After more than four years of operation, Central Arizona green building products retail showroom a.k.a. Green closed its doors in December. EcoHome checks in with former owner Mick Dalrymple, principal of Phoenix-based a.k.a. Green Services, a sustainability consulting, education, and verification company.
How did the economy tie into your decision to close?
Operating a primarily retail products business in the development-addicted Phoenix market during the worst recession since the depression was about as easy as surfing on gravel. We saw a boost in business when the new-home construction market collapsed and people who planned to flip their homes turned instead to remodeling as they realized they wouldn’t be selling for awhile.
But then our sales fell off a cliff to the tune of 70% virtually overnight when the financial meltdown occurred. Home equity lines were yanked as home values plummeted, taking remodeling plans with them.
What else led to the showroom’s demise?
It didn’t work economically to spend hours educating a customer on something new and foreign to them, developing a customer relationship for a high-involvement purchase just for the one-off sale that may be thwarted by their contractor or diverted by a Web retailer or even the supplier. How many times is the same retail customer going to buy flooring?
When selling on premium quality with highly trained salespeople and high-involvement green products, you are betting on referrals from past customers as your marketing. This takes a long time to build. Since it took us so long to get any traction, we didn’t have sufficient numbers of past customer experiences to generate enough new ones in a down market. To compound that, potential referrals had to also be into the environmental/health aspect of our products or be educated on the benefits of them. If we had solely targeted the high-disposable income circles that have the means to and tend to repeat what their friends do, we might have had more success. However, we were out to democratize green and make it available to all.
In hindsight, we should have focused more on developing the trades base earlier, because that equals repeat sales. Unfortunately, in the beginning, the trades and builders weren’t interested in green building because their customers weren’t asking for it and they were making money hand-over-fist with their traditional methods. So, we had to create the end-consumer demand first.
It is expected that brick-and-mortar retailers provide expert advice, but a sense of reciprocity that the retailer deserves the sale to pay for that advice is very rare. We adapted to this by providing fee-based educational seminars. This was successful until the financial meltdown, when consumers started viewing almost everything as discretionary spending. If we offered a seminar for free, it was packed. If we charged, we couldn’t get enough sign-ups to make it worth pursuing.