Floor Wars Revisited - May 2006
By Bill Banks
In 1984, Howard Brodsky co-founded Carpet Co-op of America so independent carpet retailers could band together for better buying power in a business world that was becoming increasingly competitive. Today, as CCA Global Partners, Brodsky’s organization counts some 3,600 affiliates worldwide and annual sales of $9 billion. We asked Brodsky to tell what he thinks today’s entrepreneurs need to know to survive and thrive against today’s biggest threats—the big boxes. Copyright 2006 Floor Focus Inc
Q. How much of a threat are the big boxes to flooring retailers?
A. I think there’s plenty of market left, but you have to be very clear about what your market is. I think in the middle, middle-high, as long as you have a great looking shop, good marketing and great salespeople, you’re going to do well. But if you’re just going to continue business as usual, you’re in trouble.
Q. Will the big boxes continue to gain marketshare?
A. There’s going to be an amount where they tap out at. In the better-goods market, a lot of customers don’t want to shop in that warehouse environment.
When a customer gets into better homes, whether it’s remodeling or custom homes, it doesn’t matter.
The big boxes can’t cater very well to the middle-high, high end markets from a lot of aspects—the service aspect, the sales aspect, the environment in the store. It’s not their bread and butter.
I think they’re very strong with younger people who are used to shopping at the big boxes, who are used to do-it-yourself, even though they might not do it themselves. But when you get past them and into the more affluent, that customer doesn’t necessarily look at the big box as a place to buy their flooring.
Q. What’s the best way for retailers to combat the big boxes?
A. I think you need absolutely superior stuff, not just good. You need superior.
Not only do you have to hire the right people, you need to train the right people. You need a superb training program. Finding the right people, training the right people, keeping the right people. That’s the key at all levels. Then you need a marketing program that’s really very focused.
Q. Our research says there are some big discrepancies in sales in different regions of the U.S.
A. I’d say that’s true. I would say that the South, Southwest, and Northeast continue to have strong years. But the Midwest, especially Automobileland, continues to be challenged because of the automobile industry’s troubles.
Business overall seems to be pretty solid, but without a question some of the areas where General Motors and Ford are in Michigan are soft. First, there are a lot of potential layoffs. Then the suppliers are in bankruptcy, and there are so many people employed in that sector that those segments have also been hit hard.
Q. What do you see ahead for China in the flooring industry?
A. Well, first, there’s a change in the whole look of China, so you have to recognize that. China is such a force with all the other industries. Certainly, they’ve already taken a strong position in wood, and are becoming a bigger factor. Also in laminate. So far they’re not a factor in broadloom.
Q. And yet, don’t the Chinese have their own floors?
A. Sure, but I think they’re looking at the export market, as they seem to be doing with furniture. For them, the export market is huge and they’re putting all their effort into exports.
Q. Some still talk about penetrating the Chinese consumer market.
A. I don’t see a lot of attention to that by anyone in the U.S. at this stage. I’m sure some day, but not at this stage.
Q. What’s CCA’s relationship to Chinese hardwood manufacturers?
A. We’re doing some importing now from Chinese manufacturers, but I don’t want to talk about that much. It’s a place we have to look at, and we’re active in it now.
Q. Final words of wisdom for independent retailers?
A. We’re optimistic. We see a strong year ahead, but stores won’t be able to continue doing what they’ve done in the past. The market is changing and the big boxes are going to get stronger in a certain part of the market. You have to establish your market well, be very focused on it, and understand that your business revolves around it.
Don’t just show up. Entrepreneurs who just show up at the store every day...things aren’t going to be as rosy for them.