Marty Ackerman,left & Ken Freedman - Hoboken Floors

By Steven Feldman
Anaheim, Calif.—A familiar theme has been resonating throughout every retail group convention hall this winter: Stay true to the brand. Such was the order of the day again at the recent Flooring America/ Flooring Canada gathering here, where members were urged to not only support the Flooring America flagship but, equally important, each private-label brand as well—such as Downs Decade, Floorcraft, Hearth and Home.

Private labels make sense for groups like Flooring America and Flooring Canada, according to Evan Hackel, president of parent company CCA Global Partners, because it allows members to successfully compete against the likes of The Home Depot and every independent specialty retailer. And any brand sold everywhere risks becoming a commodity, where price is the only differentiator.

“The average retailer works on a 32% margin,” he said. “Can you make money competing at 32%? No. We cannot sell the same brands as the average specialty retailer because they sell on price. We must look for other opportunities.”

Hackel compared selling manufacturer brands to porkbellies, which are bought and sold on the mercantile exchange based solely on price. “A porkbelly is a commodity, but Oscar Meyer is a brand. Who makes money off Oscar Meyer? Oscar Meyer does. Because the brand is sold everywhere, it doesn’t help the retailer; it helps the manufacturer. So what happened? The grocery stores started to produce their own brands of bacon to make a better margin. But no one will automatically pay more for a house brand than the Oscar Meyer brand. Good retailers are building their own private brands and marketing to the consumer the value of their brand.”

And while promoting Flooring America/Flooring Canada through national and local advertising is beneficial, it is not enough. Take Sears, for example. Hackel noted how Sears sold more appliances than Maytag and GE through its Kenmore brand. “Sears is not the brand; Kenmore is.” Hence, members need to connote the value of Flooring America’s proprietary brands to consumers through advertising and on the sales floor.

“People will pay more for Karastan because of how it is displayed and the way salespeople present the brand.” He implored members to present the exclusive Bedford Mills label in the same manner. “We can make the money ourselves. The benefits of Bedford Mills go to you; the benefits of Karastan go
to Karastan.

“We must treat our private brands with respect,” Hackel added. “Don’t convert a brand we built and say this product is made by Shaw, Mohawk, etc.”

Flooring America illustrated its commitment to its private labels by bolstering a number of hard surface programs. On the laminate side, Bill Snowden, director of hard surfaces, announced the addition of Mohawk and Faus to the core Floor Trends program. “Faus is considered the leader in embossed-in-register technology and beveled edges, and Mohawk’s Unilin collection allows you to compete against non-core Quick-Step.” More than 70 products were added and will be labeled Downs Decade or Floorcraft.

Moving to hardwood, two new suppliers were added to Flooring America’s Woodtrends collection: Tarkett and Columbia. All products will find their way into either the value-oriented Hearth and Home, mid-range Floorcraft or performance-storied Downs Decade brands. “The goal with our Woodtrends program is versatility,” Snowden said. The final hardwood addition capitalizes on the partnership between Mohawk and 3M Scotchgard. Mohawk is offering 25 SKUs—12 solids and 13 engineered—all labeled Downs Decade.

A new ceramic wing display, branded as Floorcraft with Daltile-supplied product, has been created. The idea is to make it easier for homeowners to find the right product for their project by helping them choose the complementary colors and styles that best reflect their homes and lifestyles, noted Vinnie Virga, president of Flooring America.

“Customers want unique combinations that work, and this display is ideal for helping them mix-and-match,” he said. “It’s specifically designed for discovering chic, decorative accents to get that one-of-a kind look for floors, walls and complete rooms.”

The merchandiser features overhead lighting and contains 60 24X26-in. sample boards of ceramic and porcelain products as well as glass tile and stone in a range of price points. Availability is slated for June.

Diversification Opportunity

About six months ago Flooring America/Flooring Canada entered the wood refinishing business with an eight-dealer pilot program. Based on positive results, the program, dubbed Magnus Anderson, was rolled out to the entire membership at convention.

According to George Holder, president of the division, the mindset is simple: Since 1950, about 33 billion square feet of wood has been installed, and much of that needs to be refinished. “Currently there is no standard of consistent service and no dedication to customer satisfaction. A fragmented business means there are sales and profits to be made.”

To that end, the vision is for Magnus Anderson to become a national brand that clearly differentiates itself from the competition. It will be positioned as a premium service with a dust-free system, a 20-year no-dulling warranty and value-added built around a service component. The brand will develop a strong advertising position where all media types will be exploited. These include print, coupon inserts, direct mail, mobile billboards, in-store collateral materials, TV and radio spots and the Internet. The latter is key because, according to Holder, on Yahoo! alone in one month more than 9,000 searches for wood refinishing were conducted, with the average sale being $2,000.

Holder believes wood refinishing offers significant opportunity for added profits when a member combines retail business with insurance work. And the insurance industry is embracing dust-free systems, according to Steve Pigman, senior vice president, national accounts. “If insurance partners see value in dust-free systems, are they are willing to pay more? Yes. Do insurance partners need a network of professionals for sand/finish? Yes. It’s already happening with flooring, roofing, etc.”

Pigman mentioned another edge: training. “The insurance companies need training for their adjusters. You can be looked at as the industry experts. Plus, you can be first to market. And first to market dominates the market.”

National/Local Community Service

Community service on a national level with local tie-ins has become a mainstay with the group.

Flooring America has become the exclusive flooring supporter of the American Heart Association’s Go Red For Women movement to combat heart disease in women. Corporate has committed $250,000 over a three-year period on a national scale with the goal of doubling that amount when the local level is added. The partnership will include Go Red For Women events throughout North America, in addition to Flooring America’s current charitable promotions. For example, during the month of August, member stores will be holding a special Go Red For Women Red Tag sale in which a percentage from the sale of designated products will be earmarked for the national Go Red campaign.

The Benefits

How do members benefit? For starters, Go Red for Women has amassed more than 1.7 million media impressions since 2005.

That kind of exposure is important because 89% of Americans say they prefer to do business with
corporations that partner with non-profits to support a cause.

What’s more, 86% say with all things being equal —price, quality, etc.—they would switch brands to companies that support a cause. Add that to the fact that one in three female adults have some form of cardiovascular disease and 80% of Flooring America’s customers are women between the ages of 35 and 65, and the synergy is apparent.

“As owners of family-run businesses—often for a number of generations—community involvement is a central feature of the Flooring America identity,” said Deb Binder, the group’s vice president of marketing. “Now, for the first time, we’re pooling our energy and resources for a national cause.”

Virga put it in perspective: “It’s the right thing to do and benefits our customer base.”
—Steven Feldman