Scarcely a week goes by when some retailer doesn’t ask that question. My sincere belief is that most flooring retailers can benefit greatly from aligning with a retail group. Bottom line is the average group member has significantly higher sales and gross profit than nonaligned stores which proves the efficacy of joining a group. While less than 40% of floor covering retailers in America are aligned with a group, they account for over 70% of the volume. My work as an educator, consultant and organizer of recruitment activities with the major retail groups affords me access to much information about them.
Manufacturers who have formed groups for retailers have not perceived a need for my services, so little information is available. Looking in from the outside, they clean up a member’s store and certainly add to the professionalism of the operation, but to me it’s a little like having the fox in the henhouse. Beyond that, my only comments are personal opinion framed by my familiarity with the industry.
The event that jumpstarted the retail group movement happened in 1985 at a Retail Floorcovering Institute (RFI) board of directors meeting in Washington, D. C. when 17 of the 25 directors stood up and announced the formation of the Carpet Co-op of America known as Carpet One. They immediately began an ambitious expansion program throughout the country, targeting the cream of independent flooring dealers. They quickly expanded by gaining recruits, acquiring other groups and forming new groups. Today they control over 9 billion dollars in retail volume.
However, the first successful retail group was Abbey Carpet which was formed in 1978. Initially a West Coast franchise, they later realized that with the success of Carpet One, they would need a national presence to compete. I was hired at that time to work with the owner, Phil Gutierrez, who was and still is one of the most charismatic figures in the industry. Working with him during the ‘80s was a joy. We recruited members around the country and conducted sales, service and management training sessions. We also produced training manuals for the dealers. Abbey rapidly grew from 160 stores to well over 300 in a short period. They are now the second largest group with over 800 locations.
The group movement, whether a franchise. co-op or membership, was driven initially by the desire for stronger bargaining power, but it was apparent that banding together made it possible to hire the retail expertise needed to provide professional merchandising, showroom design, marketing, advertising and educational resources. Retailers desperately needed these basic tools, but they weren’t widely available from suppliers. Moreover, during the rapid consolidation of the industry during the ‘70s and ‘80s, protecting sources of supply became critical, along with circumventing protected product lines-all of which the groups accomplished.
Group management preferred the term “merchandising group” over the retailers’ and suppliers’ favorite term, “buying group” since suppliers wrongly perceived the impetus of the groups was primarily to hammer them for price (for the less sophisticated retailers, the most critical issue was pricing). The groups soon found that providing the services to professionalize retailers was far more important. So Phil developed a presentation later used by Barth Getto of Flooring America for recruitment meetings that compared “Our” $7.99 with “Your” $7.99 pricing.
In some instances a dealer was able to buy the same product for $7.99 so the presentation enlightened retailers as to what they were missing. The laundry list of benefits included in the group’s $7.99 might have included four or six two-week periods of cuts at roll pricing-with judicial timing a retailer could stretch to double or triple that time period. An independent might be offered a 4% rebate by a supplier, but with exclusions and omissions turned out to be less than 2%. Other rebates offered were on samples, racks, POP materials and even franchise fees up to 100%. Exclusive products, private labeling and monthly specials were all part of the mix, along with expert advice.
Claims are always a hassle, but with some groups, the dealer controls the claims process and in disputes, merely has to ask for the group to step in. Other benefits under “Our $7.99,” but by no means all, could include extended terms, a one-year “no questions asked” stain warrantee, unrestricted fiber money and consumer warrantees that provide refunds under any circumstance. It opened the eyes of retailer prospects whether they joined or not.
The larger groups provide “look alike” products priced to sell below the big box stores as well as professional retail radio, TV and print materials with individual customization, and celebrity endorsers.
This is just skimming the surface: If a store doesn’t sell online they are already behind the curve. Along with computer programs, web sites and online services, most packages offer labor replacement, private trade shows, guaranteed freight rates, signage, warehouse supplies and truck and trailer deals. Now the larger groups have the wherewithal to compete using national advertising. They are working feverishly to brand their stores with an easily recognizable identity in-store and out.
No unaligned dealer, no matter how large, is able to avail themselves of even a small portion of these advantages. I have serviced dealers in trade only design centers who use the major groups. Some of the largest dealers have found more profit with their Big Bob’s Flooring Outlet warehouses than their traditional operations. Designers can align with Decorating Den and there are several shop-at-home groups available. Floor to Ceiling adds kitchens, cabinetry and artwork to the product mix. There is even a group for dealers who can prove annual volume of $10,000,000 or more. The FCA Network drives membership with their sophisticated computer programming. If it involves flooring, there is a place for you. The trend toward aligning is so strong that in the future, flooring will likely follow the hardware business. In that industry, virtually all stores are aligned with a group.
In order to afford more opportunities to unaligned dealers by opening closed territories, groups have formed groups within the company. CCA Global offers Carpet One, Flooring America, The Floor Trader and others. Abbey has their trade only and warehouse operations in addition to Floors to Go. The Flooring Alliance has CarpetsPlus, Color Tile and Carpetland U.S.A. under their umbrella.
So, given this sliver of information (a book could be written about it), which group should you join? My advice is simple. First call around and talk to a few members of different groups randomly. Then call the group headquarters and ask to talk to some of the dealers who really participate. Visit some stores. Winnow your choices down to two, three or four groups. Attend their recruitment meetings. Every group has a distinct personality and one will match yours.
I’ve been working with these people for more than 20 years. Carpet One contains the more serious members. CarpetsPlus is friendly and family-oriented. The personalities are difficult to miss. You will feel more comfortable with one over the other and this will most likely be the right choice for you.