The best way flooring retailers can become more profitable and professional is to learn from other retailers. But here’s the carrot: They don’t necessarily need to focus on their peers’ best practices. Rather, understanding the mistakes that other dealers are making can be equally beneficial; for the purpose of this column, let’s call them “worst” practices.
At the recent FloorCon event on Amelia Island, Fla., America’s Floor Source’s Jason Goldberg and Michel Vermette presented “35 retailers in 180 days: What we observed on the road and your blueprint for success.” Some background: AFS is a $200 million retailer doing business in four states with aspirations of more than doubling its business. Some of that growth will be organic, but much of it will be through acquisition. Hence, Goldberg and Vermette recently hit the road to connect with retailers while in search of possible acquisitions. What they found were many retailers were struggling with some basic fundamentals that were impeding their ability to maximize their potential. Those came in the areas of operations, financials, processes and partnerships.
The first thing Goldberg observed was store owners who are looking to sell their businesses seem to fall into two categories: the person who’s motivated, excited and hungry for more but just doesn’t know how to get there, or maybe they don’t have the funding to get there. They want to be a part of something better. That’s a potential target for AFS. Then there’s the owner who’s had enough. They’ve given up, and they’re just trying to sell. “Please write me the biggest check you think it’s worth.” That’s not AFS’ first choice.
The biggest area where these retailers seemed to need the most help was in operations. Goldberg and Vermette saw five common areas where these dealers were struggling: disorganized and dirty warehouses; cluttered and dark showrooms; aged inventory with no plan to unload it; mounds of paper vs. the utilization of technology; and an untrained staff that often didn’t know what they were doing because there were few, if any, processes in place.
Disorganized warehouses and cluttered showrooms were prevalent in the two men’s travels. From Goldberg: “Installers pick up at your warehouse. Do you think when they look at your warehouse maybe vs. my warehouse, that they think they’ll get in and out quicker if you’re more organized? Maybe your customers pick up in your warehouse. They’re either going to see a cluttered, disorganized mess or a professional operation. You want to be a professional operation. You want something that makes an impression and a positive impact.”
That mindset extends to showrooms. An organized, well lit, fully curated showroom is better for the customer and helps build trust. A retailer’s showroom should be a reflection of what you want to give to the consumer, thus, a curated showroom is very important.
Goldberg and Vermette also looked at these dealers’ inventory reports and some had goods from as far back as 2002. “That inventory holds no value, in our opinion,” Goldberg said. Selling aged inventory (SMOG or Slow Moving Obsolete Goods) puts money in dealers’ pockets. He advised that retailers need to look at that aged inventory as just stacks of money. And that stack of money is not worth as much as they paid for that inventory. “So figure out a way to get rid of it and then invest that money in new inventory,” he said.
Next, the two men witnessed a lot of untrained staff, operationally, where everyone was just going about their business however they wanted. “That’s no way to run a proper business,” Goldberg explained. “That’s no way to put yourself in a position to scale your business. And as an acquirer of businesses, I have to estimate how much time we’re going to have just to train the staff. Do they actually understand how a flooring business operates, or do I just have to train them on the AFS way? I want to only train them on the AFS way of doing things.”
Remember, your people are your most valuable asset. “I’ve heard a lot over the last two days about focus on your customer, blah, blah, blah,” Goldberg said. “Focus on your employee. Your employee is your most important asset. Treat your employees right, and they’ll treat your customers right.”
The final piece of the puzzle that Goldberg and Vermette witnessed was many retailers’ failure to either embrace technology or utilize the right technology. They seem to still do business the way they did 20 or 30 years ago with “paper, paper and more paper” everywhere. “Some had so much paper I don’t even know why they have it, because you could never find anything in those stacks to begin with,” Goldberg said. “We live in a digital world, it’s time to change your business.”
Along those same lines, many dealers are using software like QuickBooks rather than flooring-specific software, which Goldberg said was a mistake.
We will talk about financials, processes and partnerships in a future column shortly after Surfaces.
