January 2/9, 2017: Volume 31, Number 15
When Beaulieu America expanded Steve Hillis’ role to include both the commercial and now residential businesses, they were tapping a man with a wealth of floor covering experience. A big believer in customer feedback through dealer councils, Hillis knew from day one that the residential division was stuck in neutral for the past few years in terms of product development and marketing. With the family-owned business now positioned for growth, Hillis sat down with FCNews’ publisher Steven Feldman recently to discuss where the company is heading.
How does Beaulieu sit today from a financial standpoint?
Being a family-owned business the financials are private, but we are actually doing fine. We have no long-term debt, we have solid equity in our business, great manufacturing facilities and great people. The company is not for sale, we are not going out of business and we are focused on building the business for the next 38 years. We are investing in the business as evidenced by the fact we are launching new carpet and hard surface products in January and more excitement in our sales team than we have had in the last five years.
Talk about the management changes in 2016. What does that mean for the company?
The main thing is the second generation of family is coming in to guide the business through its next chapter. We have established a new board, a new management team and we are finalizing a business plan focused on the next five years. The idea is to set the company on a new direction, and that new direction is focused on building strong partnerships with our customers—both residential and commercial. That is the core philosophy on which this company was built, and we are getting back to that. We lost our way a bit over the last six years with different selling strategies. The focus now is on getting back to our roots: developing great relationships and servicing those relationships.
How was business in 2016?
I have to answer that two ways.
Commercially, it was one of the best years we’ve had in a long time. We improved our profits in 2016 on the heels of many changes in manufacturing and a lot of new product development. I also attribute that growth to superior sales training. We put an aggressive sales recruiting program together a couple of years ago and hired talented people to move our business into the high-end commercial specified market. The second thing is listening to our customers. When I took over the commercial business two years ago, the first thing I did was develop a design council. Our products were stale, and we hadn’t invested in marketing. We meet with this council every six months and get input on styling, color trends and sustainability, and that has driven our product development for our commercial group.
On the other hand, residential has been in neutral for the last five or six years. We did not have a good direction where we wanted to go, so we had not invested in new fixtures and products. We kind of became irrelevant. Product and service had suffered. We had focused more on the big box than our core business, and that affected our quality and service. So that had to be rebuilt.
Are you focusing more on PET or nylon these days?
We think being strong in both yarn systems is important. We will have a renewed and energized investment in nylon but we are creating more styling and innovative carpet products in both systems. We used to be one of the strongest solution-dyed nylon houses for years, and we will go back to that. You will see us moving into that upper-end, stylish market we feel will be important.
How does Beaulieu provide value to retailers?
The short answer is strong, trusting partnerships. We are a family-owned business, and we identify with our customers on a personal level.
What differentiates Beaulieu? What do you do better than your competitors?
No. 1 is we listen to our customers. I think a good illustration of that is my first 100 days was not spent sitting in Dalton trying to figure out the next business plan. We are in front of our customers, in some cases bringing them to our guest house in Dalton.
No. 2 is responding to our customers’ needs with product offerings and displays. The displays we are about to launch are unique to this industry. This came from listening to our customers, what the showroom of the future will look like and how technology plays into this.
No. 3 is giving retailers an opportunity to expand their Main Street commercial business. We have these products in a different division. Our industry has always operated within silos. Who suffers? The customer. To my knowledge we are the first manufacturer to break down these silos. Residential, commercial and hospitality—which have always operated separately—now operate as one. If a customer wants a printed carpet for a Main Street job, he can have it. Our salespeople have twice as many products to offer than they did two months ago. I think next year that will be one of the most powerful differentiators we bring to our customer.
No. 4 is we know our customers. People used to know they could call Carl Bouckaert on a Saturday afternoon and he would stop what he was doing to solve that problem. Our customers expect us to respond quickly and we are committed to this level of service because we truly care about our customers.
Why should retailers consider you in 2017? How do you help them make money?
We help them make money by giving them better products and merchandising that helps them win in their market, and we will launch those the first week in January. The other is we are a low-cost producer in what we sell, so bringing great value to the products they sell is important. Third is investing in sales training. We not only teach our people great selling skills, but we also are now training our customers’ salespeople. When I ask retailers about their biggest challenge, it is training their salespeople. We have many training modules built around helping salespeople improve their selling skills.
How has your diversity into the hard surface game been received by your partners?
Very well. When we launched the COREtec products, our sales force built that brand and our hard surface business went through the roof. We are launching in January some new products with a waterproof core called Impervio. We also have laminate, engineered wood and now commercial sheet vinyl.
You currently source from overseas. Could you ever see owning your hard surface manufacturing?
The short answer is yes. We may consider that in the future—whether through acquisitions or greenfield (starting something from scratch). We have always been a big carpet and rug manufacturer and we must stay in tune with changes in the flooring market. That’s the kind of thinking we have toward the future and how we can better service our customers.
What has been the impact of Shaw’s purchase of USFloors, a supplier of yours?
It has helped us make some tough decisions and forced our group to increase our focus on bringing more innovative products to market. It has helped us because we would not be so far along in launching new products. It may have been confusing for some with USFloors and Beaulieu offering a product by the same name in the marketplace. Our focus going forward is to have a clear value statement to our customers and to make sure it’s not confusing.
Thoughts on not participating in Surfaces 2017?
We are focusing on our Winter Road Shows this year and those start the first week in January, but we plan to be at Surfaces in 2018.
Talk a little about Your HomeStyle (YHS), Beaulieu’s private-label aligned program.
YHS is an exclusive dealer program that was another thing we had not properly marketed in the U.S. It’s a great program that was proven in Canada for many years, and we initially tried to plug and play in the U.S. However, there were many pieces that needed to be altered. So months ago we started bringing in dealers who bought into YHS in the U.S. We spent days listening to them, how we could make it better, how they could make more money with it. It gives them exclusive coverage with certain products in their territory. Our plan is to expand it this year.
What sets Your HomeStyle apart from all the other aligned programs out there?
No. 1 is that it is really a unique product selection system. Retailers have told us they can hire fewer salespeople to cover the store because of this system. It’s a whole experience. When a customer walks up to the display there is a unique customer profile established. Customers take a short survey on a computer screen, almost like a personality profile. They answer questions by looking at room scenes. It is a quick survey that validates for the customer their home style. From there it guides them through the carpet and hard surface products they should consider given their style and preferences. It allows the customer to quickly focus on her style. For retailers it is something they can have that no one else in their geography have. They have a much higher closing rate because it appeals to the emotions of people instead of focusing on price.
The other thing we do is surround YHS with concierge services that don’t exist in our industry. We have dedicated people who can that help our elite dealers build their websites and drive business to the website. We have dedicated people handling everything from claims to getting a sample out to answering a technical question. It’s the 5-star service of the flooring industry. That’s where we got into training. We not only train their salespeople on the selection system and products, but we also bring sales training skills such as the ways in which you can identify the four buying styles and close a particular personality.
What has Your HomeStyle delivered to your retail partners?
Our business is significantly up with dealers who have taken on the program. Their average sale price is up, and their margins are up. It helps them sell carpet for more money and have less competition.