Phillips Lighting & Home: Getting More From Less

Sometimes the smallest steps – in this case, literally transporting merchandise within the same shopping center – are the most difficult.

As everyone in retail and nearly every industry except technology can attest, the slow economy has negatively impacted commerce across the board. If your business is based in debt-ridden California, the recession essentially delivered a knock-out punch to many companies – but not Phillips Lighting & Home.

Founded as Phillips Electric Shop in 1947 by Elton and Wilma Phillips, this ARTS Award-winning lighting store has weathered all sorts of natural and state-wide economic disasters over the past 64 years. What’s their secret? Not sticking to the same-old, same-old and, instead, embracing new ways of doing business.

For instance, it’s not the first time Phillips Lighting & Home has moved in order to go with the (business) flow.

“Our previous relocation was in 2002, when we moved our store from the building it had been in since the1950s to our current spot in Modesto,” explains Carrie Arnold, who along with parents Chuck and Karen Phillips Arnold, comprise two subsequent generations of ownership.

“During that time, business was very healthy. The larger store we created then was appropriate and successful for those boom times,” she recalls. “Of course, the economy has taken a bit of a nosedive since then and the long-term economic outlook in our area – the Central Valley in California was ground zero for the foreclosure crisis – made it apparent that we needed to change our business model.

The building industry went bust and consumers were facing foreclosure and not considering remodeling. With 28,000 square feet of space, plenty of product displayed that was no longer selling, a full warehouse, and not many customers coming through the door, the math wasn’t good. Together, the family found a strategic solution.

“Last year, we negotiated a smaller space with our current landlord,” Arnold says.  “We wanted to remain in the same shopping center so our customers could easily find us after our move.” That’s not the only reason the family wanted to remain there. This plaza, known for its upscale local retail and restaurants, regularly holds events such as seasonal sidewalk sales and such popular community favorites as the Graffiti Classic Car Show and the Taste of the Village evening.

“People purchase tickets and wander through the shops, sampling food and wine, enjoying live music, and seeing what all the merchants and restaurants have to offer,” Arnold recounts. “During the Christmas season, the center offers horse-drawn carriage rides. The merchants have all been working together to bring more fun events like that to the center. Next year we will be holding our first Bridal Fair. We definitely believe there is a benefit to being part of a shopping center like this one.”

Although Phillips’ previous store was an anchor spot, the family was able to negotiate a highly visible corner in the plaza. “Our retail neighbors bring good foot traffic to us and we enjoy getting a little of the ‘ladies who lunch’ crowd as well,” she states. In addition, a Sunflower Farmers Market has just joined the shopping center this fall.

Planning ahead for their next business move instead of having sudden change forced upon them gave the family some time to prepare. “From the moment we publicly announced our upcoming move by launching our Moving Sale in January to the grand opening in the new location in May was five months,” Arnold says. “A huge amount of work went on during that time!”

This wasn’t a pack-everything-up-into-boxes-and-move-them-across-the-street kind of maneuver. The new location was achieved by joining four spaces together into one 9,000 sq.-ft. store that was one-third the size of Phillips’ previous showroom. This endeavor took a lot of consideration. If they took everything with them, they were guaranteed to have a very cluttered and unappealing shopping environment.

Time for new thinking!  “We have been concentrating on relieving some of the inventory burden that most lighting showrooms bear,” Arnold admits. “Having less overall storage space would also help enforce our decision to keep a lower inventory level.” By reducing the amount of space previously committed to the warehouse by 8,000 square feet, there would be more room on the floor.

In addition, the former showroom had a separate 400-ft. service and repair shop. In the new store, the warehouse and receiving section is about one-fifth of the overall area and includes the lamp repair.

The biggest concern when operating with leaner stock levels is losing customers who are accustomed to walking into a store for a product and then not having it available. “To that end, we developed our Express program,” Arnold explains. “We’ve segregated our bestselling items and fixture families throughout the various departments and made Express signage to direct people who need items right away to those areas.”

The emphasis on rapid delivery for the customer also altered the composition of the showroom presentation. “We’ve focused much of our product displays on items from vendors who can get us the items quickly. We want to be able to tell the customer that we can have that product in their hands in less than two weeks – and in many cases one week,” she says.

That change to the company’s m.o. resulted in some consolidation in its A list of vendors. “We needed to do this to become more efficient and to reduce freight costs. So far, it’s working,” Arnold remarks. “I think short lead times are important for us right now as we are seeing more remodels and DIY’ers coming in. If you have to give a customer a 4- to 6-week lead time these days, there had better be a good reason!”

Another thing Phillips Lighting & Home is doing differently is emphasizing its Web site. The store had been conducting e-commerce for approximately one year, but the site was primarily used as a convenience for regional customers who lived outside of Modesto. In the new location, the Web site has been transformed into an active sales tool. “We have a few kiosks set up where customers can shop or research via the site or we will use it as a sales tool ourselves,” she explains. “One of our workstations has a large-screen TV monitor. We love how we can expand the product images on it. For some fixtures (such as lanterns) we can make them appear almost life size! Our customers seem to enjoy the kiosks and we love how it emphasizes the huge array of lighting we offer – even if it’s all not physically in the store.”

In the court of public opinion, the relocation has been well-received. “For every two people who say something along the lines of, ‘Wow, you’ve really downsized!’ we have eight more positive comments,” Arnold recounts. “I think customers have been surprised that we can show a great selection in this size store and not have the shopping process be overwhelming.  We have reduced the amount of space that we had previously allocated to chandeliers and instead have made sure we are displaying more pendants, bath lighting, and exterior li
ghting. Cabinet lighting and recessed lighting are also displayed more prominently.” The reason? “These are the types of things more remodelers are after in our market.” And after all, giving people what they want is the true legacy of Phillips Lighting & Home.

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