March 14/21, 2016; Volume 30, Number 19
By Ken Ryan
Florence, Ind.—Scott Roy said he always aspired to be president of a company, but when he was first approached by an executive search firm to run the newly merged Gilford-Johnson Flooring distributor (FCNews, Feb. 29/March 7), he was a bit skeptical. After all, he had a high-level position at Haines, the industry’s largest distributor, and he liked it there.
But it wasn’t long before Roy seized what many would call a dream opportunity.
“Being president and CEO is one thing, but to join two companies that have the reputation that Gilford Flooring and Johnson Wholesale Flooring have—and to bring those companies together—that is what excites me the most,” Roy told FCNews during the Gilford-Johnson spring event here. “These are two companies that are going places. This isn’t a fixer-upper.”
What was once two mid-sized distributors has morphed into a top 20 player with an estimated $90 million in sales. Moreover, there is virtually no overlap in the two companies’ territories and product portfolio, and they both bring strengths to the table in the form of logistics and warehousing, strong vendor partners and well-respected sales teams.
“Scale in distribution is important because it allows you to expand,” Roy explained. “This is a pure geographic expansion into two of the strongest areas in the country: the Southeast and Florida.”
While at Haines, Roy started the Loyalty Club in 2005 and helped grow it into a successful incentive-laden program. Gilford has the Gilford Advantage Program (GAP), which will be expanded to include Johnson Wholesale retailers. “I believe in the loyalty retention program, and with the addition of the Southeast we can explode this thing,” he said.
The task of fully integrating Gilford and Johnson is just now beginning. Roy plans to create 10 to 12 integration teams focusing on such areas as finance, logistics, claims, credit and fees. Both companies use the Gartman operating system, but within each platform are subtle differences that have to be ironed out. (Integration is an area in which Roy has particular experience as he was intimately involved in the Haines-CMH marriage.)
“One of the values I bring to Gilford-Johnson is that I’m an outsider; I’m coming in with the mindset that we are one company and that it is ‘we’ and not ‘us vs them’,” Roy said.
Among his primary aims: to learn the Gilford-Johnson business and integrate the two companies as seamlessly as possible. “The customer doesn’t care that we bought a company in Atlanta until they see the value it brings,” he said. “We have a joint product selection group that is looking at new opportunities, and building a better logistics service model has to be part of that plan. We need to raise the bar in terms of how we run our business.”
Industry members believe Roy is just the man for the job. Melinda McChesney, former owner of Johnson Wholesale, agreed to sell the company to Blue Equity, the private equity firm that owns Gilford. “We’ve seen so many distribution mergers where one gobbled up another; I wasn’t interested in that,” she told FCNews. “I was interested in the Johnson legacy moving ahead and the Gilford legacy moving forward. We bring diverse products that cross the lines and provide advantages to the other territory. There is not a lot of fat on either side.”
McChesney wanted to bring in a CEO from outside the company who could give fresh eyes to the merger. “I am very excited to see where this leads us,” she added. “I have been asked many times what my dad—who founded Johnson—would have thought. I feel he would be pleased. I know I am at peace with it.”
The two-day trade show at the Belterra Casino Resort here included fewer vendors than previous years, which was by design. Yet there were more retailers present than in the past. The end result was bustling traffic at the booths and strong sales activity for the exhibitors. “Gilford-Johnson is really good at finding the niches in each of their product categories, and then they service the heck out of it,” said Nick Freadreacea, president and owner of The Flooring Gallery, with multiple locations in the Louisville, Ky., market. “Gilford is strong in our area and I am very happy to see them growing.”
Vendors were pleased with the traffic as well. Bill Lipinski, Midwest regional manager for EarthWerks, said the company showed several LVT lines as well as 12 new WPC offerings. “How can you not love to sell this stuff? We had a lot of buying going on, and the action at our booth has been outstanding.”
Jim Cook, Southeast regional sales manager for Somerset Hardwood Flooring, said what impressed him the most was the level of engagement among dealers. “They’re not just wandering by; they are asking some really good questions about how the product is made and especially where it is made,” he told FCNews on the first day of the event. “We are proud to say it is made right here in the United States. We have always done well at this show, and we [sold] 10 truckloads of hickory the first day alone. I don’t think you can do any better than this.”
Another highlight of the event was the annual awards banquet, now in its seventh year. In a special ceremony held March 9, the distributor awarded plaques to 68 retailers who sold $100,000 worth of business in the previous year. One of those dealers was Bennett’s Carpet of Russell Springs, Ky., which was named the Above and Beyond winner for the third consecutive year. It is the most prestigious award Gilford bestows on a dealer. “Winning never gets old,” said John Bennett, owner. “I think it comes down to the relationship we have with Gilford-Johnson. If we have issues or problems—and that is invariably going to happen in business—they are here to support us. The Gilford-Johnson staff is loaded with high integrity people.”