San Diego—Some would say the main thing that makes Cali unique is its West Coast inspired designs and California lifestyle culture. Others might say it’s the value those products provide. Turns out it’s all those things plus a whole lot more. It wasn’t that long ago that Cali was a young bamboo startup serving a specialty niche in the flooring industry. Fast forward to today, the company has grown into a multi-product, $200 million-plus powerhouse under the auspices of Doug Jackson, CEO, and a talented and expanding sales, marketing and operational team with aspirations of doubling the business in the near future.
So, how exactly does it plan to do that? For starters, with its laser-sharp focus on product differentiation, target marketing and conscientious customer service. Floor Covering News co-publisher and editorial director, Steven Feldman, recently sat down with Jackson to discuss these directives and more.
Following are excerpts of that interview:
You recently came off your second Surfaces. How was it?
Surfaces was very good. I think you’d be hard-pressed to find someone who wasn’t very excited about Surfaces. They drew a great crowd. I think they brought a crowd of buyers, people who were interested in the future. Even though the bigger, macro economy may be a bit of a dark cloud, those of us with long histories realize we’ve been through this before and the long term will be good.
Overall, good show?
Overall, very good show. And if we look at it year over year, we had much better success.
How were your new intros received?
We’re continuing to build a lifestyle brand. There are a lot of good flooring suppliers out there and we want to be part of those suppliers. But we also want to be a brand that top of funnel drives consumers into stores. A brand that’s recognizable, a brand in-store, online that people know. And then a brand that stands for something. Part of our slogan is “Simply authentic.” What stood out for us the most at Surfaces was people’s excitement around our destination-type displays. We’ve done a really good job with Longboard and our wood collections focused around the Napa Valley area—Barrel, Whiskey and Wine, and the Meritage collection.
You talk about the uncertain economy. While some sectors of the economy might not be good, flooring is often immune from major downturns.
We’re still a relatively new brand, so I don’t see it affecting us at all. We are very bullish about the next couple of years. We think there’s market share to be had. We are very focused on being limited SKUs in certain categories. And now that we’ve been in SPC for a while, we’ve been in bamboo, you’ll see us put a focus around wood and laminate. And with our outdoor program that includes decking, rugs and turf, there’s a lot of opportunity for the brand to be recognized in different spaces and an opportunity to grab some share. With regard to the greater market, I think people are always going to need floors. And there’s been so much innovation around lifestyle floors and waterproof, family proof and pet proof that people are excited about it.
What’s changed at Cali in the past 18 months?
The biggest change was we continued to grow under our new ownership. Victoria PLC had just bought us so we were coming out of being in a private equity ownership. And over the last 18 months that relationship has really matured. Victoria is a publicly held company in Europe in the flooring industry. So we have an ownership group that understands the ebbs and flows in flooring, understands what Cali is in North America and what Cali could be.
How has Victoria helped this company over the last 18 months?
They’ve allowed us to invest in our future. We have brought in people from the industry that will allow us to grow, to do things better than just be a great brand with great products but also great service. We’re excited about continuing our relationships with our dealer base. Having the great service behind it allows us to be the kind of company we want to be.
How has this company grown so much in the last three years?
I think we’ve approached the industry differently than some of our competitors. There are a lot of great flooring suppliers out there. We want to be a great flooring supplier, but we want to be a brand. We want to be a destination. We want to be somebody who’s recognized as a partner, an ingredient in our dealers’ businesses.
What does every retailer want? They want a product they can specify and make great margins on. Today, we think we give our dealer partners the best chance to do that. They get a chance to see Cali early in the search, top of funnel, and we spend a lot of money on performance marketing. We’ve got a great SEO following. We really get a chance to get that consumer early in her journey, and then let her get down the funnel and transact with our dealer partners where it makes the most sense.
We offer a completely different color line. Most of our competitors are styled and designed in north Georgia. We’re not. We live every day in Southern California. Part of the brand’s lifestyle is outdoors and being in this California marketplace. And we get inspiration for product, we get inspiration for color, we get inspiration for marketing in Southern California. And it follows through to our displays, how people see us and how we’re represented in dealer showrooms. Also, we’re very limited distribution. We don’t sell everybody up and down Main Street. So the idea is that we find great partners in great marketing areas and we let them have that area.
You talk a lot about Cali being a lifestyle brand. What is a lifestyle brand?
There are brands out there like Patagonia, Tommy Bahama, Yeti. When you think about these brands you think about what they represent. They represent outdoors, they represent a lifestyle. Cali represents a lifestyle of healthy, green, sustainability, authenticity and it’s OK to be a little different than everybody else. And we think our dealer base recognizes it and we know our consumers recognize it.
You also talk a lot about the Cali culture. What is the Cali culture? And how does that culture benefit the floor covering retailer?
One word comes to mind: authenticity. We just want to be true to ourselves. We want to be true to our environment. We want to be true to sustainability. We want our retailers to understand that we’re not trying to be somebody else. We’re not trying to compete with this person or that person. This is a very unique company. We want to be true to our people. And we want to be true to our partners, our retailers. We spend a lot of time trying to get to know that consumer early in their journey. And if we can find that consumer early in her journey and help her make the right decision and transact where she’s most comfortable, then our retailers are going to win and Cali is going to win.
Biggest challenges for this company right now.
I think for the longest time we probably grew faster in sales and the top line than we did in fixing the operational side of the business. We’ve done well enough, but we’re not world-class. And I think where we’ve been recognized as a brand and product, we haven’t been recognized in our service. I want to be recognized on service as much as I’m recognized on our marketing and products.
Tell me what you view as the biggest challenges for floor covering retailers right now. And how does Cali help or plan to help alleviate those challenges?
The sea of sameness we’re seeing in the market today. When you walked through Surfaces, you saw a lot of people in the same business—LVP, a lot getting into laminate. So, I think for today’s retailer it’s hard to know what to put in their showroom. What’s going to help a consumer stay in that showroom, purchase in that showroom and make the right kind of profit. And I think Cali helps draw people into showrooms. We help keep people in showrooms and we allow our retailers to make great margins. Our displays work as silent salespeople and they do a good job of drawing in folks and being a differentiator in the store.
There’s a lot out there that looks the same; Cali would not be accused of that.
What’s the next step for this company? Tell me some of the things that are on the horizon that’s going to help the floor covering retailer.
I think you’re going to see us continue to be very focused on a handful of product lines in a diverse group of product categories. We love the wood business, we love our LVP business. We think there’s room for us to do things in laminate in this authentic California lifestyle. We don’t want to be anybody’s biggest supplier but we think we can be their best supplier. So you’ll see us continue to spend time trying to be important to our partners, trying to be different and add a differentiated product line for them. We expect to continue to grow like a weed with the folks we’re doing business with. We’re not really looking to open up a lot more distribution.
If you’ve really got this lifestyle brand, you’ve really got this brand that carries weight. It gives you the license to diversify other product categories. As the brand really starts to take roots and resonate, I wouldn’t be surprised if Cali continues to look for other ways for our dealers to have stackable revenue. And keep that consumer as a lifetime customer. We have a lot of sister companies throughout the world that are in categories that Cali’s not in today. So the opportunities we look to expand into are things that Victoria is well known for and very good at.
Like what?
It could be tiles, it could be continuing what we’re doing with outdoor turf. We’re having some really early success with it.
Let’s talk category growth. Wood?
In wood we’ve only really had one product line and it was up single digits. I suspect by the time we get to the end of this year we’ll be tracking well north of 25%-30% by the time we get the displays out and really get the program launched. We’ve got our Barrel collection coming out. We’ve got Whiskey and Wine coming out. And we put some additional colors on our Meritage line.
SPC?
SPC has been a rocket ship for us. We’ve grown double digits for years. I suspect we’ll keep growing double digits for years to come. We introduced our Wind and Sea collection with two different board sizes, High Tide and Low Tide. It’s got a unique beveled edge and a very coastal color line.
If I’m a customer and you are a retail salesperson, tell me what you’re going to tell me about Cali SPC or Cali WPC. Besides the lifestyle brand aspect of it—what are you going to tell me that makes this brand different?
I think every consumer is coming into a retail store with some things top of mind. Color, price, texture—and I think, typically, it starts with color. And if I’m a retail sales associate, I have a brand in my store that has limited distribution and a very unique and different coastal color line. Different than most of the other things in my showroom. So it allows me to take them someplace that not everybody up and down Main Street has. We really try to accentuate that. And then I think we’ve got a really fair price point. We’re not the highest priced product in the showroom. We’re probably the best value per square foot. So you’ve got a unique color line, you’ve got the best value per square foot and you’ve got limited distribution. So you can show a product and hold the margins on it. If I’m a retail sales associate, I’m going to start with Cali and finish with Cali.
