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Silver linings: How some bad breaks turned into big breakthroughs

January 16/23, 2017: Volume 31, Number 16

By Ed Fountaine

The legendary Henry Ford once said, “When everything seems to be going against you remember that the airplane takes off against the wind, not with it.”

From the Great Recession of 2007-2009 and the implosion of the housing market, to natural disasters, to new and disruptive competitors, more than a few flooring retailers have been forced to take off against the wind. Their ability to turn a bad break into a breakthrough has been the key to success.

FCNews contacted several retailers to explain how they were able to overcome adversity.

Matt Pfeiffer, Northern Flooring & Interiors, Lake Orion, Mich.
Screen Shot 2017-01-16 at 12.00.04 PMNorthern Flooring & Interiors was emerging from the economic downturn when it was hit by tornadoes. As Matt Pfeiffer, owner, recalled, “We were just finally recovering from the Great Recession, starting to get back on our feet, and the store was in desperate need of a remodel.”

Pfeiffer explained a seven-foot pile of hail pushed against the back of the building, severely flooding half the store. The company lost power for a few days, and lost lots of paperwork and samples. However, the storm did not wreck the company.

“We were actually able to operate, and we had a big event that was scheduled in our store within a month of the tornado hitting,” Pfeiffer said. “I’m on the advisory board of CCA, and we do these events for Design for A Difference. Being part of a group like CCA is obviously a benefit in terms of having resources, knowledge and people who really give a damn about your success.”

Despite the flooding, the show went on. The company was also able to completely remodel its showroom two years ahead of schedule. “We had insurance coverage for the [storm] repair. And because manufacturers wanted to be part of the makeover and have their flooring in the showroom, we were able to leverage the actual insurance work with the benefits we get from being in the industry.

“Ironically, both the recession and the tornado flooding made us stronger than we’ve ever been,” Pfeiffer said. “Business is solid. Last year was a record year; this year will be a good one, too. In fact, we bought a new building and we’re going to be moving again. We couldn’t have done all that, there was no way I could afford to buy a building, had we not gone through the discipline lessons of the recession.”

Craig Phillips, Barrington Carpet and Flooring Design, Akron, Ohio
Screen Shot 2017-01-16 at 12.00.10 PMBefore the recession, Barrington Carpet and Flooring Design in Akron, Ohio, was almost entirely reliant on a single, large-volume customer. Fortunately, the company had the vision to expand its reach so when the recession did hit, it was able to survive and even prosper.

“The bad break that happened with the economy and builder business greatly affected many retailers and people in the floor covering business, and, to this point, many have never really made their business back up,” said Craig Phillips, president of Barrington. “We were fortunate to strive toward being diverse.”

At one time the business was about 90% one major home builder and a little bit of retail. “When I took over 10 years ago, the diversification process had started, but we really took it to another level,” Phillips said. “We hired a person who has a very strong background in property management, and we got heavily involved in that business. We hired people and got into the commercial business and really went out looking for additional custom-builder opportunities.”

Ever since that time, the company has seen double-digit growth every year. “I really lay our success on the fact that, technically, we were acting on a business philosophy that really took us through the bad break of the U.S. economy damn-near going into a depression.”

Scott Allen, Carpet Corner, Kansas City, Kansas
Screen Shot 2017-01-16 at 12.00.30 PMCarpet Corner in Kansas City was able to ride out the recession. But Scott Allen, who worked his way up from the warehouse to become general manager, is now trying to deal with new hurdles in the form of emerging competition and a demanding customer base.

“The Great Recession has been the most trauma that just about everybody [has] had to deal with in the last decade,” Allen said. “But the bigger issue now is competitive pressure from national retailers and the Internet. Those are definitely my biggest challenges, probably bigger than the recession.”

Nearby competitors, including the mammoth Nebraska Furniture Mart superstore and about 30 big box stores in the company’s market, also poses challenges. “I don’t have the answer yet,” Allen said. “But evolving is what we have to do. We’ve been stagnant, and we have to change how we market our company.”

Two of these changes entail runing more aggressive online campaigns and being more creative to attract more consumers. “You’ve got to change to capture the customers,” Allen said. “That’s something we’ll always be working on.”

Joel Schreier, Home Carpet One, Chicago
Screen Shot 2017-01-16 at 12.00.20 PMJoel Schreier, co-owner of Home Carpet One in Chicago with his wife, Debbie, was blindsided when one of his chief suppliers suddenly became a chief competitor. His solution: diversification.

“A couple of years ago we had one of our major tile suppliers open up a pretty magnificent showroom in our market, within three or four miles of my store, across from the Merchandise Mart,” Schreier recalled. “My customers could go see the same product they saw in my showroom in the supplier’s showroom. Sometimes they would even be quoted a lower price than we could provide because they were buying direct.”

It took a while but the new competition turned Home Carpet One into a tile importer—and as a result, the business actually expanded. “We turned to importing directly—from Italy, China, Spain, Brazil—to lessen our reliance on distribution,” Schreier said. “It turned out to be probably the best thing we ever did for our business in terms of differentiation of product and being able to deliver better prices to our customers.”

Direct importing, which now makes up about half of Schreier’s tile business, makes him much more competitive in the marketplace in general. “Now I have unique products that no one else has,” he said.