Volume 27/Number 23; March 17/24, 2014
By Steven Feldman
Amelia Island, Fla.—Eight years after acquiring the assets of Resource Connect from Interface, the contract dealer network now known as Fuse Commercial Flooring Alliance is thriving. The group now encompasses 70 companies with 129 locations, good for an annual sales volume of $1.2 billion.
Ron Lee, the only executive director the group has ever known, told members at their recent convention here that the next few years will focus on bringing additional business opportunities to both members and suppliers. “We are charged with making the companies in this room the best contractors to do business with. We work on our members’ businesses while they work in their businesses.”
As such, while no new initiatives were introduced at this convention, the emphasis right now is twofold: bringing more members and vendors into the equation, and continuing to develop the group’s national accounts service and support initiative launched in 2013—Fuse Commercial Flooring.
The group has added 14 members over the last 14 months, with the first three hailing from Canada. Fuse weeded out the affiliates that were either underperforming or not participating, which includes sharing information and best practices, one of the core values of membership. “We don’t want to be a stagnant organization in terms of members, suppliers and programs,” Lee said.
Bringing new members into the fold enhances the value of the group to suppliers, although Fuse wants to retain a size whereby the intimacy remains. “Intimacy is one of our core competencies and a byproduct of the size of the organization,” said Geoff Gordon, senior vice president of business development. But that doesn’t mean the group is not seeking to expand. “We are looking for members in areas where we don’t have coverage. We want the best available company in a marketplace, especially if it doesn’t compete [with an existing Fuse member]. One might be in A&D, while another may focus on multi-family. We care more about market segments than geography.”
Members benefit when Fuse adds vendors, and six have come on line since the last convention: Masland, Schönox, Karndean, Bentley, USF Contract and Olean/Marrazzi. “Opportunities increase as you have more suppliers in the network,” Gordon said. “It makes our product offering even stronger [to our customers].”
Fuse Commercial Network could represent the most significant long-term opportunity for the group, something that only enhances the member-supplier relationship. Through this initiative, customers can purchase flooring products and services from a single source, including delivery and installation anywhere across the Continental U.S. and Canada. “We are utilizing members to work with our suppliers on multi-location work around the country,” Gordon noted. “We use our resources to capture either direct or negotiated work. Right now I have two senior living chains and some multi-location retail accounts. And that’s just the tip of the iceberg.”
Bob Plann, Resource Arizona, Phoenix, has been involved in national accounts on his own for years, underscoring the importance of his Fuse membership. “We do work for University of Phoenix and will send carpet and LVT across the country. It’s critical that the job is managed and installed properly. Fuse dealers are not only nice people, but I trust them to represent my brand in other locations. These people are already vetted. They run good businesses and are successful. The fact I may use them on the installation side means they understand the whole process.”
Another key initiative launched a few years ago is Experius distribution, which is Fuse’s virtual distribution network where members can buy adhesives, sundries, etc., online. “That’s one of our cost savings initiatives that’s been doing very well and growing,” Gordon said.
Not just installers
One of the challenges floor covering contractors face today is the direct-sell relationship between some manufacturers and end users. That’s why Fuse members must constantly promote the value they provide. “We are not installers,” Gordon explained. “Installation is just a piece of what we do. We are full-service companies. We have to find the client, so there is a selling process that takes place. Then you have to select the proper product, secure the best price, figure out how much material you need—either from a set of plans or a job walk, put an estimate together that includes freight, taxes, etc., and put it into a proposal. We have to make sure we know every surface intimately and how they work together. Then we make sure we get the right products to the right projects on time. It’s so much more than installation.”
Aside from the manufacturers that go direct, one of the biggest challenges members face is margin. “Business is better, but costs have gone up,” Gordon said. “And cash flow is something we as a group will always have to work on.”
John Shehadi, Shehadi Commercial Flooring, Fairfield, N.J., said his biggest challenge is what he called “the day-in and day-out execution of work and dealing with all the dynamics of construction.” But the networking advantages afforded by Fuse membership help with that. “We talk about all the potential potholes that are out there. Where are the risk points, what can go wrong, how do we deal with it, how do we stay out of litigation? We talk about all the things that ensure success. The greatest thing is the exchange of information at the contractor and product level. You can pull yourself out of your bubble, come here and get ideas.”
Plann agreed the best thing about Fuse is the connectivity. “We would like to say it’s about providing great information, but meetings like this are about meeting other people.”
Gordon noted that Fuse fosters an environment where members are comfortable sharing ideas. But when fellow members can’t help, Fuse offers a number of options to help with critical issues. These would include an online university, with courses that feature everything from sales to product knowledge, cost cutting and succession planning. In addition, Fuse members have access to industry experts on a vast array of topics, like ceramic tile, maintenance and moisture.
Johnson Hardwood has been a preferred supplier to the group for three years.
Bill Schollmeyer, president, likes the fact Fuse includes a very diverse group of dealers.
“The goal is to develop relationships with the members who are the strongest in wood. We are currently doing business with about 30 members. We grew our business with the group by double digits in 2013 and we’re projecting even greater growth this year as more commercial opportunities present themselves.”
Karndean made its Fuse convention debut at the recent event, having signed on as a preferred supplier about a year ago. “For the last two or three years, we have been really focused on growing the commercial side of the business,” said Ed Perrin, CEO. “We see the Fuse network of dealers as a fantastic opportunity to do that.”
The company’s goal at the event was to introduce itself and tell members how Karndean can service them. “Service is what we are all about,” Perrin said. “Everything is in stock and available from our three warehouse locations in Dallas, Pittsburgh and Las Vegas.” In less than a year, the company is already doing business with about 60% of membership.