CarpetsPlus ColorTile convened at the Starr Pass Resort for its annual convention recently with leadership and retailers sharing messages about how to grow talent and expand market share.
Founded in January of 1997, the group began with a philosophy that emphasizes the power of networking best practices while protecting the important entrepreneurial dynamics of independent store ownership. Today, that spirit is alive and well with 373 members—and 18 new store signings over the past year. We sat down with Ryan Dunn, co-COO and vice president of sales, and Kevin Logue, co-COO and vice president of marketing, to talk about the growth of the business.
FT: You signed 18 new retailers recently. How do you choose who joins the group?
Dunn: We ask a lot of questions. Honestly, we just look to see whose heart is beating in right place. Both of our dads were at Mohawk Industries and they said it’s a relationship business. When you go into these towns, we don’t just look at the owner who’s doing the most business; we also look at the guy whose heart is in the right spot. In old school way of thinking, you get the guy who says they know it all best and he wants to beat his own chest, and we want to talk to the owner who wants to share ideas. I would go in and narrow down an area, break down a territory, narrow it down to three or four, and let them know who’s left and who they are up against and I would wind it into a decision for them. We split the cost for them. When a store is set up, we invest about $30,000 with a match. We know we had something special, and we didn’t just want to let anyone come into it.
Logue: We look for people that are good businesses people—good entrepreneurs. It sounds basic, but it’s where you start. So much of our business is relationships and networking, and some of it about sharing their story with others and sharing best practices. We were talking earlier that who would have thought that when we signed Josh Elder in 2005 or ’06, that he would ultimately be one of our best members? It’s people who are hard workers, who want to succeed, who have a fresh perspective on things and are willing to invest in their business.
FT: You currently have 188 Destination locations, the boutique showroom concept that owners have the option of investing into. Where is this concept headed?
Dunn: We have six stores this year who are wanting to be a part of it. It is driving toward a Cadillac type brand. How do you grow the membership? You have internal sales, versus new store openings. Today, every new store opening is starting as Destination. That’s what we are selling—that whole stop—driving the upper end products, enhancements on web initiatives, we want them to know if they stop in a store in Chicago and go to their winter house in Florida, they can look up a Destination store and those products would be there. Their websites maintain the same information, the look of the websites look like their stores; it goes hand in hand. Extended warranties, whatever the mills are doing, we extend them. We offer the advantage that when consumers go to a Destination store, they are getting the best.
Logue: Members who have taken on Destination have increased their pricing by as much as $1.50 to $2.25. Their margins are increasing, and ultimately, they are able to close more sales. That’s the most important thing. Getting traffic in the door is one thing but being able to close sales is where it’s at.
FT: Where are you seeing the passion coming from among members?
Dunn: A lot has it do with second generation having to take over the business. Times are coming back, but some owners are burnt out and they aren’t sure they are ready for this anymore. You start seeing sons and daughters take over and they hear about how one guy did it in 2005, but what do they need to do now? The learning curve is different. The bad names that groups had back in the day that mandated things, retailers are reading the press on us, it’s autonomy. I never had two sales presentations that were the same. I ask them what are you good at? What do you feel are your biggest strengths and what are your biggest weaknesses? And what would you say if everything you love doing I’m not going to touch? Everything that you don’t love, I have members who love what you hate, and I will connect you with them. It’s showing people that we can provide them help.
FT: What product innovations are going to help retailers grow their business this year?
Logue: People have been talking for years about the shortage of carpet installers and now there is a shortage of tile installers, and it’s becoming a huge issue. It is such a specialized craft, particularly in certain markets. We are offering Coretec stone [USFloors luxury vinyl tile (LVT)], and that is a perfect product for someone who has installation challenges and limited access to qualified tile installers. The visuals are great, and it looks like natural stone. We do a lot of natural stone and porcelain business, but that’s a good alternative for some people. The Shaw Floorte products in the waterproof flooring Destination perform and look great. Pretty is what sells. We’ve expanded our assortment in SPC, WPC and rigid core products. We went out and looked at 40 LVT lines before making a decision on what to carry.
FT: How are retailers managing the merchandising of these new products?
Dunn: You have to reallocate space. We have dealers that are bringing carpet samples on the wall. In our two-tier racks, instead of floating them on the show floor, they are using that space for hard surface and using the walls for carpet because they can make better use of that space and get bigger sample racks. They are using step-up tier displays instead flips, which take up more floor space. In the previous years, hard surface was up against the wall and carpet was in the middle. That’s where we are challenging the members: if your business is moving toward hard surface, why doesn’t your showroom reflect that? And your website should reflect it. The whole point of Destination is your web presence, your store presence, your product selection is going to drive business with fewer options. Less is more.