Commercial distributor thrives on well-executed strategy
March 18/25, 2019: Volume 34, Issue 21
By Steven Feldman
If ever there was a company that flew under the radar in this industry it is Spartan Surfaces. And this is by design. Sure, many people have heard the name. What they almost certainly do not know are the details, like the fact the commercial distributor operates in 30 states, handles a product lineup in the neighborhood of 40 brands, has 120 employees and raked in $100 million in 2018. Kevin Jablon, who founded the business 12 years ago as a glorified agent, has come up with a formula that blends the basics—blocking and tackling— with a secret sauce. But the turning point came in 2009, when Jablon switched gears from an agency to a distributorship. “The idea of Spartan Surfaces was that we were going to be a commercial flooring rep agency,” Jablon told FCNews. “We were going to cover a geographic territory of Philadelphia through Washington, D.C. We were going to have exclusive products that we could specify, and when the contractor had to get a price or purchase the material, the only place where he could get a price would be from was Spartan Surfaces.”
The plan was to stay lean and mean. “We were going to service the A&D community at a level they had never seen before in resilient,” he said. “And we never envisioned growing outside of that initial territory.”
Despite doing $3.5 million in the first year and just under $8 million in the second year, Jablon had set his sights on bigger things. “In 2009, we realized we couldn’t scale to the level we wanted as an agent. We had to have skin in the game, which meant we had to buy and resell. We had to morph from an agency into a specialty flooring distribution business. And in 2009, not only did we start holding paper and actually handling the invoicing and billing, but we also started investing in strategic inventory.”
Spartan did around $20 million in business that first year as a distributor, a number that increased fivefold in 10 years. That doesn’t happen by accident. “I think the biggest thing was we were one of the first to really focus on the specifier in the resilient space,” Jablon recalled. “When we worked on a project, no matter what city we were in, everybody was fighting for the carpet specification, and there wasn’t near the competition in the hard surface space. There was no other Spartan Surfaces.”
While business has gotten much more competitive today, Spartan has continued to thrive via geographic expansion, moving into New York, Chicago and the Southeast. And as it adds people, it hires employees, not subcontractors. “Everyone’s a W-2 employee; we don't believe in having 1099 subcontractors selling for us because it doesn’t support us working as a team.”
But back in 2013, Jablon made another important decision: to extend his focus from sales and marketing to back-of-house functions. “Everything for me was sell, sell, sell, and no matter how messy the back of house was, sales would heal all wounds. That makes a lot of sense until you get to a certain level. And for where we wanted to go and where we believed the company could go, we realized we had to put as much energy into the inside our business as we were to the outside our business. The culture at the beginning was that the sales reps were the rock stars and everybody else was to support the rock star. Then, as we started to just learn our business a lot better, we realized everyone in the company needed to be a rock star and feel that level of empowerment.”
Over the last 10 years, Spartan’s growth has been exclusively organic, and Jablon has solely expanded into territories where it has made sense. Only a handful of the brands Spartan carries find their way into all 30 states. This customized approach may explain why Spartan has succeeded where others have failed when they grew beyond their means.
“For us the expansion was never based on having a national footprint or being in multiple states,” Jablon explained. “We just see opportunity. I think the difference between traditional distribution and the way Spartan goes to market is when we go into a territory, we don’t necessarily believe we need to have a warehouse, or trucking, or logistics. Most everything we work on is project business. So over 80% of our business is drop shipped directly from the supplier to the customer, the flooring contractor. We don’t sell around the flooring contractor. He is our customer.”
Spartan currently does business in 30 states but has only three showrooms: Chicago, New York and Washington, D.C. It is a full-line distributor only from Philadelphia to Washington, D.C., where five trucks go out every day and deliver products from adhesives to sundries to wall base.
Spartan’s model has allowed it to circumvent two of the major challenges facing most flooring distributors: increased costs related to trucking as well as tariffs. It only transports products in the Philadelphia-D.C. corridor, and its suppliers import from more countries than just China. Still, Spartan is not without its challenges, the largest of which is the commoditization of resilient flooring for a company that admittedly does 99% of its business in the category. “When we started our business, LVT was perceived as specialty flooring, and it’s definitely as commoditized now as any product we’ve ever seen,” Jablon said. “Whether it’s WPC, SPC, dry back, loose lay, it’s just been commoditized. You have a ton of people playing in the same space.”
While having the right products to distribute is important, Jablon subscribes to the theory that it’s more about the people than any- thing else. “We use to joke all the time that we’re not in the flooring business, we’re in the people business,” he said. “For us, culture trumps strategy. We believe culture is everything. Our core value is ‘We Over Me.’ It’s all about a team. We believe in tapping into what each individual wants, whether it’s someone in the warehouse who wants to go back to school and end up in the accounting department, or a salesperson who wants to get into management. It could be someone in customer service who wants to get into sales.”
How will Spartan get to $200 million? “What’s most important is that as we continue to scale, we don’t lose this culture,” Jablon noted. “What’s most important is when it’s all said and done, we treat people right, people love to work here, we’re a family and we live that every day.”