Best Practices - May 2012

By Brian Hamilton

Carpet World of Bismarck, North Dakota has an advantage that few other flooring retailers have these days—it’s in a booming area that never really felt much of the economic downturn. Bismarck, the state capital, with a metropolitan population of 110,000, is about 120 miles away from the largest oil boom in America, where shale oil from the Bakken formation is being extracted on an unprecedented scale.

In February, North Dakota had the lowest unemployment rate in the country at 3.1%, but perhaps the biggest factor for Carpet World is that the housing industry is building there at a faster rate than at the height of the national frenzy back in 2006. About 60% of Carpet World’s business comes from local builders—not the large tract builders—who would be putting up houses at an even faster clip, but vacant land is becoming scarce.

“The oil boom is in the West but it’s slowly moving our way,” says Jon Dauenhauer, one of four family members who work in the business.

“There aren’t any oil rigs in our county, but we can feel the impact with people moving to town and opening offices in Bismarck. We’re able to handle the boom better than some of the smaller towns because there’s more availability of housing. There’s a lot of new home construction and this year is going to be record-setting.” Most of the homes are in the $300,000 to $400,000 range, Dauenhauer says, perhaps attesting to the growing oil wealth in the area.

Carpet World has relationships with local builders, who send their customers to the store to pick out floorcovering. Because builders like the customer service Carpet World of Bismarck provides, the firm gets a lot of business.

Carpet World, which is aligned with the Alliance Flooring group and is also a Mohawk ColorCenter—a very unusual combination, Dauenhauer says—has competition from about half a dozen other independent stores, as well as home centers like Lowe’s and Menards. Much of Carpet World’s business comes from word of mouth because it’s been around for so long and has been run by the same people since its inception. But the business doesn’t rely only on referrals.

The Bismarck store’s advertising is done in conjunction with the Fargo store’s, a separate location owned by the same investment group. The advertising is mostly image advertising, done on a regular basis; the store rarely has “free pad” or “buy one get one free” kinds of ads. However, there is significant advertising around its annual one-day clearance sale in February as well as Mohawk’s spring sale. The stores use a lot of radio advertising, along with some television, but little is done in print. They also, for the most part, have identical websites, with the exception of features like an online “showroom tour” as well basic contact information and some differences in featured products in their respective design centers. However, the Bismarck website has a link to a Facebook page, while the Fargo site doesn’t.

One way Carpet World of Bismarck sets itself apart from competitors is the way the showroom is set up. Rather than showing carpet on rolls, it has 20 4’x4’ display vignettes (mini-rooms) constructed with walls and molding, with carpet and pad on the floors. This enables customers to see what installed carpet actually looks and feels like underfoot. In addition, samples of similar carpet hang on the walls of each room so that all 60 different running line SKUs are represented.

In addition, Carpet World stocks 20 different luxury vinyl tile looks—LVT is its biggest selling hard surface, partly because of the cold climate—and those are displayed in eight-tile vignettes on the floor, complete with grout. “We’ve been called the Duraceramic capital of the world,” Dauenhauer says of the Congoleum product.

There’s also a Budget Center, where remnants, discontinued products and special buys are displayed, all at substantial discount.

“We’re not afraid to take on a new product or a new category,” Dauenhauer says. “We try and keep up with the trends, and if something is changing, we want to be on top of that.” That philosophy is part of the company goal not just to sell floorcovering, but to get their customers into the “right product,” Dauenhauer says. “Our salespeople are good at asking the right questions and making sure their expectations are met.”

About 90% of total product sales for the Bismarck store are from stock, while it’s closer to half for the Fargo store.

Carpet World installs 90% of what it sells, with entirely contracted labor. Dauenhauer uses about 20 different installation crews on a regular basis, and most of them choose to work only for Carpet World, and have done so for many years, partly because the work is steady. “I think a big part of our success is we’ve been able to keep installers,” Dauenhauer says. “We get calls every day from installers in Colorado, Washington, Kansas and other states who have heard about the oil boom and are looking for work.”

A FAMILY BUSINESS

Carpet World of Bismarck is a family operated business in nearly every way. However, it's partly owned by an outside group of hands-off investors, who also own another Carpet World in Fargo, North Dakota. Bob Dauenhauer was hired by the investors to get the store off the ground back in 1984 and he's still active in the business, although he's winding down. His wife, Helen, was a long-time bookkeeper but has since scaled back her involvement. Bob's sons Brian, who started in 1998, and Jon, who started a couple of years later, handle most of the decision making these days. But it's not unusual for customers to come in specifically to do business with Bob. Jon handles most of the purchasing and inventory while Brian is the sales manager and "people manager." This family aspect of the business has been a key to its success, Jon says, because the family is part of the fabric of the community.

In addition, it has a number of long-time employees, several with more than ten years of experience, which also adds to the sense of family. The store changed locations in 1994, when it began selling hard surface products other than linoleum, and has continued to expand in the current location. Today it has a 7,500 square foot showroom and a 13,000 square foot warehouse and sells all kinds of flooring, as well as some countertops. It's also about to become a Hunter Douglas dealer, having hired a designer who is very familiar with that company's products. Last year it was Alliance Flooring's Retailer of the Year.