Best Practices - June 2011
By Brian Hamilton
Dugan’s Paint and Flooring Centers in central Missouri sell fashion and projects, not paint and floorcovering, according to owner Chuck Kempton. Today, that’s a more difficult task than ever, given the changes in the economy, not to mention technology and demographics. But the 140 year old firm learned a long time ago that it had to be able to adapt by reaching out in new ways, all while remaining true to its strengths and its roots.
Five years ago Kempton says his chief competitors were other independent flooring dealers and company owned paint stores, but today they’re the big box retailers. The Great Recession took its toll on business in the central Missouri area like everywhere else and Kempton has seen many of his independent competitors in the Sedalia, Missouri area go out of business. Dugan’s, in fact, has seen its own sales dip by 30% from three years ago.
“When the economy was good, the customers walking into those big box stores for the most part were not my customers,” Kempton says. In those good old days just a few years ago, Kempton’s stores attracted shoppers for whom quality service was often more important than price.
Today, however, price is at the top of the average consumer’s list, and online shopping tends to reinforce that trend. As Kempton says, today’s flooring shopper, even while acutely interested in style, generally begins the process from the comfort of her own living room, and price comparison is among the easiest things to do online.
What’s not so easy for these shoppers is to appreciate all the benefits that come with quality service. Most people don’t understand the headaches that can result from a shoddy installation job, for example, or choosing the wrong kind of flooring in the first place.
Another trend Kempton has noticed is that flooring shoppers in their mid-20s to early 30s grew up seeing their parents go to big box stores for all kinds of products, generally looking for the best prices, and many of these young consumers are barely aware that independent flooring stores even exist.
“We’ve worked hard to make sure our presence is heightened on the Internet and social media,” Kempton says. The four store chain has an active Facebook page, where all kinds of information is presented and updated on a regular basis by the chain’s advertising manager. Kempton also uses email marketing and sends out a quarterly electronic newsletter. A blog is also in the works, but, Kempton says, “It’s still in its infancy.”
Dugan’s website is uncomplicated and visually oriented, and the main page emphasizes things the big box stores don’t have, such as free in-home estimates, free samples, and a Color Back Guarantee for paint. You won’t find prices listed anywhere. There are also inviting virtual tours of each store, providing a sharp contrast with the impersonal nature of the boxes. Dugan’s also makes good use of search engine optimization to make sure the store appears high in search listings.
That, in essence, is how Dugan’s competes against the giants—by emphasizing how shopping at its stores is a different experience from going to a mega retailer. It’s a message that’s carried through in its newspaper, radio and direct mail advertising as well.
“We try to promote ourselves as a one stop decorating center,” Kempton says, which is also an attraction for builders, who can buy many products they need in one place.
Dugan’s spends 2% of sales on advertising (which also includes a “boatload” of t-shirts and sweatshirts that it gives away to contractors who come into the store), not counting co-op advertising, and all advertising is tracked to try to get some idea of what is working. That, Kempton says, isn’t easy to figure out, and it’s especially difficult to determine how its Facebook presence affects sales. Nevertheless, he says, “If you’re not doing what needs to be done today in the area of promotion, you’re going to be left behind.”
Getting AND providing the right information
It’s equally important for customers to pick the right kind of flooring, and sometimes it’s not what they thought they wanted at the outset. Many shoppers who come into the store are armed with just enough information through web research to be dangerous. However, they often have limited information on attributes like performance characteristics of a product.
“I encourage my salespeople to find out about a customer’s family, determine their needs, and try to fit a product to them,” Kempton says. “We need to find out if they have four Great Danes. We don’t want them to say ‘I wish you had told me this,’ if, for example, the customer realizes that shiny wood floors might not be the best choice with four large dogs in the family. “We ask a lot of questions and do a lot of listening.”
The showrooms, which are updated regularly and are kept clean and well lit, also often help make the sale. Dugan’s has as many as 20 different flooring vignettes featured at any one time in the showroom, and they are changed at least every two years. Those products often turn out to be the biggest sellers, partly because customers can see how they look down on the floor and can imagine them more easily in their homes. (It also lets Kempton see first hand how carpet and other products perform.) The same is true for paint colors that Kempton uses on the showroom walls. They often wind up in area residences.
“We feel we have an advantage over the big boxes once a customer walks into our stores,” Kempton says. “We can’t compete on things that they advertise day in and day out because they aren’t even available to us. But on other things, we’re often cheaper. We believe that if we have the opportunity to compare apples to apples and show people everything we can do, we can get that customer.”
Overall, Kempton tries to maintain a high level of service, partly because word of mouth can be particularly powerful in a small community. Plus, he believes it’s the right thing to do.
“We don’t get it right every time, but we will never leave a customer dissatisfied,” Kempton says.
Marketing in a small town
The Sedalia area is made up of communities with populations of about 20,000 to 25,000. Dugan’s owes part of its success to respecting the small town life, which it has been part of for more than a century.
One of the company’s best promotions is its support of local sports, especially recreation teams. The firm, like many in small towns, also advertises in high school athletic programs. It helps get the Dugan’s name out in the community in a positive way.
Dugan’s also likes to support other worthy causes—especially those that Dugan’s employees are involved with—such as Habitat for Humanity.
On its Facebook page, Dugan’s recently linked to a local newspaper story about the company’s project with the Children’s Therapy Center, which it has supported for many years. It held an ugly room makeover contest and pledged $1 per vote to the center. Kempton told the newspaper, “In my opinion, as the owner, the more excitement we generate, the more foot traffic it means for our store.”
Dugan’s also features customer appreciation barbecues at all its stores. “Nobody does that anymore,” Kempton says.
The respect for small town life also extends to how the firm treats its employees. Kempton says that every one of his salespeople is on a salary or paid by the hour, with no commission. His employees prefer it that way, and no commission leads to less pressure on customers.
Kempton says that judging from the feedback he gets at Mohawk meetings, his payment method is very unusual.
“We don’t have many employees motivated by commission as much as they’re motivated by security,” Kempton says. “I don’t want to be a high pressure store, but with this structure you’ve got to do a great job of following up.” He also pays his subcontractor installers every Friday, even if they’re in the middle of a job, so they can have more predictable income.
Kempton is also proud of the fact that during the depths of the recession, he didn’t change his benefits package, despite cutting back in nearly every other area.
“Our biggest asset is our people,” he says. “We want to keep them.”
|DUGAN'S PAINT AND FLOORING AT A GLANCE
|Dugan's Paint and Flooring Centers is marking its 140th anniversary this year. The business started as a paint and glass store in Sedalia, with the paint and glass operations splitting into two separate companies in 1980. It added flooring in 1970. The company slowly expanded from 1983 to 1997--partly through acquisition--adding three new stores, and since 2004 has significantly expanded its warehouse capacity. The satellite stores are a good drive from Sedalia, with the Osage Beach store 70 miles to the southeast in the popular Lake of the Ozark resort community. The closest, in Warrensburg, is 30 miles away. Kempton is the fifth generation of the family in the business, and his nephew, Jason, the Sedalia store manager, and daughter, Tyger, who works in the paint department, will be the sixth generation leaders. Today, flooring makes up about 70% of sales, paint 25%, and window coverings 5%. About 65% of flooring sales is hard surface, and the majority is tile, much of which is imported directly from overseas. Dugan's has been aligned with Mohawk Floorscapes for eight years and sells a wide variety of flooring. Its main paint lines include Benjamin Moore and PPG. The company also has a small commercial business--mainly offices--that Jason handles from the Sedalia store. Kempton says that at least half his flooring customers also buy paint, and Dugan's offers additional discounts for those customers.
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