Best Practices - April 2011
By Brian Hamilton
It’s been trial by fire for J.D. and Lois Millikan, who bought Southern Floorcovering & Interiors, a Shaw Design Center, back in 2003 with absolutely no experience in the industry between them. J.D. was in sales in the computer industry while Lois had been a homemaker. In some ways the lack of experience was a handicap, since there was a lot of basic information to learn about the industry. But in other ways it was an advantage, because they weren’t locked into a particular way of doing business and could look at the enterprise more objectively.
Customer service was a focus right away. J.D. knew from his high tech experience that rather than being a retailer of flooring, the store would have to be a “solution provider,” a common theme in software marketing.
“You are actually their consultant, sometimes their interior designer—there are lots of different hats to wear,” J.D. says. “We try to instill in all our salespeople that they don’t know what the next person walking in the door will need. So we try to treat everyone the same. Sometimes the solution might have nothing to do with us. If we don’t have a product and someone else does, we’ll send them there. It all comes back later if you have a good reputation.”
The Millikans decided early on that diversification was also a good strategy, and in general they haven’t been afraid to make changes and be aggressive about forming alliances. As luck would have it, in 2005 they were approached by a builder about buying his cabinet business. As they completed their due diligence, it was clear that the company—in a good location—should be profitable but the builder couldn’t devote enough time to it.
Heritage Cabinet Co. in Pinehurst now makes up about 30% of sales but it could have been much more. “We didn’t aggressively go after cabinet business but now we’re starting to grow it like we should have,” J.D. says. “It could have been 60% of sales today.”
The Millikans believe that today it isn’t enough to specialize in just floorcovering. The cabinet business is perfect, they say, because the margins are much higher than with flooring and it keeps with their philosophy of being a “solution provider.” Many people who are redoing kitchens and bathrooms want both flooring and cabinetry. And there are many opportunities for cross promotion. Heritage, which carries stock and custom cabinets, often draws designers into the showroom, which can give both businesses added exposure.
“You just can’t be one dimensional anymore,” J.D. says. “You’ve got to have something else.”
The Millikans also have a relationship with a countertop maker and display samples from that business.
Another change the Millikans made in 2009 was to move the business from a 20,000 square foot building in Robbins in the north part of Moore County to a 16,500 foot location in Aberdeen where most of their business was located. Although the current location is smaller, J.D. says it’s much more efficiently set up. Shaw provided a moving truck for free while Southern Floorcovering paid the driver, and various reps helped set up displays.
In addition to their main full service store in Aberdeen, the Millikans also own Discount Flooring Warehouse in Aberdeen, which caters more to a do-it-yourself clientele, although a few builders and remodeling professionals also shop there. It’s also their primary outlet for laminate sales, as well as discontinued tile lines, running stock wood, and promotional products from Shaw. They started this business when they moved the main business to Aberdeen and found a warehouse with an attached showroom and office space nearby.
“We decided, especially in light of the economy, to start a cash and carry business there,” Lois says. “We have our commercial samples and some displays in the showroom area, and part of our warehouse is customer friendly with rolls of carpet and vinyl, pallets of hardwood, and laminate and promo goods.” Today the store comprises about 20% to 30% of sales. It’s run by J.D.’s brother, Chris.
The company also seeks out commercial business, which makes up about 15% of sales. Most of the work is for area hospitals but it also gets business from strip mall renovation projects.
Southern Floorcovering draws from an interesting demographic. There are high concentrations of older, and relatively wealthy, people because the area has more than 40 golf courses and attracts many retirees. At the same time, Fort Bragg is nearby, so there are many young military families around as well, and it’s a transient population so there’s a fair amount of turnover.
Today, the firm puts much of its promotional dollars into two local magazines to reach those customers. One, produced by a major real estate company, is received by everyone moving into the area, including the growing Fort Bragg population. In return for advertising, the real estate firm refers its clients to Southern Floorcovering. J.D. has also had the chance to speak at the firm’s meetings and offer discounts to its customers, so the company is becoming very well known in the real estate community.
The second promotional vehicle is an upscale lifestyle magazine that reaches older, more affluent residents.
Television stations are too far away to make advertising practical. The Millikans do a little radio advertising and occasional newspaper advertising in special sections. Heritage Cabinet Co. has a Facebook presence. The Millikans have also just begun to look into email marketing but generally don’t have a strong web presence beyond their main website. They admit to playing their advertising by ear, and don’t have an advertising budget, per se, but may establish one next year.
Southern Floorcovering also has discounts, which it promotes heavily, for active service people, and employees of the local community college and hospital, two of the largest employers in the area. These have been successful at drawing traffic into the stores.
The firm also has solid relationships with all the town offices in the area and it finds out quickly when someone pulls a building or renovation permit.
The Millikans also like to hold after-hours events for particular groups, such as insurance or real estate professionals. It’s been a successful strategy at the cabinet company, which is in the same building as the most well known restaurant in the area, Elliott’s on Linden, and it has used Elliott’s to cater gatherings for designers, knowing that the restaurant’s name would be a significant draw by itself.
“I know we still have things to learn and there are things we could do better,” J.D. says. “We’ve made mistakes along the way but we try not to make the same mistake twice. When you stop learning and think you’ve got it all down, especially with customers and personnel, you need to re-evaluate what you’re doing. You’ve got to be flexible, be knowledgeable, and keep your eyes and ears open.”
If you think times are tough where you are, you should try selling floorcovering in the Detroit area. While the entire country has suffered thrional insurance account through Carpet One, and that has really helped business a lot.”
A CUSTOMER BUYS THE BUSINESS
J.D. and Lois Millikan were customers of Southern Floorcovering and Interiors Inc. when they bought the business in 2003. They liked the store and when they found out the business was for sale (while J.D. was in the store to buy carpet), J.D. decided it was a good time to leave corporate life behind. One of the original owners stayed on in a consulting role for a time to help in the transition Today, J.D. is director of operations and Lois is president. The store is unusual in that its largest selling floorcovering is solid hardwood, which surpasses even carpet in sales. J.D. believes that as long as the price of oil remains high or moves higher, and carpet prices continue to escalate, wood will continue to gain share. "It's almost as cheap to put in hardwood," he says. The main store also offers carpet, vinyl tile, ceramic tiles and rugs, along with a line of furniture and miscellaneous items such as radiant heating systems. Their relationship with Shaw has helped them with everything from sales training to advertising material to follow-up with customer complaints.
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