The headline in the local business press seemed ominous: Flooring Retailer Shuts 5 Stores, Lays Off 25. News of this sort can be unsettling to retailers who run much smaller operations. If an eight-store flooring chain with nearly $20 million in sales is floundering, where does that leave the single-store mom and pop shop? Many specialty store retailers seeing news like this will undoubtedly take a hard look at their balance sheet. Is it time, they may ask, to cut prices, lay off staff and talk to the kids about the virtues of community college?
The headline in the local
business press seemed ominous: Flooring Retailer Shuts 5 Stores, Lays Off
25. News of this sort can be unsettling
to retailers who run much smaller operations. If an eight-store flooring chain
with nearly $20 million in sales is floundering, where does that leave the
single-store mom and pop shop? Many specialty store retailers seeing news like
this will undoubtedly take a hard look at their balance sheet. Is it time, they
may ask, to cut prices, lay off staff and talk to the kids about the virtues of
it is unpleasant to see anyone committed to the flooring industry stumble. We
are all well served by the powerful sense of fraternity in this business. If
your competitor goes bust, you wonder: Did they collapse under the weight of
bad business decisions, or was it something else that brought them down? If it
is true that a rising tide lifts all boats, it’s equally true that a drought
can render an entire landscape barren. And these days, many flooring retailers
are feeling the heat.
case, the flooring retailer in distress should be seen as a cautionary tale.
Amigo’s Flooring is the eight-store chain that is reportedly shutting five
units and issuing pink slips to 25 workers. (Company officials did not return
calls seeking comment.) The chain, which opened the first of its Los
Angeles-area stores in 2001, embraced a business model that is completely at
odds with the emotions and passions that drive flooring. They went with lowball
pricing and huge stores that offer all the ambiance of a ship’s boiler room.
They sidestepped distributors and tried to get everything direct from the
manufacturer. Amigo’s plight should not make you uneasy unless you are using
the same playbook. And if you are, it should make you very uneasy.
the chain’s web site (www.amigosflooring.com) and you begin to understand why
we are now hearing that the company was forced to file for Chapter 11
bankruptcy protection. One of the first things you see is a statement from the
retailer’s founder and CEO, Michael Cope, crowing about the oversized tin shed
that was used to launch the chain. “Some people say it looks like a beat-up old
metal barn, but to me it was beautiful,” he says like a proud dad gushing about
his kid’s finger painting. Further down on the page he goes on about the
company’s “no-frills warehouse style” and “lower operating costs.”
section “About our products” is the real eye-opener. It begins with the promise
of “Real hardwood flooring for the price of a Laminate” then teases shoppers by
dangling the prospect of “Name Brand Laminate Flooring for less than a cup of
coffee?” It promises 60 styles of hand distressed hardwood flooring “that will make your home look expensive. At
the lowest price in history!” Everything is price, price, price.
the idea. No doubt when they launched, Amigo’s Flooring had in mind the many
working-class families that are the backbone of Southern California. Perhaps,
as the name might imply, they pointedly targeted the legions of folks in this
area who are of Hispanic heritage. Overwhelmingly these are proud, hardworking, people who struggle
mightily to achieve the American dream. Having an amigo in the flooring
business would not be such a bad idea when you are trying to achieve a
beautiful home on a tight budget.
whether you call them friends or amigos, people who truly care about you are
not those who see things strictly in dollars and cents. They care more about
your comfort, your happiness and, ultimately, your dreams. This is why the
approach taken by Amigo’s Flooring turned out to be such a flop. When the
residential market was on a roll, the demand for flooring was such that even
retailers who treated our industry’s products like a commodity could stay
afloat. Now, as the business has become a bit more challenging, they are the
first to feel it. Why? Because customers were not drawn to them for their expertise
or the expectation of a comfortable, relaxed shopping experience. They
were wooed by nothing more than the
promise of flooring on the cheap.
For those in the flooring business, particularly those in
Southern California, there should be no gloating over the plight of Amigo’s
Flooring -just a sigh of relief that your operation sells on passion, not
Editorial Comment: When your only pitch is lowball pricing, expect to get hammered
May 18, 2007