Regardless of the size of your dealership, it always seems like space is at a premium. The set up and flow of your dealership is pivotal not only to your cash flow, but also to your customers’ experience with your dealership. Some of the dealerships we work have 1000 square feet while others have over 20,000 square feet or more! No matter the size, we often hear: “We don’t have enough space!” Regardless of the size of your dealership, there are a few key things that you can do to maximize the space you have available.
Every square foot of floor space has to generate revenue
When we start thinking about the setup of a dealership, we start with this premise — every square foot needs to generate revenue. The idea is that the product in a specific location has to pay rent to be there. The more prime the location, the more a product needs to generate to stay in that space.
How do you track this? Let’s take your end caps as an example. If you look at any convenience or grocery store, the end caps are constantly changing to capitalize on the impulse buy from customers, yes they know that you will buy the Snickers bar — that’s why they put them there. Keep in mind, there are impulse items your customers will buy as well. As you track this, each end cap would be a parts bin location. As items sell from that place, you will be able to track the sale and generate a report based on the location in your business management software to determine what the value of that particular space is, and, if the part is not generating the revenue it needs for that spot, it’s time to move it out. We expect every square foot of your parts display area to generate $500 Gross Profit per year and your wall racks to generate $300 of Gross Profit per square foot per year. This goes for your service department as well. The responsibility of tracking this falls back on the departmental managers. We expect, as an owner or GM, that the numbers are reported on a monthly basis by department and changes are being evaluated and made as needed.
The goals of our floor plan and layout is to make the experience effortless for our customers
Yes, everything we do in our dealership is through the lens of making money. At the same time, we need to focus on creating a cohesive experience for our customers. The interesting thing is, when our customers feel like an experience is effortless for them, they tend to spend more money.
Part of determining the layout is creating clarity in your customers’ journey. Is it clear to them where they need to go as they walk in the door? What about if they have a question or need to check in a piece of equipment for service? If the answers are no, this is where you need to start. Sure, you may know where to go, but maybe what your layout needs are new and visible signage.
We also want to focus on meeting your customers’ needs before they even know what they need. This could be product placement right next to the departments they are walking to or tablets with some of the FAQ’s that other customers like them have.
By Department – Sales, Parts, and Service
As you think about layout by department, it might surprise you what can be done with what you already have. Before you decide you need to build a multimillion-dollar dealership, ask yourself these questions about the one you already have.
Sales – Are you showcasing equipment in your showroom, not just using your showroom for storage?
You don’t need all of the equipment that you have in stock in your showroom. Have a few pieces that have all of the accessories on them, similar to a car dealership. If you have one of each model that you carry you can still work through the sales process with your customers while maximizing your space and keeping your showroom inviting. Your customers don’t want to see every piece of equipment that you have in stock. They just want to see the piece of equipment they need.
Parts – Create a parts department that makes your customers comfortable and makes your job easier.
Think about using high density parts cabinets under your parts counter for easy access to your fast-moving parts. You can go a step further and put a cabinet with your fast-moving parts outside of the parts department with a computer monitor that allows customers to look up and pull their own parts. While not all customers will utilize this, some will, and it will be a win for both you and your customers. When thinking about your parts department set up, keep in mind that one of the easiest ways to free up space in the parts department is to return parts that are not being sold. This not only frees up space but will free up cash flow for the dealership as well. Our rule of thumb is if a part hasn’t sold in 9 months it’s time to return the part.
Service – Set aside enough space for each technician.
When we think about our service department, we like to see 1.5 bays for any technician who is working on outdoor power equipment and 2 bay compact and utility tractors. Our goal is to give any technician who gets stuck on a job the ability to move on to the next job without having to put the equipment back together and move the equipment out of the space. In the dealerships that we work with, we utilize our service department as a selling feature. Make sure it looks the part. Is it clear where the customer needs to go when they pull into your dealership parking lot to drop off equipment, and is it well lit?
By thinking about every part of your floor plan as something you need to generate revenue every single month, you will be able to maximize the space in your dealership.