Lumber Liquidators 2012 Annual Report Download - page 12

lower rents than other retail locations. We can adapt to a range of existing buildings, whether free-standing or in shopping
centers. We enter into short leases, generally for base terms of five years, with renewal options to maximize our real estate
flexibility. We believe that our store design and locations reinforce our customers’ belief that they get a good deal when they
buy from us.
In 2012, we completed the initial design to expand our average showroom from the 1,000 to 1,200 square feet
previously targeted to 1,600 square feet. However, with an improved warehouse design and supply chain efficiencies, the
total targeted store square footage is not expected to change. We refer to this new design as our “store of the future”, and
beginning in 2013, we expect that all of our new stores and all remodels and relocations of existing stores will be in this
format.
Our store showrooms have wall racks holding one-foot by two-foot display boards of our flooring products, presented
within color palate and in a good-better-best format, and larger sample squares serving as the showroom floor. The
showroom also displays an expanded selection of flooring enhancements and accessories to complement, install and maintain
a customer’s new floor.
A typical store staff consists of a manager and two to three associates, with a compensation structure generally
weighting sales-driven bonuses over a relatively low base salary. The store manager is responsible both for store operations
and for overseeing our customers’ shopping experience. As people are a key component of our value proposition, we have an
emphasis on identifying, hiring and empowering top performing employees who share a passion for our business philosophy.
Many of our store managers have previous experience with the home improvement, retail flooring or flooring installation
industries. We provide training opportunities for our store personnel including our Lumber Liquidators University (“LLU”)
program, which is an annual training event for all of our regional and store managers that focuses on enhanced selling
techniques, in-depth product training and strategic discussions with senior executives.
Customer Education and Resources
Our sales strategy emphasizes customer service by providing superior, convenient, educational 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. Visitors to our website can search through a comprehensive knowledge base of tools on wood
flooring, including browsing product reviews, frequently asked questions and an extensive “before and after” gallery from
previous customers, as well as research detailed product information and how-to videos that explain the installation process.
Flooring samples of all the products we offer are available in our stores, and can be ordered through our call center and
website. In addition, our iPhone and iPad app, The Floor Finder, gives consumers access to nearly 200 digital samples as
well as a variety of tools designed to facilitate flooring purchase decisions, including visualizing any floor in their own home.
The app also gives consumers flooring specifications, such as hardness and installation information. We are active in social
media in order to connect to our consumers in the most convenient manner possible as well as build relationships with our
satisfied customers. We have an active presence on Facebook, Pinterest, YouTube and three unique Twitter accounts.
Our call center is staffed by flooring experts cross-trained in sales, customer service and product support. In addition to
receiving telephone calls, our call center staff chats online with visitors to our website, responds to emails from our
customers and engages in telemarketing activities. Customers can contact our call center to place an order to be delivered
directly to their home or picked up at a nearby store, to make an inquiry or to order a catalog.
Our Brands
We have invested significant resources developing our national brands, including our name and proprietary products,
and expect to continue to invest resources in our advertising and marketing at a percentage of net sales that we believe is
greater than our competitors. We believe Lumber Liquidators is now recognized across the United States as a destination for
high-quality hardwood flooring at low prices, while our flagship Bellawood brand is known as a premium flooring brand
within the industry. We are committed to supporting our proprietary brands and products through diverse national marketing
campaigns that reach a wide variety of potential customers.
In order to control the quality of our Bellawood brand, we maintain a finishing facility in Toano, Virginia. In 2012, we
finished approximately 92% of our Bellawood products at that facility, and we obtained the balance from qualified finishing
suppliers in North America and South America. Bellawood products have one of the highest scuff resistant finishes in the
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