By Steven Feldman
SANTA CLARA, CALIF.—S&G Carpet and More, one of the largest specialty flooring retailers in the U.S., recently hosted its first affiliate summit meeting here. One year removed from the launch, more than 10 retailers have signed on, including Tile Outlet, a national chain of 100 stores that did nearly $30 million in 2007.
The retail strategic alliance program is designed to allow smaller independents to capitalize on S&G’s 60 years of proven success. “What’s good for S&G’s eight corporate stores is good for S&G’s affiliates,” said Gregg Flint, national vice president.
By his own admission, the program is still in its infancy. But Flint has set lofty goals. “I see S&G becoming one of the largest buying groups in the country,” he said. “Last year was spent putting this whole thing together. The systems are now in place. There is a more defined understanding of what we are offering to our affiliates.”
Manufacturers are also buying in. “They are more accepting of the program, cooperative with the pricing and more supportive of our affiliates,” Flint added. “They know we are not going anywhere.” He particularly cited Mannington, which came in with two truckload buys of laminate and hardwood. “This allows us to support our affiliates with stock inventory of a brand name product.” As well, he noted Beaulieu and Mohawk have come to the table with sharp pricing and support to the affiliates.”
The S&G hallmark is to offer affordable quality from around the world, mixed with products from domestic manufacturers. It imports about 70% of its wood, laminate and ceramic, which creates an opportunity to offer smaller retailers higher-margin, private-label products that will differentiate them from the competition. Although S&G imports such a large portion of what it sells, its suppliers manufacture product to its specifications.
“We design it, color it, pattern it and then private label,” said Gary Miceli, president. “Trish Camara is our high-end brand, Casabella is our handscraped hardwood, Lantern hardwood and laminate is our mid range.”
Members can also piggyback on S&G’s prowess in marketing, merchandising, advertising and more. According to Miceli, the key to the program is flexibility. For example, members will have the option of keeping their existing name, changing to S&G Carpet and More or incorporating S&G into their existing name. “We want them to remain independent and maintain an identity in the marketplace,” Miceli said.
At the same time, he noted advantages to using the S&G name and promoting the affiliation. “We spend more than $1.5 million a year in print, cable TV and radio advertising,” he said. “We have no problem if they want to ride our coattails.”
Flint highlighted a number of advantages to joining the S&G alliance:
1. Increased profitability and margins (S&G’s average margin is 44%). He noted S&G’s exclusive products will never be found on the Internet or on the shelves of another store down the street. As well, private labeling prevents price-comparison shopping. Finally, retailers will have the benefit of capitalizing on purchasing power that is afforded only to retailers the size of an S&G.
2. Advertising. Members can get ad slicks with the ability to customize. They can also take advantage of already produced TV commercials and radio scripts with personalized tag lines.
3. Merchandising and store layout. S&G will come in and redo and re-merchandise a showroom to maximize space and create a professional and inviting environment.
4. Training. S&G provides a full training manual for selling.
5. Private label S&G credit card. Selling credit results in higher ticket prices offering consumer credit.
6. Annual summit that provides networking opportunities.
7. Customized Web pages for a nominal charge.
8. Dealer locator on the S&G Web site.
9. Sales calendar with monthly promotions.
He noted S&G is currently looking at varying finance programs, health insurance, a linked computer network and trusted resource list for its affiliates.
Follow the fold
Flint believes all retailers have to do is follow the blueprint. “We provide them with the formula; all we ask is that they use it,” Flint said. “We want them to emulate our business model yet remain independent. They can pick and choose what they want to do but we recommend they stick to our model.”
Dave Henderson, Sequoia Floor Design, Placerville, Calif., became an S&G affiliate two months ago because he wanted to be part of a larger buying group and have more stock items. “S&G is a good name to be associated with,” he said. “People recognize it. And that helps with my goal to service Northern California—from Sacramento to the Bay Area.”
Just in the last two months Henderson is already getting calls from his Internet exposure. “I totally expect to see a significant increase in sales. In fact, I already saved a customer $1,500 on a laminate job because it was a stock item versus having to go special order.”
Ron Amin, S&G Capitola Carpets and Vinyl, Capitola, Calif., joined a little over a year ago after 30 years in business. “I joined because I needed the advantage of a buying group,” he said. “I had been a member of another group for 19 years. But when business went south, they dismissed me. S&G offered what I deem a family atmosphere, and they actually look after me.”
That’s not all. “The close proximity of S&G’s corporate store and the customer base they al-ready have grown encompass my area. And the name is more recognized in my area than the [name of the group to which I previously belonged]. I’ve had more response being associated with the S&G name in a year than I had in 19 years with the [other group’s] name. So it was a no brainer.”
There are three tiers of membership: platinum, premium and a la carte. Platinum membership, at a cost of $30,000, gets 40 sets of samples and complete computer access, where the member can place orders online. Premium membership costs $15,000, gets 20 sets of samples and limited computer access. The a la carte level comes with monthly fees running anywhere from $800 to “negotiated.”
S&G’s roots trace back to 1948, when the original owner, an installer from New York, moved to the San Jose area and opened a store called S&G Discount Outlet that sold carpet, linoleum and vinyl tile.
Over the last 17 years, the business grew from one to eight locations and sales jumped from $10 million to $35 million-plus in 2007. He attributes the growth to hard work, servicing the customer, honesty and a medium-to-high-end product mix.
For more information on the S&G affiliate program, contact Flint at 916.730.0550.
