April 27/May 4, 2015; Volume 29/Number 2
By Ken Ryan
National Harbor, Md.—Haines has held its annual Loyalty Club Summit for many years now but the 2015 version was different in many respects. First and foremost, the integration of CMH Space is now complete and that gives the industry’s No. 1 distributor tremendous economies of scale.
By virtue of the acquisition, Haines has added 23 new suppliers including IVC US, EarthWerks and KronotexUSA, and now boasts 393 Loyalty Club dealers, the largest contingent in its history, up 270% since 2006. From the opening comedy skit delivered by top executives to the closing, the mood here was vibrant.
“This is the first year we are all together, so I look at this as year one,” said Bruce Zwicker, president and CEO of Haines. “This is a new era.”
It was also a new venue—the sparkling Gaylord Resort & Convention Center overlooking the Potomac River, just outside of Washington, D.C. The move was fortuitous; last year the Haines Summit was held in downtown Baltimore. Had this year’s event been scheduled there, company executives said they would have canceled the Summit because of the unrest in that city.
As it was, a record 525 attendees turned out for the two-day Haines event, which included breakout sessions, product demonstrations and a five-hour vendor showcase that was packed with dealers. “Booth traffic has been phenomenal,” said Steve Wagner, director of sales and marketing for Wellmade Performance Flooring.
Luc Robitaille, vice president of marketing at Boa-Franc, makers of the Mirage brand, said dealers were particularly interested in Mirage’s new displays.
David Little, owner of Little Wood Flooring in Cornelius, N.C., said he gets a jump-start on the buying before the showcase opens. “At my rep’s suggestions I often do the purchasing before I even come to this show. Once here I am mainly looking for displays to buy; there are some great displays here.”
Haines Loyalty Club (LC) dealers are independent retailers who are not affiliated with any buying group, although some may be a Mohawk or Shaw aligned dealer. LC dealers get access to a slew of marketing, merchandising, online and financial tools as well as discounts on everything from Staples products to Enterprise rental cars. Of note, members annually receive $700 in rebates to use for purchasing displays, advertising and more.
“We’ve never had a goal to be 600 or 800 members; we want the right members,” said Scott Roy, senior vice president of the Armstrong division and customer service. “We want the majority of their businesses to be retail since the rebates are mostly on residential products. These independent dealers enjoy their independence, but when they join this group they still have their independence with the buying power of 393 members. And there are the rebates and marketing programs. We’ve come a long way but we are not even close to being satisfied. We know this program can grow even more. We want this program to be unique and differentiate the dealers, and we want to reward their loyalty.”
In 2014, Haines paid out hundreds of thousands in rebate dollars. On another note, the program offers customers $700 in merchandising funds to spend as the customer wishes on business support. Both Roy and Rosana Chaidez, senior vice president for CMH sales, urged members more than once to spend the “free” money.
Amy Kasopsky, co-owner of A&E Flooring, Collegeville, Pa., said she didn’t take advantage of the rebate the first two years she was a Loyalty Club member because she was “overwhelmed” by the sheer number of features and benefits available to her. “They just have so many perks it’s hard to wrap your head around it at first. But I make sure to spend the money now.”
So do Pam and John Kulick, co-owners of JK Carpets, Locust Grove, Va., the 2014 Loyalty Club Dealers of the Year. “I never leave the $700 on the table,” Pam Kulick said. “I usually have it spent by March. I have already bought two displays this year using the funds.”
CMH integration
The integration of a $200 million distributor into the Haines fold was a long and arduous process that involved massive logistical challenges and transportation issues that invariably arise with such a merger.
“We knew it was big,” Zwicker told FCNews. “It was really hard to account for absolutely everything. It is getting better. It’s like whack-a-mole. We see a problem, we whack it.”
Several Loyalty Club retailers said the transition is becoming more seamless by the week. Bill Zeigler, owner of Charles F. Zeigler & Sons in Hanover, Pa., said the last six weeks in particular have been much smoother operationally.
Chaidez noted, “One of our best customers said to us, ‘You never stopped shipping, you never stopped billing, you never stopped operating.’”
Roy added, “We would not have record attendance like we have today if we didn’t have people behind us like we do.”
Haines operates three sales divisions: Armstrong Flooring, CMH Flooring and Flooring Supplies. Under the new Haines, former CMH Space CEO Hoy Lanning is senior vice president, CMH marketing and Haines purchasing and inventory; Chaidez is now senior vice president of CMH sales; Roy is senior vice president of the Armstrong Division and customer service, and Fred Reitz is vice president of the supplies division. Mike Barrett was recently hired as vice president of operations.
2015 outlook
Zwicker provided his 2015 industry outlook, which in some respects looks similar to 2014. “Q1 is off to a slow start and it’s not all weather related. April is showing improvement; new residential is not picking up but it’s coming. Remodel and retail pricing is up but not robust. Commercial growth is accelerating. 2015 feels like last year—good, not great.”
He said success for retailers often depends on where they are located and what the competition is like in that market. “Depending on where you are located, who your competitors are, some of you are killing it with double-digit increases.”
One of those dealers “killing it” is Little. “I literally cannot keep up with demand; our business is so good. Part of it is we have been in the Charlotte market, near Davidson, [N.C.,] for many years and we’re known there, and we just don’t have a lot of competitors.”
As for the future, “we just want to be really good at what we do,” Zwicker said. “We are not going public. We are not for sale. We are not looking to make another acquisition. We want to make it right [with CMH].”