Beaulieu of America's Next Generation: The Bouckaert family retools for the future - Dec 2016

By Kim Gavin

Beaulieu of America is passing into the hands of the next generation, as Carl Bouckaert and Mieke Hanssens’ children take the company in new directions. Son-in-law Michael Pollard serves as president. Son Stan Bouckaert is senior vice president, special projects and a board member. Son Nicolas and daughters Stephanie Bouckaert and Natalie Bouckaert Pollard are also on the board of managers.

While capitalizing on a legacy of strong manufacturing and service, the next generation aims to forge a new flexibility and focus on product innovation. The main goal: to be relevant to the independent flooring retailer and help them maintain relevance to the consumer.

Your Home Style, for example, is a new merchandising and marketing system the company has developed and is testing, set to roll out with select retailers next year. It’s all about creating a better experience for the consumer, the company said, as well as giving retailers something to help them compete.

Floor Focus recently sat down with Pollard and Tom Ellis, chief marketing officer, to discuss what other changes they are making to reposition the company in a new world.

Q: What do you see as the major challenges for the industry today?
Michael Pollard:
The pace of change. If you look at other industries, there’s been a quicker transition to online sales. There has been channel conflict and all kinds of problems. With the type of product we sell and consolidation, that hasn’t occurred as much and has happened at a slower pace. That’s a challenge because people want to shop differently. That creates pressure on the independent retailer, because the big box store does have an advantage with online sales and sampling directly to customers.

It’s also a challenge because people want design. They don’t want to just buy something; they want to have it curated for them. It’s a difficult thing for our industry to tackle. Innovation typically does not come from the market leaders, especially with the barrier to entry and the size of our market leaders. But it has to come from somewhere. We’d like to think that we are charged with doing that.

Q: How will you do that?
Pollard:
You start by understanding the problem well; that’s really where we are focused. We are trying to understand our customers better and trying to align our business to tackle those problems.

With Your Home Style, we are trying to solve that problem by giving retailers a selling system that helps them curate design. There are still ways we can tweak that and make it even better, but that’s the direction. It’s a system that not only helps the customer pick the right floor but also get the floor they really wanted.

Q: As someone relatively new to the industry, how do you see the relationship with the consumer?
Pollard:
As an outsider, what I see is that we’re selling on fiber types. The consumer has no clue. One of the frustrating things for me is that I would look at our commercial division, for example, and see such beautiful design and think: why can’t people get that in their home? I would have friends call me for help with carpet. I would take them to a retail store, and they would struggle to find something they liked. Then you would say, “Look at our commercial books,” and they would say, “Wow. These are beautiful. Why can’t we buy these?” I think the reason is the retailer doesn’t want to take the risk, and the consumer doesn’t want to take the risk.

I think the challenge for the industry and certainly us in our evolution is how we make people feel comfortable taking a risk. The industry already has a lot of complexity, so to do design well, you also have to build in the flexibility to do it. We all face the same huge cost of vertical integration and all the things that allow us to be competitive. But there’s a quickly changing marketplace. I think that’s where there is big challenge, but also big opportunity for us.

Q: What specific direction will you take to tackle that challenge?
Pollard:
Your Home Style is one area. We are trying to make our sampling systems extremely flexible. We’ve upgraded to full digital printing, so we can manufacture smaller numbers of samples more efficiently. We’re also looking at a redesign to put meaningful customer changes further down the chain. So we have fewer yarn SKUs, but that proliferates into more end-use styles that are higher in design. To redesign a business like ours is not the easiest thing to do, and it takes some time. But that’s what we’re focused on: how we create flexibility while at the same time making it something we can change quickly.

Q: Do you have a time frame in mind?
Pollard:
I think it’s a three-year effort. If you look at the history of our company, we were a low-cost producer. We had huge bets on vertical integration all the way back to polypropylene and polymerization of caprolactam—that was an excellent model. And we really focused on service. Carl’s personality and the way he handled customer service—it’s unbelievable.

In a lot of ways, we were a chemical company. And with excellent service we could drive volume and have a low-cost model. We still have a lot of those advantages. But I don’t think that’s what the market wants at the moment. I think that’s where we can be different and successful going forward. It is a change in model for us—not an easy thing to do, but it’s the right time. <

Q: What strengths do you bring to the company?
Pollard:
Success in anything is the same formula. I’ve always been a very goal-oriented person. I met the family through Olympic equestrian sport. What I learned during that time is that no matter how much talent or success you have, it requires consistent effort and hard work and listening to people you respect and seeking out knowledge. Whether you have an MBA from Harvard, or you’ve come up through the school of hard knocks, ultimately you are only as good as the smart people around you. Carl could have put me in this company much sooner. He focused me on entrepreneurial businesses, and, frankly, he let me fail if I deserved to. That hunger and coming into this a little bit the same way he did—given a lot of opportunity but being allowed to sink or swim—was a benefit for me.

At the same time, I’m enough of an outsider that I can see things from a different perspective. A lot of times when you have been in business for 40 years, it’s easy to see problems, while I see opportunity.

Q: What other product opportunities do you see on the horizon?
Pollard:
The first thing: do what you are doing well. This year we launched new hard surface in wood and laminate. We’d already launched the LVT and WPC products. We have to solidify everything we are doing there. There will be expansion within those product lines.

We are looking at a big refresh in the carpet business to provide more flexibility. In the meantime, we’ve closed some facilities; we’ve sold some divisions. We are trying to give ourselves enough headroom to make investments in what we think is going to be the next generation. I don’t have a timeline for when we will bring those products to market, but as I look at our three-year plan, it’s one of the top three priorities.

Q: What does that three-year plan look like?
Pollard:
Year one is focused on service—2017 is about becoming a world-class service company again—while at the same time, we’re already at launch season for next year’s product line. Year two is how we rebuild and design what we want to be. Year three is about innovation, but if you are going to do something really innovative, you have to start that now.

Q: What do you see for business in the next year?
Pollard:
We are lucky in that the cycle is in decent shape right now, but there is a lot of worry around the election in the economy in general. Uncertainty in general is not great for the economy, but it also creates an opportunity for a great 2017. As we’ve all watched this election, people have put things on hold to find out what’s going to happen. As the market calms, people will be back out wanting to make improvements that they have planned. I think it will be a good market.

Q: How is the commercial business doing? How important is that business to your future plans?
Pollard:
We feel like it’s a business where we have advantages. We talk about innovation. It probably hasn’t gotten enough attention, but we are in the third generation of Nexterra modular tile. We have a tile product that’s second to none, that has a real environmental story with real benefits. That’s another place we can continue to create growth. Having Tom Ellis on board with his wealth of experience in the commercial business helps us continue that success story.

Q: If you look at the reports, the commercial carpet business is fine. It’s the residential business that’s suffering. Why do you think that is?
Pollard:
If you look at residential carpet, it’s boring. You can have a beautiful design, but carpet has become a commodity item and low-cost option. We sometimes forget that it is a beautiful product in and of itself.

Q: Back in the ’50s, carpet was the affluent choice. How can the category regain that stature?
Pollard:
We want to make carpet for people that like it. I think the industry got away from that. I think carpet is a beautiful product and should be presented as such without apology. It has a lot of attributes you can’t get in any other flooring system.
Tom Ellis: We are seeing the influence of design in carpet. It’s tighter; it’s more random but more durable. We are seeing technology where print, tufting texture—and some accent of cut pile, if we need it—can intersect at residential. I think what Michael is suggesting is that we are trying to be more nimble, so design can be accessible to everyone.

Q: What is the company’s mix of soft versus hard surface these days?
Pollard:
It’s about 80/20 at this point, still soft surface. But we’ve doubled our hard surface business every year since we launched it. Beaulieu Canada is a little further ahead: its mix is getting closer to 60/40. I think that’s a fair resting point somewhere down the road. That will require growth to get there, because we don’t plan on losing share in our carpet business. That’s where innovation is going to come. Also, our connections with the European business give us a unique ability to bring new products to market.

Q: How do you see the state of retail today? Our sense is that even though the market, as a whole, has had some sense of recovery since the Great Recession, that segment hasn’t enjoyed the same.
Pollard:
I think you are dead on. We have to go where the customer wants to buy. It’s in all of our interests to make sure the independent retailer is strong. I think that is—when we talk about design and making sure the customer gets what they want and are happy with it—the best place to do that. The big boxes do a great job, and there are a lot of things they do well, but it’s a more buy-at-your-own-risk type of environment.

Q: How do you make the independent retailer more successful?
Pollard:
We have a culture that’s very quickly shifting to online sales, but we have a product that people want to see and touch and feel. I think there is always going to be a need for retail. But the retail has to be an experience. It can’t just be a smaller version of a big box. It’s not our job to tell them how to run their business. Our job is to give them the tools to do that well. But we are also trying to listen, so we know how to create flexibility in their market.

Ellis: I recently asked an independent retailer, “So if we gave you the merchandising and showed you a collection but allowed you to pick the ones that fit, would that be meaningful to you?” He paused for a while and said, “So you would let me pick what I want? No one has let us to that before.” I asked, “Would that be helpful?” He said, “It would make the most sense I’ve seen in the industry.” We are hitting the road in January with this concept.

Pollard: That’s where our investment in digital printing comes in handy. We don’t have to load up on samples. What we want to try to do is let the market tell us the direction it wants to go. The sampling is the first piece of that, but throughout the whole chain we are trying to create a pull system.

We are probably the only company with the ability and the necessity to do it. Toyota was the same. They wanted to be cost competitive with GM, but they had 1/15 the market size, so they had to come up with another way of doing it. As we’ve looked to retool our manufacturing footprint, we want to create a pull system that allows that to be nimble and flexible.

Q: How are you going to support the retailer?
Ellis:
We are trying to balance the equation to have access to the dotcom, but we don’t have to be the channel it goes through. We don’t know what that looks like, but we think it allows us to go through independent retail. We do have an independent retail design council. This is their biggest fear. If things become web based, it removes them, just like big box did. We have to be very sensitive.

Q: How do you counter the online movement?
Ellis:
If carpet can begin that process and be supported by the independent retailer, that could be the best leverage we have to align with them. If we can get to that consumer first, we can pull the retailer in to help them. It’s all about that comfort that says we understand what you are going through and we will help you through it.

Pollard: It’s the difference between big beer and craft. Craft is where the market wants to go. Look at buy local. But our industry is charging in the other direction. I think that’s good for us as a company. That’s where the opportunity is.

BEAULIEU'S NEW TEAM
Beaulieu’s realignment also includes a new board as well as new members of the management team. Former CEO Karel Vercruyssen resigned in July, and there are no immediate plans to replace him, according to Pollard.

The company is governed by the board, which consists of family members as well as outside professionals chosen for the depth of their experience. Rich Roedel is a former chairman and CEO of BDO Seidman and sits on numerous boards, including Six Flags Entertainment. Larry Rogers is the former president and CEO of Sealy Corporation. Joyce White served as the president for Bank of America Business Capital and has been involved in the company’s financial affairs for many years.

Beaulieu’s co-owners Carl Bouckaert and Miecke Hanssens brought their children into the business as they matured. The younger Bouckaerts now sit on the board as well as help run the company. That change, Pollard said, makes possible the path forward. “We are big enough to be competitive but small enough to make decisions quickly. We don’t have to have a committee of 25,” Pollard added. “I think we are poised to put that speed and agility to work on big wins.”

Senior Management
Michael Pollard, president
Mike Hoffman, chief operating officer
Vince Denargo, chief financial officer
Tom Ellis, chief marketing officer
Stan Bouckaert, senior vice president, special projects
Steve Hillis, president, flooring
Annette Cyr, executive vice president human resources
Del Land, chief administrative officer and SVP for projects
Lynn Elkins, vice president, manufacturing and operations
Bobby Creswell, vice president, manufacturing

The Board
Stan Bouckaert
Nathalie Bouckaert Pollard
Rich Roedel
Larry Rogers
Joyce White
Nicolas Bouckaert
Stephanie Bouckaert
Carl Bouckaert
Mieke Hanssens

Copyright 2016 Floor Focus