By Steven Feldman
AUSTIN, TEX.—Like every flooring retailer in the U.S., the 37 members that comprise the National Floorcovering Alliance (NFA) are trying to maintain their business in a down economy. However, these high-volume dealers, among the best in the business, are doing so with the help of each other. In fact, as the group seeks to expand, the networking opportunities and camaraderie are among the biggest selling points.

According to Jon Pierce, general manager of Pierce Flooring and Design, Montana, who steers the membership committee, the group is seeking to grow by about two members each year. “There are good geographic areas, both in the U.S. and Canada, where we have not approached anyone,” he said. To that end, Pierce implored members to find leads and invite prospective members to the buying group’s next meeting during Surfaces.

But although the NFA wants to continue to show growth in the eyes of its vendors, the criteria for membership into this exclusive club is steep. Right off the bat, $10 million in annual business is mandatory. Upstanding character and professionalism is also obligatory. Then, after what can best be described as a full-group interview process, 100% approval from the existing members is required. This bylaw, among other things, ensures no new member will encroach on another’s trading area. “We need to find people who can add something to the group and make a contribution,” said Sam Roberts, Roberts Carpet and Fine Floors, Houston, and immediate past president.

What does membership into this tight fraternity afford a retailer? Jeff Macco, Macco’s Floor Covering, Green Bay, Wis., and NFA president, cited five competitive advantages:

1. Networking with some of the industry’s sharpest minds.

2. Singular negotiating positions with vendors (direct relationships).

3. “The best rebate structure of all the groups. We have 100% pass through of rebates. In fact, we were just audited by the IRS and everything coming in was paid out.”

4. Non-competing members (see above).

5. “A great group of people. We emphasize the social aspect because some of the best information is exchanged in this atmosphere.”

Members agree. Zac Akin, COO, Akin Brothers Flooring, with three locations in Oklahoma City said the best thing he gets from NFA is the best practices segment. “I always want to hear what everyone else is doing, whether it’s advertising, shop-at- home or Internet. I gain a lot of knowledge from everyone’s expertise.”

One of the best things Akin has come away with is a meaningful Web strategy. “I specifically asked every member for feedback—what’s good, what’s bad, and we really came up with an efficient Web site. Initially we figured it would be strictly informational but it has become a useful sales tool.”

Akin said traffic may be down 20%, but business is up 2% thanks to bigger tickets. “The people who have money are spending it,” he said. “Themiddle has definitely gone away, particularly carpet. ”

Jimmy Poulos, president, Flooring 101, with four locations in Ventura County, Calif., is also seeing a drop-off in traffic being offset by bigger tickets. “Affluent people are still purchasing, but we have to be more competitive, sharper and work harder.”

Poulos believes the best thing about NFA is the exchange of ideas with other members. Probably the best advice Poulos has come away with is to “think big,” particularly as it relates to purchasing and inventory. “I used to be cut order; now I’m a stocking dealer because I learned this way you have better availability for the consumer and better pricing, which means higher margins.”

Poulos has also instituted better inventory control systems as a result of his networking with other members. “I have computerized everything, bar coded everything. Now there is no waste, I stock the right products and provide faster service.” He also noted how he has learned about all the various training opportunities available to him from the many floor covering associations.

Pierce Flooring and Design’s Pierce is one of the few retailers who classifies business as “very good. Montana is not in the mainstream of the housing demise, and we’re somewhat insulated from the impact of the negatives on our economy.” He cited the Armstrong direct relationship as something that would never have happened without the group effort on behalf of the NFA.

As for specifics, Pierce noted how his company is committing to recycling all used carpet and cushion, residentially and commercially. “We learned how to achieve that through my association with NFA dealers. We have collection trailers at every one of our locations and have built tear-out into the price.”

Phil Koufidakis, president, Baker Bros., with eight locations in the Phoenix area, noted the best thing about NFA membership is the ability to share ideas with “non-competitive, smart guys who have been in the business for a long time. We have built great relationships; these are all great people.”

As an example, Koufidakis mentioned how he uses the group for information on potential suppliers. “When you check out a new vendor, what’s a better endorsement than having five guys giving a thumbs up—whether we are talking about claims, service, etc., third-party endorsement helps put your mind at ease.”

Members are not the only ones who see the value in the NFA. Wilsonart, a major supplier to the group, gets a bit of an education at the one-on-one vendor meetings, a staple of NFA conventions. In fact, every member is required to spend 20 minutes with each supplier.

“We talk about business in their respective markets,” said Russ Rogg, director of sales. “Each of these businesses represents the best game in town in their respective cities. As much as we are looking to promote our initiatives, we also sit back and learn as well.”

Steve Staikos, Armstrong’s general manager, strategic accounts, is also a fan. “The value for us is the one-on-one conversations. Because NFA members are the key retailers in each of their respective markets, as these guys go, we go. It’s important to show what we are coming out with, but also to get a feel for how they are doing with the products we already launched. That dialogue has helped us move faster and make adjustments in the marketplace. It also allows us to understand how we can better serve the needs of the retailer.”

Wilsonart’s Rogg and Mark Kieckhafer, national sales manager, added that because vendors are included in dinners and activities, there is an “unparalleled opportunity to get to the know the membership on a personal level that you could never experience with any other group.”

Direct relationship revisited NFA created headlines a couple of years ago when it negotiated a groundbreaking agreement with Armstrong, where the mega supplier would deal directly with the group in terms of pricing and billing. Today it has become a cornerstone of NFA’s position.

“I think it’s one of the most successful things we’ve taken on as a group,” said Jim Jensen, Carpet Mill Outlet Stores, Denver, and NFA board member. “I think more members have embraced this program and all the smaller programs built into it than any program since I’ve been an NFA member. What it does is create a competitive advantage in the marketplace that I would otherwise find difficult to achieve.”

Jay McDonnell, Custom Carpet Centers, Buffalo, N.Y., and NFA board member, said the Armstrong program took off, in part, because members recognized the company really stuck its neck out as it didn’t know how it would be received by distributors and non-NFA dealers. “We felt compelled to give them more floor space as a result of them being on the cutting edge and taking a chance.”

Macco said a major benefit is large truckload buys. “Many dealers in this group can take advantage of that [because of their size and ability to stock]. It gives us the ability to enhance our margins.”

Armstrong’s Staikos said the relationship has been beneficial for the supplier as well. “The direct deal is an opportunity for us to have quicker, better, one-on-one communication with the key decision makers versus that extra step via distribution,” he said. “And, of course, our business and market share is increasing with these key retailers because of our direct relationship with them.

Macco noted that the board has been tasked by NFA members to create similar positions with other vendors and is in the process of negotiating similar deals. And the suppliers have been more than receptive. “Vendors who have lost market share with the group as a result of the Armstrong deal have approached us about offering a similar type program,” he said. “But to this point either a particular member could only support one vendor or the deal has not been good enough.”