January 16/23, 2017: Volume 31, Number 16
By Leah Gross
For many specialty floor covering retailers intent on growing their businesses, the issue is not “if” they will expand but when and how? This applies to dealers across the board, whether they’ve been in business for a few years or a few decades, or if they operate one store or 10 locations.
For some, the path to growth may entail new product offerings or additional services; for others, expansion into new geographic territories might make more sense. The common denominator, though, is timing.
FCNews talked with retailers across the country to hear their ideas on the different ways to expand.
Apply a growth strategy that works best for your needs
If you’ve recently opened your business or added a store to your lineup, applying a good benchmark to ensure you have a solid footing in your market is three years. Fast growth and quick profits are not necessarily the most reliable indicator. A solid and well-tracked customer base is a great sign. Experts say it indicates an ongoing demand for your products as well as a level of satisfaction with your service. With a loyal following you might even have customers approaching you asking when you’re going to expand.
“We have no plans to expand into other markets, but we’re always looking to grow our business,” said Jim Walters, president of Macco’s Flooring, Green Bay, Wis. “There are several ways to do this: opening new branches or acquiring existing stores, or continuing to look for more market share in your present locations.”
Macco’s is continually looking for the unturned stones in its own backyard. “For example, we have recently begun doing more promotional advertising targeted to the builder side of our business,” Walters explained.
New stores and showrooms may be the most obvious avenue, but they are certainly not the only way to expand. For Stephen Dayton, owner of Carpet Village in Pasadena, Md., growth entails continuing to improve upon what they have and identify ways to grow from within. “Our growth strategy for the near future is to continue to improve and become more efficient in what we’re doing already. Our goal is to provide excellent service and grow with our customers.”
Really think it through
How you weigh the potential for rewards against the associated risks of expansion is a critical consideration, experts say. “A well-thought-out expansion plan and execution of that plan is critical in order to keep your business profitable,” said David Elyachar, founder/owner, Big Bob’s Flooring, Yuma, Ariz. “Our No. 1 rule is expansion should only be done with profits.”
Big Bob’s operates under a “spoke-and-wheel” model, and this is a central focus when making expansion decisions. “We have three stores in Kansas City and we’re opening a fourth,” Elyachar explained. “When that store is profitable we’ll look at opening a fifth.”
Know your market and target demographic
“You must know your market and surrounding areas inside and out,” said Scott Patrick, owner, Carpet Specialists Carpet One. “You must be reading the trades pertinent to your industry. You must know what is happening across the country. Lastly, you must have a strong presence in your community and ensure that your company is involved and exposed within it.”
Make sure team members “buy” into the plan
Any company-wide strategy—especially one that entails the future of the store—requires that all team members understand the main objective. You may need leaders who can step up and handle the greater demands of opening and sustaining new stores. Once you decide to move forward with the expansion, experts say, you will definitely need people on the floor and in the back office capable of handling new shoppers and processing increased data flows.
“Success is not a given in expansion,” Elyachar warns. “In addition to a better plan, you must have better people. If you have the right people on board there is no stopping.”
Adjust your product mix accordingly
In some instances, the decision to expand the business—especially when it comes to product offering—may be based on shifts in consumer demand. This is particularly true in situations where homeowners consider remodeling multiple areas of the home at one time.
Big Bob’s Elyachar, who recently opened a new concept store in Independence, Mo., can attest. “Forty years we sold only carpet and vinyl. Now we sell all flooring categories.” But be warned, he notes. “Know what you’re getting into before making the leap. It does not matter what you’re selling, the same rule applies: You must be an expert in the area you expand into. Expanding your inventory does not translate into making more money unless you can move it off the floor.”
This rule not only applies to flooring. As part of the long-term growth strategy at Lewis Floor and Home, Northbrook, Ill., the company added new categories and product lines about 10 years ago. “Our inventory includes window treatments as well as fabricated countertops,” said Steve Lewis, president. “More recently we added cabinetry to our lineup. The response has been great and we’re always looking for new opportunities.”
Lewis is not alone. Greg Miller, president of Henry’s Floor Covering, Green Castle, Pa., took a similar approach when he decided to grow the business beyond flooring. “In 2005 we expanded our inventory to include window treatments. Our customers communicated a want and we made it part of our business. It has proven to be a highly profitable extension.”
Know when to say no
Despite the potential upside, growth is not just an obvious path to more business. There are situations where expansion is not always the right prescription for growth. Paul Johnson, president of Carpet One Floor and Home in Tulsa, Okla., can relate. “As part of our growth strategy we are always looking at tomorrow so we can be prepared for any opportunity that presents itself. There are competitors all around that are closing or selling their business, and if we are not prepared we cannot take advantage of those situations.”
At the same time, Johnson has passed on some potential deals. “We’ve had opportunities to expand out of state or extend into other product categories, but that did not make sense to us. We have a hub and spoke business model, so everything centers around a focal point. Pushing our boundaries could spread us thin.”
Bottom line: Always look out for opportunities to grow the business—just be smart about it. As Carpet Specialists Carpet One’s Patrick put it, “Expansion is important. Let’s face it, you’re either growing or you’re dying. This is the reality of any business, not just floor covering. If you’re not innovating and keeping up with the times, you’re dead in the water.”