During the Great Recession, thousands of flooring retailers failed to survive the financial debacle as new construction business declined with the housing crash and consumer remodel budgets dried up. Those that were to survive had to learn how to operate leaner and cleaner.
At Atlanta’s Great American Floors, Jason Seltzer, together with his father Marc and mother Robie, did everything they could before, during and after the recession to ensure their Floorscapes dealership not only survived the challenge, but came out of the struggle stronger for it.
The company, which was founded in 1992, saw sales decline 65% between 2007 and 2009. After having seen nothing but growth in its first 15 years, those three tough years also saw many strong competitors disappear.
“We had to make a lot of cuts and became a leaner, smarter version of our old self to help us survive,” says Seltzer. The company had been well on its way to reaching eight figures in sales and had to relearn how to make the business work in the new economy.
A scrappy player from the outset—Seltzer’s father built the business from his kitchen table in the early days, growing it to seven figures within a few years—the company’s growth has always been strategic, including moving into their first showroom by 1996 and joining Mohawk’s Floorscapes network about five years after that.
“We looked at five or six different options [for partners],” says Seltzer. “Looking back, a few things stood out about Mohawk: They had a huge amount of resources for product, the amount of advertising they did for cobranding, and all the people and the way they do things. From the sales rep to the truck driver to customer service and marketing, top to bottom they are nothing but a pleasure to work with.”
As an example of how helpful the partnership has been, he confides when the dealership had to downsize from a 15,000 sq. ft. building to a 10,000 sq. ft. space at the height of the recession, Mohawk went over and above to send a trailer and eight people to help with the move.
“It definitely left a lasting impression,” the younger Seltzer recalls.
Today, the company just opened its second location run by Jason’s sister, Rachel, and is fast approaching its pre-recession revenues—this time with stronger margins.
“Back in the early days,” he explains, “we weren’t pricing things right. We were too low and were not making enough profit. Working hard but not seeing any money. Once we had a greater understanding of where our margins needed to be, it enabled us to do more with our business.”
Although he maintains Great American Floors always works to give a fair price to customers, that “fair” needs to cover all the overhead—taxes, insurance, marketing and warranty service, salaries, etc.—the company has to endure before it can start earning a profit.
“Many competitors are so focused on getting the sale they don’t find out until after the job is complete that there is not much left [for aftercare],” Seltzer explains. “What they don’t realize is, when Ms. Smith calls back six months later with a problem and you have to send a guy back with a $100 trip charge, well. Since we make our margin with the initial sale, we can go back without any charge and a smile on our face. It is an opportunity to surprise her in a positive way—and possibly get a referral out of it.”
To help ensure the margins remain intact, he points out everything in both stores is clearly priced. He also is extremely focused on training everyone on his team of 10 people.
“We take advantage of our access to Mohawk University,” he says. “In addition to video training, we send people to Mohawk U classes. We also go to Floorscapes conventions and regional meetings, and encourage all our salespeople to read sales and time management books. Even if you read just a page or two a day, it adds up and helps keep our people fresh and focused.”
A key element in Seltzer’s training is a one-on-one approach.
“I want everybody to be more efficient and effective on their own,” he explains. “When we first hire someone, I spend a lot of time with them, showing them around and going to appointments. I want them to understand how I interact with people and customers.”
As new people become acclimated, Seltzer shifts the focus to weekly, then monthly and quarterly meetings to ensure continual growth throughout each person’s tenure with the company.
He says the approach is important because “our customer is different [than those who go to the box stores]. Our customer is interested in going to the locally owned family business. We have 25 years of history [in the community], give better service and know the product.
“We are definitely a more high-end business that is focused on the details [compared to the big boxes],” Seltzer adds.
Those details are extremely important in Great American’s client focus. In addition to the residential retail base, Seltzer targets custom home builders, remodeling contractors and medical facilities.
One of the biggest benefits of working with remodelers has been the consistent business since the company began targeting the sector about 15 years ago. A member of the National Association of the Remodeling Industry (NARI), he says of the market segment: “It’s all repeat. If I carpet a residential customer’s whole house, we’re done for a long time—besides referrals. With the remodeling guys, we see more recurring revenue.”
Although the sector is slower to pay and margins are slightly lower than traditional retail clients, it has provided the business with a great deal of repeat work. As such, the targeted marketing spend and effort is similar to what Seltzer uses for his more traditional retail clients.
“We stay away from apartments,” he notes. “I haven’t figured out how to make money doing that work. We also don’t do new construction with builders that do 400 to 500 homes a year.”
Going forward, Seltzer is focused on Great American Floors’ continued growth through partnerships. In addition to his relationships with Mohawk through Floorscapes and NARI, the company has invested in equipment and training to become a Bona certified contractor.
“There were a number of years where we were the only people in town who could actually say dust-free,” he states. While there is now more competition and the equipment is not cheap, the expense works to keep smaller players out of the segment.
It seems to be working. Although the company has not returned fully to its revenue heights from before the recession, it has seen positive growth for each of the last seven years and with what it learned from the economic downfall and the way things are moving, it is poised to reach a new sales peak in the near future.