Lumber Liquidators 2014 Annual Report Download - page 14

We currently target retail corridors within a market over the more industrial locations we historically
have occupied. We implemented an improved store design in January 2013 to enhance the shopping
experience for our customers and improve the efficiency of our operations. We designated the new design as
our ‘‘store of the future’’. The store of the future retains our targeted location size but expands the average
showroom to a structured design of approximately 1,600 square feet, from a general historical size of
approximately 1,000 to 1,200 square feet. The assortment of flooring options presented has expanded, grouped
by product category, displayed within color palate and in a good-better-best format. The assortment of
moldings and accessories displayed has expanded significantly. We believe the expanded showroom format has
combined well with our advertising message resonating with a larger base of casual customers, our real estate
strategy of locating stores in retail areas more familiar to the customer and increased in-store service levels
through our Best People initiative.
All of our new stores opened in 2013 and 2014 featured the new design, and we have remodeled
39 existing stores, including 17 in 2014. Pleased with the results we have seen from the new format, we
expect to feature it in all of our new stores and to remodel a majority of our existing stores, either in place or
through relocation within the primary trade area, over the next six to eight years.
Store location activity in the expanded showroom format is as follows:
Number of stores featuring the expanded showroom: 2014 2013
Number of stores at January 1 .......................... 52 —
New stores opened during the period ..................... 34 30
Existing stores remodeled during the period
(1)
............... 17 22
Number of stores at December 31 ....................... 103 52
Expanded showroom stores as a percentage of total stores ...... 29.3% 16.4%
(1) A remodeled store remains a comparable store as long as it is relocated within the primary trade area.
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 install, complement and maintain a customer’s new floor. A typical store staff consists of a
manager and three to four associates, with a compensation structure that generally weights sales-driven
commission bonuses over relatively low base salaries. The store manager is responsible both for store
operations and for overseeing our customers’ shopping experience. A store’s warehouse is stocked with a
combination of that store’s most popular products and high-volume items, as well as customer-specific
inventory waiting to be picked up or delivered. By generally requiring a 50% deposit when an order is placed
for product not taken home that day, we reduce store-level working capital requirements.
Our People as Flooring Experts
A flooring purchase is generally a large-ticket, discretionary purchase that most residential homeowners
purchase infrequently. Few home improvements, however, have as much consequence to the ambience of a
room as the flooring. A flooring purchase is often well-researched, but can be influenced by emotion. A large
segment of residential homeowners are in need of a trusted expert, whether as a guide through a range of
flooring alternatives and services or as a resource to a do-it-yourself (‘‘DIY’’) customer. We train and position
our store management and associates to establish these individual customer relationships, which often last
beyond the current purchase to subsequent purchases for additional rooms in the existing house or even to the
remodeling of a new home.
In conjunction with our Best People initiative, we place 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 continuous training for our store associates, ranging from topic-specific modules offered
on our online learning management system to participation in our Lumber Liquidators University (‘‘LLU’’)
program. LLU 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.
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