gains have been through new store growth as home-related
discretionary spending has been weakened by a difficult economic environment and we struggled internally with the
implementation of our integrated information technology solution. 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 new and existing markets, domestic and international. We expect store base growth will drive market
productivity and operational efficiencies.
•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 strong 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.
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. Bellawood is our premium brand and we believe that it has a reputation as a high quality product. We also
offer a large selection of hardwood flooring year-round at everyday low prices primarily under our other proprietary brands.
We are committed to supporting our brands and products through diverse national marketing campaigns that reach a wide
variety of potential customers.
Our Integrated Multi-Channel Sales Model
We have an integrated multi-channel sales model that enables our international 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, convenient,
education tools for our customers to learn about our products and the installation process. Our website contains a broad range
of information regarding our floors and accessories. We hire store associates who often have relevant industry experience
and our call center is staffed by more than 60 flooring experts. Customers can order samples or catalogs and access product
research and information through any of our sales channels.
Customers can purchase our complete assortment of products in our stores, or through our call center, website, a
smartphone or a tablet, such as an iPad. The prices available on our website and from our call center are the same as the
4