A combination of service, styling, quality and competitive pricing established Lexmark as a market leader in the hospitality segment and allowed the company to successfully expand into residential market in 2013. The company continues its growth trajectory, investing heavily in new machinery to expand tufting capabilities and boost its residential capacity. It has also invested in new merchandising and training tools for the retail market. The efforts seem to be working; Lexmark posted record-breaking first- and second-quarter sales this year—the first time since the inception of the residential division, according to Rodney Mauter, executive vice president of Lexmark’s residential business. We spoke with Mauter recently to catch up on the company’s assertive growth plans and what’s in store for the brand.
FT: Lexmark has raised the bar residentially with textures and patterns at a competitive price point. How would you describe your market positioning?
Mauter: It’s summed up with the catch phrase of “affordable fashion.” What we try to convey to retailers is to bring pattern and heavy texture to an open audience. Historically, when you look at a pattern, what we are able offer is based on a room to room or square yard price open to more consumers. With homeowners wanting to put incredible wood in their kitchen and living areas, they want the same quality and style in bedrooms and family room, and they want those rooms to have as much of an impact. Consumers look at carpet as another luxury buy. I joke with retailers that no one lays on the wood floor to watch TV. There is a push back toward comfort and quality.
We are seeing patterned products take off. It’s the faster-growing segment in the category. We fit in the soft category with consumers who are looking at more fashionable products. She’s not willing to settle for a beige cut pile. She’s wanting to put a stamp on her home. We can fit in any aspect. We have a good, better, best offering.
FT: Who is your target customer for patterned carpets?
Mauter: We ask retailers to start with us and show them what we can do. I believe that we have a product that would work for everyone. From a pattern that is more in your face to something that is more subtle, a single yarn color that gives some depth to the room right up to where we blend two to three yarns to make a pattern pop. We haven’t clearly defined our consumer, just mainly that we are open to the broad group. We do focus a bit on the builder, but it’s mainly the upgrade business—the second or third upgrade is where we fit best. So even on the builder side of thing we still have a place, but it may not be in that spec home.
FT: How are you determining which retail partners to team up with for the residential business?
Mauter: We are offering retailers a way to make money. The point is we do not have an oversaturated brand. We are looking for key retailers that we identify as folks who understand how to sell fashion and understand how to sell the product and will take consumers to our product, at least first, to give them an option. But in return, we are not everywhere, so we give that retail consumer the opportunity to really make money with us.
If you have one of our competitors you are not really setting the price based on what the general public will pay; you are setting your price based on what your competitors are willing to sell it for. And with us, you don’t have that as much. You can set the product pricing based on the look of the product and what the market will really bare, which to me as a retailer, I try put myself in their shoes as much as possible, I think that’s a very attractive offer. We look for folks who sell like products, who understand the fashion side of the business. We do feel like we have an offering for everyone—from our value products to our Living fixture to our Tailored fixture, and in our new Adorn nylon offering, we feel like we can hit a lot of spots for that true well-rounded retailer.
FT: Tell us about the “It Takes Two” promotion?
Mauter: Something that we have been driving with retailers is our promotion It Takes Two. If you give us two qualifying orders, which is about 40 yards an order, we will give you a small gift for trying out our product. The thought here is we are a smaller, lesser-known mill so my goal is to give people the confidence to go to our fixture. I want them to see that the order comes in, it’s great quality, and it installs very well and you will have a happy consumer, so you get paid—the system works. The goal there is to get two jobs and you are able to see you make money and it’s a good product.
FT: For retail associates who are new to the idea of selling pattern and texture, what are some of the tools you provide them to have success?
Mauter: We put a big focus on coaching. It boils down to a couple of key factors, which are install related. Most [retail sales associates] RSAs are commission-based, so they want something that will go in easily, which means the store will get paid so they will get paid, so we want to put their mind at ease. So, we have a seaming demo board that asks them to pick the seam and the goal is it’s difficult, if not impossible, to pick out the seam, which puts people at ease. The other thing is the waste factor. We are such a value that the waste factor is not a big deal. We have a team here who will talk to installers or retailers to give them more technical advice. But we will be a 10-gauge story next year, and we use a heavier latex that is built through the hospitality specs because we run one coating machine in our operation, so everything we have is heavy-duty. We built things to last so retailers don’t have to worry about their reputation in the market.