July 18/25, 2016; Volume 31, Number 3
By Steven Feldman
The year was 1991, and the floor covering retail landscape was about to forever change. The smaller, independent dealers were aligning and home centers were beginning to sell carpet. Suffice it to say, these new dynamics were not going to play in favor of the high-volume players.
These larger dealers had not found success by accident; they were proactive, forward-thinking businessmen and it was time to act. Enter Charlie Levin, the president of Sandler & Worth, a multi-store chain in the New York metropolitan area with a sales volume surpassing $10 million. It was Levin who approached Jeff Helman of Mid-Atlantic retailer Carpet Fair and Bunny Fain of New England-based Carpet Giant about capitalizing on their purchasing clout.
“The idea was that Carpet One and Abbey were doing pretty well and CarpetMax had just formed, all to address the needs of the smaller retailer,” said Levin, who exited the business 15-plus years ago and now owns Pathfinder Consulting Group, a full-service consulting and Internet technology firm in New Jersey. “Plus, Home Depot had recently gotten into the carpet business. The mid-size to large retailer who previously had advantages due to their size were losing those advantages. So my idea that gave birth to the NFA was a way to give a little leverage back to the larger, regional retailers.”
Aside from the challenge coming from groups and the home improvement center model, DuPont was becoming a thorn in the side of the bigger retailers by putting a lot of Stainmaster advertising dollars behind Carpet One. “That changed the focus in the marketplace,” said Fritz Munzinger, former owner of Baker Bros. in Phoenix, an original NFA member. “In every market there were bell cows. Now you have these mom-and-pop dealers advertising on the back of Stainmaster. For example, in Phoenix, Tollivers was just a dealer. Now they are spending money like Baker Bros. Where is this coming from? It’s coming from support outside its realm. Support is coming to the buying group at the expense of big dealers in the marketplace. So we had to band together to improve our leverage in the marketplace.”
The original concept was simple: Form a group of higher-volume flooring retailers that would strike unique deals with manufacturers and share best practices. There would be no geographic overlap and, thus, there would be no competition among its members.
“I had already been doing the idea sharing from meeting these dealers during various trips and markets,” Levin recalled. “The casual idea exchange was so valuable that I thought a structured environment, plus what I thought we could bring in negotiations with vendors, would be valuable.”
After talking with Fain and Helman, Levin invited a dozen retailers doing at least $10 million in annual volume to the Atlanta Market in January 1991 at the Peachtree Plaza. A PowerPoint presentation showed how their industry position was eroding, the challenges they were facing and opportunities that could manifest themselves if the dealers could form an organization and act as a larger, stronger whole. The presentation resonated with eight of 12, who joined immediately and met a month later at the first official meeting in Scottsdale, Ariz., where the National Floorcovering Alliance moniker was born.
Levin, who served as president for the first five years, said the early years were not without its obstacles. “The interesting challenge was getting a group of very skilled, high-energy entrepreneurs into a room and having them agree on anything. I felt I could be a relatively effective facilitator and help them see the [wisdom] of compromising some of their desires for the greater good of the group and share information they probably never shared before.”
That was the internal challenge. Next up was trying to get the same deals that were being given to other large retail organizations. “The mills hated the idea because they were concerned we had formed to take money out of their pockets,” Levin explained. “But we were able to show them the benefits of working with the larger retailers to develop and distribute products. In the end, they came to the realization it was more beneficial to work with us.”
Carpet Giant’s Fain said it was critical for the NFA to stretch regionally across the country. “The idea was to focus on one or two manufacturers in order to provide an assurance of volume across a number of states. At the time we were less concerned about the retail floor and fixtures; the idea was to create a single image. We were less concerned about a single, identifiable brand name—that came along later. We were most concerned about rebates.”
The original mills that supported the NFA included JP Stevens, Philadelphia, Aladdin and Beaulieu, and not every member was enamored with the lineup. “We were negotiating certain deals with the vendors on behalf of all the members,” Levin said. “If we made a commitment to a manufacturer, we agreed to put our buying power behind it so getting people to buy in was a big challenge, especially when they may have been doing more business with other suppliers.”
Munzinger put it in perspective. “A dealer would have a mill he was doing a nice job with, then the NFA would select a few mills by the vote of the membership. If you didn’t get your mill in, you didn’t have to throw it out; however, you would have to commit to the mills the group selected. So you may have to change the profile of how you were doing business and with whom you were doing business. That was one of the early dynamics. But we fought through it.”
Sam Prizant, former owner of Prizant’s Carpet in Pittsburgh and an original member, believed Levin’s ideas were good, but the group lost some effectiveness in the early years because the members were all strong-minded individuals and independent thinkers. “So even through we supported the NFA, we didn’t give fully of our efforts. Oftentimes there was conflict between the participants.”
The conflict ranged from something as specific as vendor support to general issues such as the overall direction the group should take. “The idea was to buy together, but with such a diverse group we couldn’t agree on enough products to buy,” Prizant said. “Some of us were similar, but we all had different ideas as to what products we should have. What worked for Bunny Fain in Boston did not necessarily work in Pittsburgh. Some people were higher end and wanted to go that way in their approaches. Then some people thought we should have a very informal organization, while others thought we should be doing more things together as a group. Those people may have been a little weaker financially. But it evolved to a point where we did enough things as a group to make it much more effective.”
Gary Cissell, former director of flooring for original NFA member Nebraska Furniture Mart in Omaha and the group’s third president, added that another conflict involved rebates, specifically trying to get more money for one product category vs. another. “That created constructive tension. How the rebates were split up and how we funded the group was always a discussion.”
Prizant said the group became more effective under the auspices of Doug Chadder-don, owner of Carpet Center in Coeur d’Alene, Idaho, who took over the presidency in 1995 after Levin. For example, an offspring of the NFA was a computer software company that developed programs specifically for the group. “It enhanced our businesses,” Prizant noted. “We were all stockholders in the company, and eventually it was expanded to serve dealers outside the group. That was one of the main benefits early on.”
Another benefit of membership, he said, was to secure more advertising dollars from the vendors. “I still don’t know if we ended up getting more dollars as a group than we would have individually. Remember, you needed to be doing $10 million in volume to join the NFA. At that volume, most people were getting the advertising dollars.”
And, of course, the exchange of ideas was then and still is to this day worth the price of admission. “We had meetings twice a year and one of the criteria was you had to come with a ‘best idea,’” Prizant said. “One of the things I did involved certain inventories, specifically remnants. I had a policy that after 90 days I would mark a remnant down, and if I still had it after another 30 days I would mark it down again, and I would repeat that every 30 days until I got rid of it. It prevented me from having any stale inventory.”
Baker Bros.’ Munzinger agreed one of the biggest early benefits was sharing best ideas. “For example, I never recycled cushion, then Steve Coles came in and talked about it. I can’t tell you what that did to my bottom line. I started doing a trailer a month.”
Carpet Giant’s Fain said one of the best things about the NFA was the interaction of the individual personalities where anyone could learn from anyone. “You tend to be very isolated in this business, except when you see a manufacturer at a market. But the idea of having eight or 12 retailers in the same room and discussing business and socializing was of importance to all of us. That may not have been the original objective, but it was one of the primary advantages.”
In fact, according to Munzinger, when the group looked to add members it brought in people with different marketing strategies. “Nebraska Furniture Mart was all about getting market share; the same with R.C. Willey. Baker Bros. was all about margin. So, a lot of what was shared was how to grow both at the same time. The one thing we did not share was pricing. We bought independently from the suppliers, negotiating the prices we were entitled to. If we compared notes, it was done outside the NFA.”
So 20 years later, much has changed with the NFA, but the group’s core values of rebates and relationships remain intact.