January 8/15, 2018: Volume 33, Issue 15
Randy Merritt officially retired as president of Shaw Industries on Dec. 31, 2017, after 40 years in the flooring industry, all for one company. He built a reputation based on honesty and integrity. A gentleman in every sense of the word. As humble as a man can be. FCNews publisher Steven Feldman for months was trying to convince Merritt to reflect on these past four decades with a front porch, rocking chair view. While it went against his humble nature, he finally agreed to sit down in December, the text of which follows.
The road to Dalton
The reason I was in Dalton was a guy named Bryce Holt. Bryce was the father of my college (NC State) roommate’s wife. Bryce is also the father of David Holt from Mohawk, who I’ve known since he was probably 14 years old. So, I got to know the Holt family very well in my college years.
When I realized I wasn’t getting into med school, I needed to find a real job. I’d always admired Bryce and his success, although I didn’t know much about what he did. I called him up and said, “Mr. Holt, you know I’m just looking to find a job working for a good company.” He asked, “What do you want to do?” I said, “I don’t really care. I just want to work for a good company where there’s an opportunity.” And he said, “I think I know the place.”
I had never heard of Shaw Industries, and of course it wasn’t Shaw Industries then. It was Star Finishing. It was the biggest thing I ever heard of. It was a $100 million company—1976 was the first year Shaw broke $100 million. And to be honest with you I wasn’t even sure how many zeros were in a million. As a college student you didn’t think of things in millions—hardly in thousands.
When I got to Dalton, I thought, man, this is a small town. We didn’t have the Internet back then, so I didn’t really have a way to do any research on Dalton, Ga. I knew nothing about how big it was and didn’t know the carpet industry. The first week I remember someone mentioning the term “tufting machinery” and I had to go to a dictionary to find out what that meant.
I grew up in a very small town, a manufacturing-driven town very much like Dalton. It’s kind of interesting actually as Lexington, N.C., was right there in the central part of Piedmont, which was the furniture capital of the world, with High Point, Thomasville, Lexington. And there were a lot of similarities in the towns. The furniture industry was made up originally of a lot of tiny furniture companies. Most of my high school friends’ families had something to do with the furniture industry. A lot of them became very wealthy because the same consolidation that ultimately happened in carpet happened in furniture. And the Burlingtons and Mascos came in and bought up the small family furniture companies. But that’s where the history of Dalton and Lexington went in opposite directions because in the furniture business they began immediately moving all the manufacturing to Vietnam, Malaysia and Asia, and the carpet manufacturing always stayed right here in Dalton. And Dalton has continued to prosper and grow, and Lexington is a ghost town of empty buildings that used to be manufacturing facilities.
I started May 10, David started Aug. 23. Two weeks after I met David he asked if I wanted to come live with him and a guy named Greg Wheat, another trainee. Greg’s parents had a farmhouse down Houston Valley Road. I said, “That would be awesome,” because I was living in a little one bedroom apartment with rented furniture and nobody to talk to.
I later bought a house and David moved in with my brother and me. They lived with me right up until I got married. In fact, David was building a house that was supposed to be finished by the time I came home from my honeymoon, but wasn’t. He and my brother actually lived with Sharon and me for two weeks after we got married. We lived in this tiny house, and I came home one day and Sharon is sit- ting at the kitchen table just crying her eyes out and said, “They have to go.” So we were roommates probably two weeks longer than we should have been. I introduced David to his wife, Becky, and they have been great friends of ours for 42 years. Our kids grew up together. We went on vacations together. He’s still one of my very best friends.
Vance Bell was one of the first people I met—truly the first week I was here. Vance was one of four salespeople. All our customers were located in Dalton because we were making carpet for other manufacturers. Back then they didn’t sell carpet by the square yard; they sold it by the truckload of a color. You had Vance, Jim Morris, Doug Squillario and Bill McDaniel. Bill and Jim have passed away. Doug is still alive but has been retired for a long time.
We were close to the same age. Probably the first two years I just knew him as a salesperson. I was trying to learn about the industry so when I got a chance I would ask him questions. When Sharon and I got married in 1979 we bought a house downtown and ended up being almost next-door neighbors to Vance and his wife. Our wives became good friends, and Vance and I became better friends. Vance and I have literally worked together for our entire careers here.
Vance has always been very strategic looking at business. And the trait I’ve valued most about Vance—and this was so valuable to us when he became the CEO in 2006 and I became the president, right at the beginning of the Great Recession—was he is so calm and steady. He doesn’t get real excited and he doesn’t get real depressed. During those very challenging years he said we are going to have to do some tough things, make some tough decisions. But the one thing we weren’t going to do is let our customers feel our pain. And that was a kind of a mantra for us—that we would do whatever we needed to better prepare ourselves for the future. Vance is a very steady hand and I’m more emotional. If I’m ticked off you’re going to know it. I wear my emotions on my sleeve. We made a good team in that regard.
From product development to sales
I was in product development, which is where all the trainees started. Back then we didn’t have a formal training program. We started in product development and would work in a dye facility and then a coating plant and then a yarn mill. One day Bob [Shaw] called me and said, “I need you to go see one of our biggest customers.” One of our first acquisitions was Magee Carpets, and the biggest distributor Magee had was Carson Pirie Scott. Carson at the time was a big distributor throughout the Midwest with one location in Florida. So I went to Chicago to see Dean McKinney, Roger Hunt and Jimmy McDonell. The problem was Shaw Industries was growing, Magee Carpets was growing, Carson Pirie Scott was growing. But we weren’t growing together.
Back then you had more mills than you could count on all your hands and toes, and a distributor like Carson was buying from World, Galaxy, Salem, Horizon, Trend, you name it. They had lots of choices, so I just went in and said, “My mission here is one thing: We’re growing, you’re growing. Why aren’t we growing together?”
They looked at me and said, “Randy, we don’t know. We love Shaw. You make beautiful products; your salesmen are here at least once or twice a month. We don’t know why we’re not growing together. We have 13 branches around the country. Are you calling on them? Because we put all these products in our showroom and then those branch managers come in and they pick the products they think will sell in their market, and that’s what they inventory.” I said, “Maybe we’re not calling on them.” So I went home, met with Bob and said, “I think the problem is we’re not really calling on the right people.” About a week goes by and he calls me up and says, “You really think that would make a difference?” I thought it would. So Bob said, “Okay, starting Monday they’re your account.” I was now in sales and reporting to Vance.
I got out a map and plotted where these Carson locations were and decided I wasn’t going back to the main office in Chicago until I went to see all those locations. I still remember the people who ran those branches to this day: Buzz Grows in Chicago, Tom Mielcarek in Milwaukee, Joe Boisvert for Minneapolis, Don Penrod in Columbus, Dan Kaufman in Cincinnati, Harvey Johnson in Florida, Frank Hemmer in Cleveland. Sure enough we hadn’t been calling on them. So I started working on that relationship and trying to figure out what we could do to differentiate ourselves from all these other mills they were buying from. When I started we maybe did $7 million with Carson and within a couple of years we were doing $50 million.
What I learned there, and I still tell our trainees today, it’s great to know the owner of the business. It’s great to know the buyer for the business but you better pay attention to the people who are actually selling your product because they’re the ones who can help or hurt you.
Transition from soft to hard
It was not really difficult for me to transition from carpet to hard surface because once you accept the fact it’s all flooring and our mission here is to provide the right kind of floors. It goes back to what Mr. Buffett said was one of the reasons he was attracted to Shaw—every building he’s ever seen has a floor. So our job is to simply figure out what the consumer wants on her floor and give it to her.
The early customers
One of the first customers I remember meeting is Larry Nagle. He was a great customer, a tough buyer and bought a lot of product from Shaw Industries. I remember Marv Berlin from New York Carpet World and Duke Goldberg from Rite Rug. Back then it was Mr. Berlin and Mr. Goldberg. They were huge. For most of my career I was just watching as other people dealt with them. I remember Miles McComas of Carpetland in Baltimore. And what I remember about Miles was that he was a true gentleman. Here was a guy who ran a big business and could be a gentleman doing it. Another guy I remember like that is Ron McSwain. He was such a classy guy. And I admire the way he ran his company and the way treated his people. And I think with his son, Jason McSwain, the apple doesn’t fall far from the tree.
I remember Michael Goldberg when he was a young whippersnapper and trying to be like his dad. And I think what’s made Rite Rug successful is Michael has been willing to do things differently than the way Duke did it. And he’s had to change. It’s a different world today. Duke would come into the Chicago showroom and buy 50 truckloads of carpet. That just doesn’t happen anymore. You know Michael will buy way more than 50 truckloads; he just doesn’t buy them all at one time.
I remember Rick Meyer and Jerry Rosenberg. I have great respect for the Blumkins at Nebraska Furniture Mart. Another one of my favorite people is Levon Ezell of L.D. Brinkman. He was just a worldclass guy. Dean McKinney was a world-class guy. Harvey Johnson is a world-class guy. Of course the challenge is that when I start naming people, I’m of course going to leave someone out unintentionally. I’ve met so many wonderful people in this industry, it’s impossible to name everyone.
While I remember those guys, I’m really excited about some of the young people I see in our industry, bright young minds. The Boyajian brothers at A.J. Rose in Boston. The Akin brothers of Akin Carpet One in Oklahoma. Dan Mandel in Southern California. Matt and Ryan Bechtel of Contract Furnishings Mart in Portland. Eric Langan of Carpetland in Illinois. Sisters Dana Chirico and Lauren Voit of Great Western in Chicago. All just really bright, creative people who are passionate about the flooring industry. They have all stepped into their family businesses and have successfully grown and moved their respective businesses forward.
The toughest negotiators
Sandy Mishkin and Alan Greenberg at Carpet One. Marv Berlin at New York Carpet World. He was tough. Michael Goldberg is tough. Olga Robertson is tough but fair. One of the toughest was Allen Stein. I’d see Allen and Mishkin argue over a nickel for three days.
I think one of the things people are beginning to understand is that fighting about the nickels you pay for something isn’t as important as solving how we can sell it for a dollar more. We should be asking ourselves how do we work together to sell products for more money? How do we trade consumers up instead of trading consumers down? Buying is still extremely important, but how we work together to sell for more and to create better, more innovative products are what’s really important. The whole LVT category is a great example of where we’ve learned to sell products for more and together we have made a greater profit. How do we continue innovating and giving consumers a better, more stylish product, all while making more money?
Our partnership with St. Jude Children’s Research Hospital started in 2012, and until then I didn’t know any more about St. Jude than you do. My children were healthy. But Shaw was looking for a nationally recognized philanthropic effort that we could support and our customers could relate to. The one that kept rising to the top of the list was St. Jude, which was great for me because it fit right in with my passion for children.
I’ve always had a soft spot in my heart for children. You saw it from our conventions, from the day we started a show for our network that was about the families. And I’m really proud that some of those first children at the Shaw Flooring Network conventions are today working in their family businesses and selling Shaw products. I’ve also worked for years with our Boys and Girls Club here in Dalton. I spent years on the Big Brothers/Big Sisters board of directors.
So when we had the opportunity to develop a partnership with St. Jude it was a perfect fit for me personally. I took a special interest in it from the first trip I made out there. It’s a life-changing experience. You see all those children and what they’re going through and what their families are going through. And you realize what St. Jude does for those families and for children all over the world who are diagnosed with these horrible diseases.
But the point I make about St. Jude is while it’s a good thing to do and it makes you feel great supporting them, it’s also good for business because we’ve been able to leverage that relationship with customers by saying, “You can support St. Jude too by supporting these products and we will give a portion of whatever you buy back to St. Jude on your behalf.” And since 2012, we’ve given just under $8 million back to St. Jude. We’ve built a good partnership that our customers heavily support and believe in, and I think there are plenty of people at Shaw who are passionate about that goal and will carry it on for a long time.
Miss the most
Easy answer. All the people here at Shaw and all the customers. I did not stay at Shaw for 42 years because it was a $5 billion company. I did not stay at Shaw all these years because I had a big job. I didn’t stay at Shaw for any other reason than I love the people I’ve worked with and the customers we worked with. It’s a great industry. People have given way more to me than I’ve given to them.
The constant is caring, passionate people who work hard to do those things we’ve talked about, who pay attention to the customer, who listen to what the customer wants. When Vance was first selling he would go to his mill customers and say, “This is what we can make. What color do you want to buy?” Today it’s, “What do you want” and we have to figure out how to provide that, whether it’s color or style, texture, or flooring type. There are so many choices today. We have to give customers what they want. The thing I’ve always felt about the flooring industry is there are good quality people who care about making lives better, people who care about making your home happier and something you’re proud of. They care about making your office building more functional and more pleasing. Our goal is to make the spaces where people work and live more beautiful.
When I started, most of our business was selling to other manufacturers and those manufacturers were selling primarily through distributors. When we started selling directly to retailers, the largest retailer in America was Sears. Sears used to stock every SKU they showed on their floor in a giant warehouse. Imagine dealing with the style variation and all the things we have today and then trying to stock every SKU. In fact, Shaw Industries is the one that convinced Sears to just show and sell the product and let us service it for them. Other large flooring customers during that time were department stores Macy’s, Rich’s and Kaufmann’s. Today those stores either don’t exist or aren’t where consumers go to shop for flooring.
I’ve had literally hundreds if not thousands of trainees come through Shaw Industries and sit in front of me, and the first question is always the same: “What kind of advice would you give me?” I tell them it’s not rocket science. It’s things most of us have been taught since we were little. And I think the most important piece of advice I can give is the Golden Rule. My mother told me very young to treat people the way you expect to be treated and things will be fine. So throughout my career, whether I’m someone’s guest or trying to figure out how to do business, I try to treat people the way I want to be treated. For a salesperson that’s the key to selling. Treat people the way you want to be treated. Here in Dalton I want to eat at a place where the people treat me the way I want to be treated. I don’t care if it’s the best food in town.
In today’s world product is the price of entry. Everybody has to have good product. The difference is the way you’re treated, the way you’re serviced, the way people take care of you. The best salespeople, when they’re talking to you, you’re the most important person in the world to them at that moment.
Ch ch changes
The entire world has changed more in the last five years than it had in the previous 20. Technology, the speed that things happen, is amazing. You’re sitting here with two smart devices and a computer—20 years ago you would have been writing in shorthand. The world is faster and it’s going to change more in the next five years. I think it took something like 30 years for radio to reach 50 million or 100 million users. It took half that time for television to reach that many users. It took four years for the Internet to reach that many users. And today there are millions and millions of searches per minute. Information flows so much faster and consumers expect things faster.
Consulting? I would never say never but I don’t see that happening. I wouldn’t do anything that would hurt or compete with Shaw Industries. If there’s a way I could share some of my knowledge and help one of my good retailer friends, maybe. If I could do some training about leadership for someone, maybe. I don’t have any plans right now. I just plan to be a granddaddy. I plan to continue helping children in some way.
The one thing I will do is keep reading Floor Covering News and keep up with the industry. I told Vance my next role for Shaw is cheerleader, booster club, whatever I can do to help. And I have Vance’s cell phone number; if I see something I don’t like I won’t hesitate to pick up the phone and call.