It was estimated in 2010 there were between 11,000 and 12,000 establishments selling floor coverings in the U.S. That number, according to many experts, has contracted to an estimated 8,000 to 9,000 in 2015. In the face of diminishing numbers of independent floor covering retailers, a great deal of pressure remains on the players who are still in business, as they continue defining the roles they plan to serve and outline the market position they hope to fill in the years to come.
Size doesn’t appear to be the answer for all to ensure their longevity in the retail flooring arena, but it also appears to be a very popular tack many retailers elect to take. Many retailers have expanded not only within their own markets but into new markets, yielding more multi-store operators. So in reality, the number of storefronts has not minimized as much as it might seem.
This trend is expected to continue and to further reduce the overall number of independents. On top of that, home improvement and other big box players continue to increase their effectiveness and grow their market share. And that doesn’t even begin to take into account the effect online players will no doubt have on the industry in the long run.
This, however, is a look at the inner workings of one particular retail organization and its principal. This retailer has been enjoying exemplary growth for some time and has remained financially sound throughout the economic downturn, permitting him to seize opportunity when it presents itself and grow in a variety of directions and geographies.
We’re talking about Donny Phillips, owner and president of Atlanta Flooring Design Centers in Suwanee, Ga., and now in Charlotte and Raleigh/Durham, N.C., Birmingham, Ala., and recently Chattanooga, Tenn. We had an opportunity to sit down with Donny in his headquarters in Suwanee. You can listen and watch this conversation in its entirety on the TalkFloor website in the archives. Here are some excerpts from that conversation.
TF: Talk about Atlanta Flooring Design Centers and its growth patterns over the last several years.
Phillips: We have long felt that a flooring store, if it can achieve a balanced approach within the marketplace, will be a much more bulletproof organization. As a result years ago we set out to do retail, commercial and some builder. Thankfully we were mostly out of the builder segment before the 2008-2009 challenge. We jumped back into the builder sector in late 2009 and in 2010, and it turned out to be a saving grace for this company.
We still continue to do business in the retail sector and have done a very good job in the commercial sector for some 30 years now. Over the past six years we have grown tremendously on the builder side. That has permitted us to grow, add square footage to our buildings and we have been very fortunate to be able to hire several new people.
In addition, we have added a new building right next door to this location (our retail showroom and headquarters) and have opened a cash and carry location, which was really the last piece of the puzzle for us in terms of selling flooring. It has a warehouse atmosphere and products for the DIY market. It does seem a bit strange to have a cash and carry location less than 100 yards from our full-service location, but we can cater to each customer depending on their needs when they come in the door. It also enables us to move out leftover merchandise that we don’t have a good outlet for otherwise.
The remaining element of the business is we also do carpet cleaning. We have our own truck and crew to care for our existing customers—customers we have serviced for years. In addition we have also decided to get into the cabinet business and we will be opening a kitchen and bath showroom in January. These additions will balance us out even more.
TF: You have embarked in some very serious expansion in recent years. You started in the Atlanta area and have grown to opening locations in the surrounding states. How did this expansion evolve?
Phillips: I am the American dream. We have been blessed, starting as a one-man operation in 1985 in a location that was about 1,000 sq. ft. Through a great deal of hard work and some excellent opportunities that came our way, we continued to grow the business in a very healthy way for a number of years. We grew from that 1,000 sq. ft. showroom to a 4,000 sq. ft. showroom.
Five years later, we moved into our very own building of about 6,000 sq. ft., adding onto it several times over the years and staying there for about 20 years before we build our current location. I can thankfully say the business has grown every year for the 30 years we have been in existence, except for 1990 and 2008.
Recently, we have had some fast growth. I won’t say the growth was unhealthy; it’s just difficult to keep up with. In 2010 and 2011 we were able to hire some very good talent with prior flooring experience. By 2012 and 2013 we began running out of such talented people and it became a bit more difficult. We have added in excess of 100 people in the last couple of years.
When you grow at that pace, it’s difficult to maintain the company culture, which is important to the management team of Riley Gazzaway, VP of sales, and Frank Winter, executive VP. We want very much to keep the company culture, which is “serving one customer at a time,” in place. And with such rapid growth it is a challenge. We place a great deal of emphasis on hiring and training people properly and make sure we can retain them.
TF: Was the motivation to expand as you have in recent years to ensure your longevity? Was it ‘bigger is better?’ If not, what?
Phillips: We never had a plan involving bigger is better. But we have always enjoyed healthy growth. We had a good foundation, but when 2008 and 2009 hit I was as scared as anyone. And thankfully—and I mean truly humbly thankfully—we did not lay anyone off. There were a number of pay cuts around here and it was pretty difficult for us to make it through, but we made it through it and if anything it just continued to cement my approach that we need a balanced operation. As a result we have looked for opportunities in the marketplace to add to the commercial, retail and cleaning operations we have in place.
We had had done some custom builder business but not a great deal, so we added the tract home builder segment in 2009 and that move really permitted us to grow. I can’t say when we made that move I expected we would grow to the size we are today. But since it has happened we believe it is to our advantage to continue to work on those synergies among the builder, commercial and retail segments, and use one to help support and enable the others to give the customer the best deal we can give.
And I think it takes a heck of an operation that can blend all of these businesses and make it work. It also helps us to have the manufacturers that operate in a number of different markets to look at us as being important in many divisions. Plus, I have always felt if we have a healthy, balanced store it would knock off the highs and lows. In the end that is a good way to be.
TF: Getting customers in the door remains a pivotal element of retailing. Most shoppers now begin their campaign online and use it as a source for educating themselves. How would you describe your philosophy towards digital marketing?
Phillips: Now you have asked a question that is over my head. I am not sure that I have the answer as to how we correctly tackle this problem. It all really goes back to the fact that we want to do a very good job when it comes to service. We want to make sure, when we sell a job and service that job, we have an opportunity to work with that customer’s neighbors and friends. We still feel that word of mouth is the strongest advertisement possible.
We have an individual on staff whose job is to work full-time on social media and make sure we are properly presenting the personality and the culture of Atlanta Flooring Design Centers. We feel a company’s culture when perceived by a millennial is a little different from that perceived by someone my age. As a general rule, people my age don’t necessarily rely on social media to help us develop a feel for the personality of a company. Younger consumers, however, do look to social media to help them evaluate the culture and the personality of the people they want to do business with.
So, we have a younger person on staff, he’s 30, and it’s his job to frame our appearance and personality on social media to the millennial. But I’m not sure if this will get us one more customer or 1,000 more customers. I don’t necessarily want to be ahead of the curve—I just really don’t want to be behind it.
TF: You have built a balanced operation, and you are in all of the basic categories including maintenance. What are you contemplating for the future?
Phillips: We have experienced some great growth. Our future really depends on our continuing to attract new employees. We have so many that have been with us less that one or two years. We need to concentrate on training those employees to understand the company’s culture.
I know it sounds very simplistic when I say “one customer at a time” or “one phone call at a time,” but my goal is to make sure we have the culture in place to take care of every customer that calls in, walks through the door or touches us via digital communication.
However a customer gets to us, we want to make sure they are treated with respect and treated fairly. So the future for us is to make sure we digest what we have been blessed with over the past three years. Beyond that there could be some expansion into additional markets and adding some division to our existing branches. Frankly, I don’t wake up in the morning and think about ways we can become a bigger company. I wake up in the morning and think of ways we can become a better company.
Editor’s Note: To watch the full three-part interview with Donny Phillips, visit www.floortrendsmag.com/videos, scroll down to the Most Recent Videos and click back by pressing “Load More” until the videos posted under the title “Donny Phillips, Owner and President, Atlanta Flooring Design Centers” appear.
We’d love to hear your feedback on this and other conversations you’ve watched or listened to on the site, along with any ideas you have for people and companies you’d like to see interviewed. You can contact either Dave Foster at email@example.com or Matthew Spieler at firstname.lastname@example.org.