Evan Hackel

By Steven Feldman
Cincinnati—With challenging business conditions as the backdrop, Carpet One Floor & Home members at their summer convention held here earlier this month were implored to recognize the world is changing around them and, in turn, adjust their business strategies to capitalize on the opportunities these changes present.

“What made you successful before is not what will make you successful in the future,” said Evan Hackel, president. In illustration, Charlie Dilks, COO, cited the way we purchase music today. Tower Records, a major retailer for the better part of the last 30 years, recently shut its doors because of a different model: The Internet. And coffee shops are falling by the wayside because it’s no longer enough to just sell good coffee, as Starbucks has proven.

Much of this is being driven by a changing consumer. “The expectations of the customer is much higher than ever before,” Hackel said. “For example, it’s not enough to have the best flooring store in town. Consumers are now comparing their experience in your store to the likes of Pottery Barn and Best Buy. They demand more service and a better shopping experience.”

The customer isn’t all that’s changing. Take product, for example. Hackel noted how the middle part of the market is eroding in lieu of low- and better-end goods.

But possibly the most significant change involves the competition. It’s not just traditional brick and mortar retailers and the big boxes anymore. In fact, Hackel cited the Internet as concern No. 1. “Lumber Liquidators is doing more than $100 million over its Web site,” he said.

Then there’s iFloor, which has expanded its presence beyond e-tailing. “iFloor just opened up its 30th location, and the goal is to have 300 before too long,” he added. But it’s not the traditional retail model. The stores are 5,000 square feet, most of which is warehouse space. Customers who have bought online are using these local warehouses to pick up their purchases to reduce the cost of freight. Meantime, the showroom is filled with product iFloor has imported itself, like cork, bamboo and hardwood. “iFloor is highlighting these products in its stores because they make 40%-plus margin. So the model is to have a depot for customers to pick up their goods, while the stores are used to push high-profit items.”

To compete in this changing environment, Hackel called for members to continue to embrace all aspects of the Five-Year Plan because “that’s the best way to gain market share as we build the Carpet One brand.” He acknowledged that while members are reluctant to adopt new programs in tough economic times, it is during these times when members must move forward.

Mark Healy, Kensington Carpet One, Calgary, Alberta, Canada, is a proponent of the strategy. His business has tripled over the last three years, and he attributes the growth to many components of the Five-Year Plan. “You have two choices: either change or die,” he said. “You can’t solely blame market conditions for slower sales. As the economy changes you have to change.”

One component he has embraced is Online University. “The customers are better educated than they’ve ever been, so we need to make sure our staff has that same type of training. I don’t know all the answers, but Carpet One can provide me with systems to help me improve.”

Customer First

In response to increased customer demands, Carpet One is launching the revolutionary Customer First contact program with a major pilot under way this summer. The goal is to create a unique and memorable experience with Carpet One customers—not just inside the store but long after they leave.

“It’s an effective way to manage brand experience,” Dilks said. “It’s more than about the look and feel of the environment, but also about our people. It’s the residual effect they walk away with. It’s what compels them to tell others about us. This is what builds a base of repeat and referral customers.”

The program was born from mystery shopping results that revealed flooring customers did not see much difference between Carpet One stores and the competition, which included home centers, independent retailers and other groups. “Customer First offers the tools to help make us stand out,” said Brian Metcalf, senior vice president of training.

The key elements:

1. Customer satisfaction: Whether a customer would recommend a particular company is the differentiator that tells if the customer is loyal and will come back. One component of the program is the Net Promotor Score—Promotors - Detractors = Score. This measure is currently being used by companies like Southwest, Saturn, FedEx and Costco, and currently being piloted with 10 Carpet One members.

2.Education:A broad program is being put on Carpet One Online University.

3.Sales support tools: New P-O-P and marketing tools will be introduced.

4.Hospitality: Carpet One will provide members with branded bottled water and logo-ed chocolate chip cookies. This shows customers the member is part of a national brand.

5. Uniforms: Professional looking uniforms from a national company for installation teams.

6. Mystery shops: Measures how well the member is doing.

7. Customer Relationship Management: Tracks when the customer came in, what she bought and so on. Information can be tracked in different ways—what she is interested in, what type of family she has, etc.

Building Internet presence

Today’s consumer is also changing in the way she wants to shop. She wants choices. To that end, Carpet One offers three options: in store, online or in home. And online is one area on which the group is particularly focusing, especially in light of the fact Internet sales in the U.S and Canada is expected to reach $1.5 billion over the next 5 years.

Relaunched in January, carpetone.com is getting 1.3 million visits from 825,000 visitors daily, according to Stan Langer, vice president of marketing. “These are all potential customers—customers who are in purchase mode. Every day we are receiving requests through the site for samples, measures and information. Some people are strictly buying.”

One reason Carpet One members need to build their Internet presence is because consumers tend to spend more when purchasing online. In fact, Hackel noted that Carpet One has an average online ticket of $2,700 versus an industry average in-store ticket of about $1,250. It’s one of the main reasons why Carpet One began buying key words on Google and other search engines as part of a paid search campaign.

“We are at tip of iceberg as we learn how to convert more of 1.3 million visits into leads that come to your store,” Hackel said, adding that he wants online sales to be 10% of each member’s volume in a short amount of time.

Laminate: Less is more

At convention the group completely revamped its laminate strategy. The focus will now be on just five strategic partners—Armstrong, Mannington, Shaw, Mohawk and Wilsonart. These are in addition to the CCA Global proprietary Global Direct brand. “Our members’ laminate strategy should not be a compilation of various vendors and displays, struggling to compete with every other store in their town,” Dilks said.

According to Jim Gould, chief product officer, the CCA Global laminate strategy was neither focused nor provided sufficient support and volume for any supplier. “We felt it was important to focus our purchasing to the benefit of fewer suppliers and, in turn, our members.”

CCA Global did not make the decision in haste. “We analyzed every manufacturer of laminate, their strengths and weaknesses, distribution methods, technologies, design, etc., and selected those we felt were the ones we wanted to partner with long term,” Gould said.

Born out the strategy is the new Mirror Lake Collection, the first exclusive laminate brand for Carpet One, according to Scott Wheeler, vice president of merchandising. The display houses 114 SKUs that feature today’s most popular hardwood visuals, such as exotics, handscraped and embossed in register. About 75% of the products are new, and there is no vendor branding. “Having your own brand means your customers can never shop the category,” he said.

The display, which is part of Carpet One’s Selecta-Floor system, was designed with both the consumer and salesperson in mind. Large samples make the unit inviting, and products are organized in a manner that allows salespeople to more easily trade up consumers, Wheeler said.

In addition, as part of the Mirror Lake Collection a smaller display houses all marble, tile stone and granite looks. And another unit, dubbed Direct Expressions by Mirror Lake, contains 30 SKUs of Global Direct product that “reaches every price point with all the benefits we feel the consumer wants today,” said Randy Gum, vice president, hard surfaces.