Feasibility study for a kitchen and cabinet contractor.
A new business model to tap into growth markets.
Goals
- Boost revenues.
- Find new revenues sources.
- Revamp sales and marketing.
Obstacles
The client was a contractor for high-end and custom-made kitchens and wardrobes. By 2011, the UAE contracting market had become over-saturated with competitors and profit margins had become very thin.
The company started incurring losses and the owner was looking for solutions.
Analysis
The client was generating revenues by working exclusively with a handful of main contractors in the residential construction sector; they relied on repeat business from the same key clients.
This presented a high concentration of risks. If the construction market collapsed, many main contractors would default on their payments, which would send our subcontractor into a tailspin.
The client had to create new sources of revenues, from new market segments that were still at their growth stage; ones that were connected in a way to the contractor’s main activity.
Actions
- Recommended our client to enter the furniture retail market and to provide interior design services.
- Identified new Italian suppliers of residential furniture. The company added 5 new brands (Faber, Gandi, Lineager, Febal and Heral Cucine) to its product offerings.
- Participated in the identification, negotiation and agreement with an Italian multinational franchisor in the field of customized kitchen and wardrobes, and home and office furniture (Colombini Gruppo).
- Introduced the new concept of 'ready-made' kitchen, wardrobes, office and home furniture to the UAE.
- Lead the effort in choosing a suitable high-end showroom on Sheikh Zayed Road.
- Developed creative briefs to design the showroom including the merchandising concepts and in-store ambiance.
- Set systems and procedures for sales and marketing.
- Set new sales policies for the company to follow (pre-qualification documents, tenders, prospecting, relationship-building and loyalty) when dealing with interior designers, architects and decorators.
Results
The new sales consultants (interior design services) were able to close deals worth AED 647,000 on average, per representative.
Every sales representative signed 7 contracts on average per year.
Total revenues in the first year were AED 11.5 Million divided into retail sales (AED 5.2 Million and project and export sales of AED 6.3 Million).
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