Strategic Exchange - July 2012

By Kemp Harr

This 20-year review of the floorcovering industry is enlightening but also a bit scary. Where is this industry in its lifecycle? What happened to the entrepreneurs who required little sleep and awoke every morning hell-bent on making a difference and taking this budding industry to a new level?

As Jim Collins, author of Good to Great, adroitly pointed out, good is the enemy of great. Could it be that our industry has matured to a level where we have a consolidated number of large suppliers, filled with plenty of “good” people who are more focused on building shareholder value than challenging the status quo and making a differentiating decision that will plant us at the base of the next growth curve?

The smart people in the channel—our own retailers—tell us in this issue’s Retail Survey that they fear we are headed toward commoditization. Who are these retailers? A few of the “good” people who drive the sales organizations on the supply side of this industry answer that question by saying, “the retailer is our customer.” But I challenge that! Retailers are not your customers; they are your business partners. The “great” leaders on the supply side recognize that suppliers and their channel partners should sit on the same side of the desk and build a “go to market strategy” that incorporates all touch points all the way to the consumer and end user—who is ultimately the customer.

The leaders on the supply side of this business have got to ask the question; Can all retailers be my business partner? The answer is absolutely not! The retailers that have built their reputation around high volume, low price and no service are the ones that need to be treated a little differently. But wait a minute. “Those are the guys that cover my overhead,” a “good” flooring producer might say. That’s just about as absurd as saying, “Don’t worry, we’ll make it up in volume.” We have our own case study right here in the floorcovering business. Just ask the folks at Pergo whose name became the Kleenex of laminate flooring but today can only be found at the home centers.

So let’s take this notion a bit further. How do you deal with the mass merchants of the world? You can’t deny that they are here to stay and they do sell large volumes of product. John Deere and Levi Strauss think they have the solution. You let them have your brand but you sell them a cheaper product. In essence, you let the consumer sort it out. This strategy gets mixed reviews from Deere’s stocking dealers and Levi’s boutique store partners. Deere answers the problem by saying that they’re bringing more traffic to their loyal dealers in the form of parts and service—something Home Depot and Lowe’s don’t offer. And Levi Strauss tells its boutique retailers that its Levi Signature brand at Wal-Mart does not compete for the same consumer that pays $100 for a pair of jeans at the boutique store.

I mention these two brands as examples because they, too, are struggling with the right channel strategy. But they aren’t exactly relevant to our situation here in the flooring business, for one simple reason. Deere and Levi Strauss still spend millions talking to the consumer in the form of advertising. This business needs another Tom McAndrews, who propelled Stainmaster and Mannington Gold sales through aggressive consumer advertising. We’ve said it before and we’ll say it again—you can’t have a commanding voice in the channel unless you mean something to the consumer. One solution is your own investment in consumer advertising; the other is partnering with the right retailers who commit to building your brand downstream—or perhaps a blend of both.

LEADERSHIP MATTERS
Perhaps the most rewarding part of pulling this anniversary issue together was hearing the stories about some of the leaders who helped shape this industry over the last two decades. Many of these stories were conveyed to me by the industry’s current leadership. On both counts, this business has been blessed with a number of gentlemen who qualify as level 5 leaders as described in Good to Great. For those of you who haven’t read the book, a level 5 leader has a paradoxical blend of personal humility and professional will. They are usually self-effacing individuals who deflect adulation and yet have a stoic resolve to make their company achieve greatness. Their passion is not for personal wealth but for the success of their organization.

Ray Anderson, the founder of Interface, is a perfect example. Early in his career, Ray risked everything he owned and focused his passion toward Interface’s success. And yet, all the while, he kept his cool with a swagger and an infectious smile. Later in life, he shifted his focus to environmental sustainability and with the same razor focus and refined Southern drawl, convinced our industry and many others to follow his lead on a trek toward sustainability. Each of the leaders we singled out in this special issue deserves to be honored for advancing within our industry over the last 20 years.

There’s a strong chance that we’ve inadvertently omitted a key person, fact or milestone from this issue that deserves mention. We sincerely seek feedback on any omissions so that we can add this information to our library and pass it along to our readers.

QUALITIES OF A GENTLEMAN
I used a word a minute ago that needs a little more attention. The word is gentleman. I mention this for fear that many men in today’s society have, for one reason or another, lost their aspiration to become gentlemen. Being a gentleman is behavioral and has nothing to do with economic stature. A gentleman is aware of what civilization is about and acts accordingly. He recognizes that there should be a balance between the needs of himself, others whom he is associated with (friends, family, associates), and all mankind.

So, what makes a man a gentleman? He is well groomed and stands tall, he is quick to open the door for others, smile and acknowledge one’s presence, and when he shakes hands, he looks the other person in the eye as if there is no one else in the world at that moment. He is courteous and attentive and does not partake in idle gossip about others. A true gentleman is wise and in control of himself at all times.

If you have any comments about this month’s column, you can email me at kemp@floorfocus.com.

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