By Megan Salzano
While many small businesses across the country continue to struggle with the fallout of the COVID-19 pandemic—which recently experienced resurgence in some states previously thought to have kept the virus at bay—some stores are reporting record growth rates.
Providence Flooring in Kingsport, Tenn., is one of them. In fact, the specialty flooring retailer officially exceeded its 2019 sales record earlier this month. And, as of July 16, was up 3.5% year to date.
Born for adversity, according to Cory Rundle, store manager, Providence Flooring and Paint began in 2009 in the midst of the Great Recession. “When Doug Gooch, [founder], started the company his suppliers told him he was crazy for starting a flooring business at that time,” he told FCNews. “That did not slow him down because he knew how to run a business without debt.”
Even with its rich history surviving hardship, the question remains: what gives? How is one store able to outpace its 2019 sales in the face of a pandemic while others can barely keep the doors open? Well, Rundle admits that before the shutdown the store experienced a record first quarter; however, the growth is not by accident. “We have an unconventional business model,” Rundle explained. “There is no simple three-step solution for our success. There is a specific business code of conduct.”
Strategies for success
The business model that keeps the store in a seemingly constant state of growth includes several strategies for success, such as a niche product selection, strong relationships and outstanding customer service.
Rundle explained each strategy as follows:
- Quality first, price second. “We don’t have cheap stuff. Other stores do cheap well. We have a threshold of quality that we will not go below. Ninety-nine percent of homeowners and contractors appreciate that.”
- Particular pricing. “We put our best price forward. No matter who comes into our store, everyone gets the same best price—no haggle, no discounts, no games. We have a set price unless our suppliers offer price breaks on quantity.”
- Meeting margins. “Instead of having a select inventory with low-margin dollars, we have over 50,000 selections with a reasonable margin that we can have available within four days.”
- Niche flooring. “We strive to have a unique selection of flooring to set us apart from local stores. Instead of competing with them, they refer customers to us—especially Lowe’s and Home Depot.”
- American-made products. “This is hard to do in the flooring industry, but our customers appreciate it and are willing to pay more for it.”
- Innovative installation products. “We constantly seek materials that can make contractors lives easier and their jobs look better, longer.”
- No accounts receivable. “All materials are paid for at the time of order. The past four years has had an annual growth of more than 10%. This year, we’re lucky to match last year.”
- Bill payment. “Suppliers enjoy doing business with us because we pay our bills before they are due. Often, they give discounts for early payment. This means they release materials to us immediately. Sometimes, we receive special order materials the next day.”
- Quick ship. “We seek suppliers that keep reliable inventory and that ship quickly.”
- Referrals are key. “We refer other business (even our competitors) and are conscious of reciprocating business with no referral fees. If we recognize good business practices in other local businesses, we send customers to them. There is a granite fabricator in town that said we send them 30% of their business. They send customers to us all the time.”
- Contacting contractors. “We continually cultivate relationships with local contractors. Currently, there are over 80 contractors that shop with us and send us customers. We have developed a good database of contractors with a range of skill levels.”
- Customers come first. “Our focus is helping the customer with their project. Sometimes that does not involve selling them something. It creates rapport that keeps customers coming back to us. We become their go-to person for their projects.”
- Product knowledge. “We understand and educate the expectations of our products. We try to eliminate surprises by showing and explaining all the ins and outs of the products before they are sold.”
- With experience, comes wisdom. “We know our stuff. Doug has 46 years of flooring experience, and I have 25 years of flooring installation and sales experience as well as construction experience. I studied art and architecture in college. Our contractors turn to us for advice and solutions.”
No installation, no problem
Another unique piece to the puzzle was the store’s decision to cut out installation services about four years ago. “We took the plunge and no longer offered installation to our customers,” Rundle explained. “By doing so, we were no longer seen as competition to our contractors, and those contractors become 80 unofficial outside salespeople that send customers to us. We reciprocate by feeding them referrals.”
Rundle noted that contractors now send the store customers to design the job and make product selections while the contractor will take home all the profit from labor. The change has also helped manage typical headaches associated with installation. “We no longer leave the store for measures,” Rundle explained. “We no longer have to stress about scheduling and materials. The contractor is held more accountable to the homeowner, and we can focus on taking care of the homeowner and getting the materials in correctly and quickly.”
He added that while the store has lost all of its installation revenue (which was very low margin to begin with), it has increased its overall sales by more than 10% each year since. “In four years’ time, we have doubled our sales,” he said.
Tips and tricks for other retailers
While the store’s unique business model might not be a great fit for every other flooring retailer looking to weather the storm these days, Rundle said there are several strategies retailers can implement to find success.
For instancing, ask for payment in full at the time of order. “All of the home centers do it,” Rundle said. “Today’s homeowners are ready to pay for special orders at the time of order with all other facets of their remodel. Why should flooring be different? If this is a problem, get on board with a financing company that offers no interest. We use Synchrony, which has six months no interest for 1.99%. Smart buyers will have their own credit card that gives them 2% cash back.”
He also advocates maintaining a low inventory by displaying (not necessarily warehousing) products that can be delivered quickly once the customer has made her purchasing decision. “Stock flooring ties up inventory dollars, which changes your sales focus,” he explained. “You are now trying to get a quick return. You tell your sales staff to sell your inventory, which is probably a higher percent margin than normal but actually lower overall margin dollars. And you’re forcing customers to like what you have in stock. Today’s customers do not like to be told what to buy.”
Next, be sure to get involved in your local business community in order to build a referral base. “Connect with local businesses that are directly and commonly related to your customer’s projects: granite places, cabinet shops, paint stores, etc.,” he explained. “Then, get customer feedback to make sure these businesses are safe to refer.”
Lastly, Rundle said it’s all about your contractors. “Take care of your contractors. Since you are not offering them a discount or line of credit, make sure they have something from you that they cannot get anywhere else. Organize in house seminars for contractors, too. And create a database of good contractors that you can refer installation—it creates loyalty with the contractors, and they become great advocates for your business.”