Chicago-based designer Dan Rak, a former tax lawyer, has taken an analytical approach to maximizing his vendor relationships: He quantifies his firm’s spending to showcase the value of his business.
How has COVID changed the way you present to clients?
We’ll do a big first round of sourcing and pull the bulk of the space together with online images. We’ve realized that we don’t struggle with getting people to buy from photos, but that’s somewhat new. COVID changed everything, because we didn’t go into showrooms for 12 months.
Are you back in showrooms now?
We’re forcing ourselves to get back out. Sometimes when you do see something, it just hits differently. We were recently at the Mart and saw a sectional that was perfect for our client—and we would have passed on it just seeing it online. I love that there’s a happy accident component to seeing something in person. But the bulk of what we are doing is online for efficiency, and also because there is so much available online that isn’t shown on the showroom floor, so [in-person shopping can] feel limiting. They’re not turning over the showrooms often, so it’s a lot of stuff that you’ve seen before.
Do you have a select group of vendors you visit again and again?
Because we buy quite a bit, we have negotiated great pricing with our vendors, so there’s an incentive to maintain our accounts. At the same time, I don’t want to use the same things repeatedly. I am constantly trying to update and grow. I’m always on the lookout for new sources. I’m an avid shelter magazine reader, and I try to pay attention to the captions—that’s where you find the good stuff.
You mentioned you have great negotiated pricing. Is getting there just about order volume?
I’ve found it’s beneficial to prove out the volume that your firm buys in each category on an annual basis. We are very disciplined in our software, and all of our items are assigned a sales code as we sell, so we know at any point in time how much fabric we’ve sold this year, how much hardware, furniture, pillows, accessories—all of that. And with that information, you can go, “Hey, we buy this much for our clients,” because most of the vendors have a tiered system.
Is that about saying, “We’ve spent X dollars on fabric this year,” or “We’ve spent X dollars with your brand”?
We can pull both. We know exactly how much we spend. This is a relationships business, so I know the vendors that are going to jump in and help if we need it, and I know the ones that won’t. Even if there’s something great and new out there—I’ll try it, but I like the security of knowing that our vendors stand behind their products. On any given project, I like knowing where the bulk of it is coming from. I like standing in front of our client and saying, “This is all tried-and-true stuff. We know where it comes from, and we know it’s going to be good. If there is an issue, we can get it handled and fixed.” Then we mix in some of the new stuff. If it doesn’t work out, you can fix it until you know whether or not that vendor is going to stand behind their product.[Ultimately, with sourcing], the easier, the better. If we like something but it’s a pain in the ass to use—there’s just too much other good stuff out there that is easy, so that makes a difference. If I like something and I’m like, “Figure it out,” and I get a lot of pushback from my staff, [I pay attention to that]. My staff is great, so if they’re like, “I had to call 18 times to get this—they never respond, we can never get the specs we need, we never get pricing,” then we’re going to move on to something else that we can actually get our hands on.
Have you tried to hit certain dollar amounts with certain vendors to tap into that next tier of pricing?
This is a business for sure, and we have to be cognizant of that, but I will not pick something just because of financial incentives. At the end of the day, we have to create an amazing product so that our client, and then the world, sees it. That’s how we get the next job. We can make more money on a job by sourcing it in a certain way, but I think that’s a short play. If you want longevity, you have to put out something unique, interesting and of great quality. I think you can still be profitable while doing it. I can’t say we’re X dollars away from this tier, but I know where we fall. This is my eighth year in business, and we’ve grown quite a bit in the last three or four, and now I’m starting to realize how much we actually order. I’m also becoming more confident in asking our vendors to stand behind us, support us and come through for us, because we are giving them a lot of business. Because we’re able to quantify it, we should feel OK asking for that.
Are there incentives or trade programs that make a brand more desirable for you?
On a project-by-project basis, we’ll watch where our margin sits and have a target for where we want that to be. If it’s off at the end, we know we need to reevaluate the material mix. There are vendors that show in High Point with pricing that is horrible for designers—where we can barely compete with what the online vendors are selling their products for. If we can barely get it for cheaper, we don’t use it. That is a business decision. There’s enough out there that is great and that we can make money on. And if we don’t make money, we won’t be in business for very long.
This article is part of a series of interviews that explore different approaches to shopping, offering tips and strategies to make a firm’s sourcing more efficient, more inspiring—and more profitable, too. Want to read more? Explore the rest of the series here.