Nashville, Tenn.—Every generation or so something comes along that truly changes the game for flooring retailers. For CCA Global Partners, it’s Retail 2.0. Executives told FCNews it is the biggest initiative in the co-op’s nearly 40-year history.
Billed as a new merchandising system that brings a streamlined and simplified approach to the consumer shopping journey, Retail 2.0 has been in development since 2019 and piloted for the last 18 months. It will begin shipping in March 2023 to members who buy into the program and finish in Q1 2024. By then, it is expected that Carpet One and Flooring America retailers will have the tools necessary to transform their businesses.
“Our vision was to build a better mouse trap before someone else did it,” John Gilbert, president of Carpet One Floor & Home, told FCNews.
“The reason we did 2.0 was to put members ahead of the pack,” added Keith Spano, president of Flooring America. “The sales pro now has the horsepower to simplify the customer journey and to close the deal so they don’t go anywhere else.”
The most obvious change with 2.0 is the uncluttered look compared with how flooring stores are typically merchandised. Indeed, features of the program include fewer SKUs, albeit better selling products yielding higher margins. Studies have shown that fewer offerings lead to greater sales volume. With 2.0, products will be merchandised not by supplier name but by style, such as “waterproof” or “expressive.”
Long-time CCA sub brands including Lees and Tigressa are going away. As Gilbert noted, “Those brands don’t mean anything to the customers.”
Indeed, everything about Retail 2.0 emanated from customer feedback. It is, after all, the consumer who ultimately makes the call, and shopping in a less cluttered showroom with digital display boards and QR codes are meant to bridge the online world with the in-store experience.
Regarding the conversion timetable, the first big launch comes in Q1 2023, while the last “tranche” culminates in Q1 2024. “We’re giving our members a long runway to get on board,” Spano said. Members who don’t convert will ultimately be left out as new features and digital programs will only support Retail 2.0. Spano used the example of an iPhone. “I don’t have to update my iPhone but at some point, it is not going to work anymore if I don’t.”
CCA retailers who agreed to take on Retail 2.0 as a pilot said after initial pushback from its RSAs, the team ultimately came around to embrace it. Mike Nichols, sales executive for Carpet One Floor & Home in Jacksonville, Fla., said he had doubts about the efficacy of the program in the beginning but has come full circle. “The program works. What I like is that a customer can go to four stores in our market and three of them will look the same. Ours will look completely different.”
Matt Silva, general manager for Peabody, Mass.-based Bradford Carpet One Floor & Home, said his takeaway is that Retail 2.0 reminded him of all the opportunities his business previously missed. “With 2.0 we saw increased sales in higher-end products almost immediately. We have no intention of going back to the old system. Our profits have increased. We now have a visually impactful showroom that differentiates us from the competition.”
Joey Zenger, president of Top Notch Flooring America, Bel Air, Md., added, “For us, [Retail 2.0] was a quick buy-in. Once our first sales associate had success with it, then the others followed. With 2.0 I realized how much time we wasted with a sale previously.”
Other retailers said they were bullish on the merchandising program from the outset, saying the industry needed something fresh and exciting that would set it apart. “It’s the right thing to do for my business and makes so much sense,” said Jim Miller, owner of Columbia River Carpet One, Rainier, Ore.
Kelby Frederick, co-CEO/owner of My Flooring America, Houston, recently added Retail 2.0 to one of his four stores. “The new displays that come with 2.0 have provided a dramatic difference to the showroom and made the other stores without 2.0 look ‘hodgepodgy,’” he said. “Just the visual aspect of the store is significantly improved.”
Drew Courson, owner of Carol’s Carpet in Montgomery, Ala., said he will be an early adopter in 2023. “Technically what we are buying is a brand-new showroom,” he said. “We love the look.”
Kevin Frazier, owner of Knoxville, Tenn.-based Frazier’s Carpet One Floor & Home, added, “In terms of merchandising, I do think it’s as good as it gets. I am very excited about it. Unique, distinctive and workable merchandising has long been a part of what sets CCA apart, so I am glad to see us continue on in that tradition.”
One of the highlights of CCA conventions is the presentation from ITR Economics, the forecasting firm that boasts a 94.7% accuracy rating. Given that stellar record, ITR economist Connor Lokar’s presentation was a bit sobering as he delivered the news that the U.S. economy is already “technically” in recession, per ITR data (see editorial on page 4).
ITR does not subscribe to the government’s definition of recession, which is two quarters of negative GDP growth. ITR’s data shows an economy that has already met the definition of recession. What’s more, Lokar said things will get “a little worse” before they get better. However, he assured members that the sky was not falling and improvement is on the horizon.
“We’re in a more challenging landscape,” he said. “2021 growth rates were unsustainable; it was like we were all driving 120 MPH and now we’re back to 55/65 MPH. We’re going to ease back to normal.”
The good news, according to Lokar, is the supply chain is improving, inflation is on the precipice of getting better and the labor market—a bugaboo for the flooring industry—will be less challenging as retention issues ease. “You will have more horsepower to work with,” he told retailers.
For the U.S., Lokar said ITR sees flat-to-slow growth in the next two to three quarters with improving conditions in the second half of 2023; however, he cautioned that inflation will still be higher (about 3.5%) than historical norms.
On the housing front, a critical benchmark for the flooring industry, single-unit housing starts are down in 2022, and permit issuance for new homes is also in the red. Consequently, builders are pulling back, Lokar noted. “We’ve had an unsustainable rise in housing prices where buyers were getting $50k above the asking price and 30 offers.”
The silver lining? Lokar said there are scores of young people who have been “on the sidelines waiting for the insanity to leave the market” and are poised to jump into the housing market. “That’s good news,” he said. “We need churn in the market.”
The convention kicked off by paying tribute to Howard Brodsky, the co-founder, co-CEO and chairman of CCA, who is retiring from day-to-day activities after 38 years.
Brodsky retold stories of how he and Alan Greenberg took a chance on starting the co-op 38 years ago, at a time when many of the mills tried to convince them otherwise. It turned out to be the right decision as CCA has grown into a powerhouse. “The cooperative is the great equalizer,” he said. “We can provide the tools to allow a small business to flourish while maintaining their independence.”
Although retiring from active duty, Brodsky will remain CCA’s chairman of the board. “For me, the greatest joy has been building this company and community together for the betterment of everyone,” he noted.