Is a Showroom in Your Future?

ost of you are familiar with “temporaries,” a term used to describe rented space at a show where you set up, sell your things, and tear down in a few days time. But have you considered exhibiting in a “permanent,” as they are referred to in the trade? Permanents are a long-term commitment.

A permanent showroom is a space where your wholesale products are available year round. The setup is similar to a store, except it isn’t open daily and it’s not open to the public.

They can be located in major market cities or in smaller, minor markets. The major markets for the gift industry include Atlanta, Chicago, Dallas, Los Angeles, New York and San Francisco. The minor markets, or smaller markets, include Kansas City, Minneapolis, Seattle, Denver, Columbus, Ohio, and Bedford, Mass., to name a few.

Named by Guinness Book of World Records as the world’s largest wholesale resource, the Dallas Market Center (DMC) boasts a campus with several buildings that focus on different wholesale industries including gifts, apparel and floral design. In addition, DMC and other market centers host temporary shows that feature the gift industry as well as apparel, lighting, furniture and gourmet foods.

Showrooms have many advantages

“ There are many advantages to having a permanent space,” says Robin Wells, senior vice president of leasing for DMC. Showrooms can save you time and money because you set up your samples and leave them there. This means less shipping costs and less time spent putting up and taking down displays.

The Hemisphere Accent Gallery at the Dallas Market Center is a shared showroom in one of the major markets for the craft industry.

Showrooms offer more consistency with buyers and room for growth. Many wholesalers outgrow temporary space when their product offerings become large and cumbersome to transport.

Major market centers have full-time marketing and design teams. The staff of the market center does all the advertising to buyers and includes retail development specialists whose job it is to find the right buyers. They also have professional designers available to help you design your showroom. Additional fees may be charged for design services.

A market center may provide FedEx and UPS service, a post office, cafeterias and restaurants, its own security force and a full-service office center.

Pricing and contracts for showrooms

“ Generally,” says Wells, “showroom space rents for $20 to $35 per square foot (PSF) annually, across the country.” The PSF rate may be higher or lower depending on the city, the type of industry (gifts, apparel, furniture, etc.), and the location inside the market center (main floor, atrium, etc.). PSF rates can also vary depending on the size of the showroom (larger = cheaper) and the length of the lease (longer = cheaper).

Wells advises potential showroom tenants, no matter what market center they are considering, to read the contract carefully. “Tenants need to clearly understand what the lease rate includes and what charges are added on,” Wells says. “Most leases include taxes and utilities, but some may assess charges on top of your lease rate for common area maintenance, marketing, design service, and buyer lists.”

Wells says showroom contracts also include escalations or planned increases in your PSF rate. “Escalations or step-up rates can be 3 to 6 percent a year, depending on location, PSF start rate, length of contract, and showroom size.”

A showroom contract will also spell out when your showroom must be open. “Tenants are required to open their showrooms during all published market weeks and show hours,” says Wells.

For most, this means a showroom must be open for the two major market weeks as well as two minor market weeks. Tenants may be required to be open during the “First Monday” or “First Tuesday” events as well as other times. Potential tenants should ask their leasing agent for a complete run down on required attendance.

Some retailers share showrooms

Since showrooms require a major investment on the tenant’s part, many market centers have begun offering shared showrooms, where several wholesalers can rent a showroom together. Sometimes referred to as “permanent temporaries,” a shared showroom offers many benefits and may be more attainable for a small craft business.

The showroom may be focused on a theme, such as garden products, or on an industry such as gifts or decorative accessories. The market center chooses the tenants and contracts with each individually.

“ Shared showrooms can be attractive to the small crafts business because it offers less of a commitment while giving the tenant all the benefits of a permanent showroom and the synergy of being in a showroom with complementary lines,” says Wells.

Most shared showroom tenants are small businesses, companies with a limited product line, and companies who want to test the market before committing to a lease on their own. Leases can be for a shorter length of time and smaller spaces are available. At DMC, shared showroom space can be as small as 40 square feet.

Shared showrooms also provide staffing. This means you don’t have to be there. A market specialist hired by the market center will learn about your line, write orders for you, and open the showroom daily. It’s like having a sales rep that doesn’t charge a commission.

Because there’s no commission charged (check the contract as some shared showrooms may charge a commission), shared showroom fees are usually higher. The average is around $45 PSF, again depending on city, industry, location and length of lease.

Other showroom possibilities

GROW Nebraska (GN), a non-profit marketing and training program for Nebraska-based entrepreneurs, sponsors a showroom space available to GN members at the Kansas City Mart.

GROW Nebraska, whose primary focus is art and craft businesses, leases a 900-square-foot showroom featuring the lines of 13 companies. Each company is juried and must make a commitment to attend the market a few days to help write orders. “Most of our companies are within driving distance to the Mart,” says Janell Anderson Ehrke, director of GN, “which makes it easier for them to participate.”

Ehrke looks for companies who have some wholesale experience and works with them one-on-one to train them for the showroom experience.

Each GN tenant contracts individually for one year. They pay a monthly fee of $125 for a small space or $345 for a larger or anchor space. The fee is based on the lease fee, the cost of a temp, and a 15 percent markup to cover administration. The Kansas City Mart is open every Monday, so GN hires a temp to write orders on these days.

Ehrke advises any potential showroom tenant to visit the prospective market center prior to signing a lease. “Go to the market and see if it’s well respected and well attended,” says Ehrke. “Make sure there is enough daily traffic to make paying a temp worthwhile.”

Ehrke also suggests that prospective tenants understand the hidden costs of a showroom, like travel to and from the market, insurance, and any add-on assessments charged by the market center.

Other state and local guilds or organizations may have similar programs for shared showrooms. Craft artists should contact these groups in their area to ask about the possibilities.

Another alternative to having a showroom is to have a sales rep with a showroom. Showroom reps will charge a commission and may charge additional fees for advertising and other market expenses.

If going this route, be sure to visit the showroom as often as possible to see how your line is displayed. If you take a temporary space in a market center where you have a showroom rep, you may be required to pay a commission to your rep. Check your sales rep contract.

A showroom is a major commitment in both time and money. If you are not ready for this type of commitment, then temporary booth space at a market center is your next best alternative.

-Mary Strope is manager of crafts marketing for George Little Management. She is responsible for the Handmade sections at the New York International Gift Fair, San Francisco International Gift Fair, Washington Gift Show, Boston Gift Show and the Dallas International Gift and Accessories Show.