A conversation with Carpet One's Evan Hackel: 'We're constantly trying to top ourselves'
Carpet One's president Evan Hackel says he has a highly detailed road map for where Carpet One is headed over the next few years -- and it is all neatly collated into a bulging three ring binder that he keeps tucked away in his office. Although Hackel says he'll keep the details safely locked away until he meets with his members, his enthusiasm is not so easily concealed.
Seated in his office and cradling the binder like a newborn, Hackel confidently explains that the plan is based on exhaustive research. Product trends, competition, vendors, demographics and even psychological profiles on different types of shoppers have all been taken into account. Most importantly, he says, the members were extensively involved in setting the priorities and developing the goals. Perhaps most notably, members at the winter convention participated in small round table discussions that helped set the agenda.
It all seems highly ambitious for such a well-established company, but Hackel assures that the effort is in keeping with the corporate culture that has propelled the company forward for the past 20 years. Simply put, he maintains that each step up for Carpet One is really just a platform used to climb up to an even higher level. And it's been that way for 20 years, he says.
To be sure, Hackel knows something about the way Carpet One works. During his 17 years with Carpet One's parent company, CCA Global Partners, he has been widely credited with elevating the level of training while also building the company's marketing effort. He was elevated to president in November 2004 and since has spent more than half his time on the road meeting members and working on the five-year plan set to be revealed at the summer convention in Toronto in July.
Hackel recently met with National Floor Trends in his office to discuss Carpet One's position. What follows are excerpts from the interview.
In a nutshell: how does Carpet One work?
What we do is build on the entrepreneurial skills of our members. Our belief is that to be successful in the floor covering business you need an entrepreneur who knows the local market. But they also need the abilities that you have with a big company. So we provide them the tools. The two together create a winning combination. It's important to recognize that if you aren't constantly trying to get better, your competitor will beat you. So we're constantly trying to top ourselves.
As an organization, how is it structured?
This is not an organization where management says we know best, do what we say. It's an organization that's built by the energy and knowledge of our members. Management's role is facilitation-to bring people together. Basically it is a group of flooring retailers who have a common goal and a common vision. My role as president is to provide leadership to the organization, and help facilitate the knowledge sharing for the development of programs that help our members be as successful as possible.
Are they successful? What type of net profit do they make?
I have seen research that says the industry average is something like 2 or 3 percent for the profitable floor covering retailer. That's not enough. When you're working on 2 or 3 percent what you're really doing is owning a job. I want our members to be making 8-10 percent or more on profit. The key is having differentiated products the customers value with brands that they like and trust. If you can do that you hit a home run.
And what about gross margin?
The industry average is somewhere around 32-33 percent gross margin. Our member retail margin average is probably in the mid- to high-40s and some are over 50 percent. If you simplify this and say the industry's at 32 percent and we're at 42, that's 10 percentage points on the bottom line. If you're a $2 million retailer, that's $200,000 of increased profit.
Is it true that installation is the biggest problem in the industry?
I don't think that at all. I think installation is the number one opportunity in the industry. Unfortunately most retailers find themselves frustrated by it and see it as a headache. And with that approach, they have very poor results. If you look at it as an opportunity to differentiate your store, and if you recognize that installation is your major key to success, you have a totally different energy and you create a totally different type of installation department. And that's how we as a company approach installation.
Specifically, what do you do that is different?
We created a program called Installation Excellence a little over 10 years ago. The program does a couple of things: It improves communication throughout the entire process. Customers learn why installation is important and have a better understanding of what to expect. Also, salespeople do a better job at collecting information and sharing it with the office staff and the installers. Expectations are set throughout the process for everyone involved. What we really do is try to create a culture of excellence built around customer service and installation. This is critical as consumers decide what store they want to buy from. It is one of the most successful programs we ever launched and it keeps growing in strength.
But what sets Installation Excellence apart?
The crowning part is the measurement system. Our customers rate us every day. We receive feedback forms that rate the salesperson, the installer and the store overall. Then everyone gets a scorecard and they can see how they compare nationwide.
What role do your exclusive brands play?
Our brands are incredibly important to us as a company. There's no doubt customers value brands and we make every effort to provide them the best brands that we can. Are we done adding brands? I would say no. We're constantly looking at and evaluating brands and if opportunities come up we're going to take them if they can help our membership.
Your marketing team is using radio ads that take a shot at big box retailers, why?
We call them combat ads and they're designed to differentiate ourselves from certain key competitors to highlight what makes us different. The most recent ads were funny and made the point that the big-box stores are impersonal and don't have a high level of customer service. We're saying if you are going to buy a product that needs to be installed you should buy it from a professional who's going to really take care of you and find out what you need and not treat you like a nothing.
What does Carpet One's 20 year milestone represent?
Every company goes through phases. When you start out you're new and it's exciting. I believe this organization is going to keep growing significantly. At 20, we are no longer new, but with the foundation that has been built, I believe our members' business and volume and profits are going to keep growing.
How has the industry changed since Carpet One started?
There have been several major changes in the industry. For one, we know that having quality installers is something that you can't take for granted. Many retailers are limited by how many qualified installers they have. Two: Product innovation. The diversity of product, the looks, the styling. We have seen much more of a regional bend on product than there used to be. Three: Margins are incredibly important. The cost of doing business keeps increasing. If retailers aren't able to maintain margins in the high 40s/low 50s at retail, it's extremely difficult to achieve a 10 percent profit at the end of the year. And finally, technology. State-of-the-art computer systems, B2B, transactions with your suppliers, and being able to work with your customers effectively on the Internet.
Moving forward, what are your plans for the company?
We're going to be presenting a new vision. To take the company forward we're going to be challenging the members. Carpet One members have never been complacent.That's one of the keys to our success: our members are aggressive, they want to be successful, they want to innovate, they want to lead. We're going to be presenting a plan for the members to have everyone see the vision of how we believe we can shape and lead this industry for the next five years and further.