Lumber Liquidators 2015 Annual Report Download - page 14

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no other flooring retailer has comparable facilities. This new lab will complement and augment the capabilities
of the facilities we operate in Toano, Virginia and in Shanghai, China, as well as those utilized by our
suppliers to help ensure compliance with CARB requirements.
Installation
Historically, approximately one in 10 of our customers opt to utilize the fully-insured and licensed
professional installation services which we make available to measure and install flooring at competitive prices
at each of our stores. As of December 31, 2015, we utilized a network of associates to perform certain
customer-facing, consultative services and coordinated the installation of our flooring products by third-party
professional installers in 186 of our stores. Service revenue for installation transactions we control is included
in net sales, with the corresponding costs in cost of sales. We believe our greater interaction with the customer
and greater control over the third party services provided will ultimately result in a better customer experience
and higher utilization by the customer. Installation services are offered in our remaining stores through a
national arrangement with a third-party. Under this national arrangement, we receive certain reimbursements
based on volume, which offset other expenses.
Store Model
As of December 31, 2015, we operated 374 retail stores, with 366 located throughout the United States
and eight in Ontario, Canada, after closing one of our Canadian stores at the end of its lease term during the
fourth quarter.
We generally seek locations with lower rent than retailers requiring high traffic or impulse purchases and
are able to adapt a range of existing buildings to our format, from free-standing buildings to strip centers to
small shopping centers. Generally, our stores are approximately 6,500 to 7,500 square feet, which includes a
showroom format designed to emphasize our products and a small warehouse. Our real estate strategy
considers total long-term share within a market over unit-based analysis. We enter into short leases, generally
for a base term of five to seven years with renewal options, to maximize our real estate flexibility.
We routinely evaluate our store site selection criteria and are currently targeting retail corridors within a
market over the more industrial locations we historically sought. We consistently monitor performance of
current stores as well as the market opportunity for new locations, adjusting as needed to optimize the
profitability and growth potential of our network.
Sales Approach
We have an integrated multi-channel sales model that enables our stores, 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. Though our customers utilize a range of these channels
in the decision-making process, the final sale is most often completed in the store, working with our flooring
experts. Our customers typically plan well in advance for the inconvenience of removing old flooring and
installing new flooring. In larger, more complex projects, greater lead time and preparation is often required.
Our research indicates that the length of a hardwood flooring purchase can vary significantly from initial
interest to final sale, but averages approximately 100 days.
Our objective is to help the consumer through the entire purchase cycle from aspiration to installation,
whether in our store or in their home. Our goal is to provide our customers with everything needed to
complete their flooring project — to remove the existing floor, install the new floor with complementary
moldings and accessories, and finally, maintain the floor for its lifetime.
Our sales strategy emphasizes customer service by providing superior, convenient, educational tools for
our customers to learn about our products and the installation process. Flooring samples of most of the
products we offer are available in our stores, or can be ordered through our call center and website. Once an
order is placed, customers may choose to either have their purchases delivered or pick them up at a nearby
store location.
We are committed to responding to our potential and existing customers in a timely manner. Our call
center is staffed by flooring experts cross-trained in sales, customer service and product support. In addition to
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