Best Practices - October 2011

By Brian Hamilton

Pasadena Floors has been able to weather the downturn largely because of the way partners Marty Kinder and Steve Garvey have managed the business over its 17 year history. Kinder and Garvey, both of whom came from an installation background, probably knew better than most how important customer service and attention to detail are to a floorcovering operation. Those qualities have paid off because the partners have established a loyal clientele and most of their business comes from referrals rather than through aggressive advertising.

Pasadena Floors is located in the heavily populated Washington, D.C.- Baltimore corridor and many of Pasadena’s customers are government workers and professionals. Kinder says that the 55,000 people in their immediate area aren’t very transient and many plant roots in the area for the long haul.

“We’ve gotten to the point where we’re selling to a second generation,” Kinder says. “The kids of our original customers are coming back now. With us being in business for 17 years, we’ve built our own brand. One of the advantages of doing business with a small independent, when the owners are there every day, is that if there are problems, we just take care of it, quick. Customers get an immediate response and they will tell their friends. We’ve done some pretty amazing things to solve some minor problems,” he says, recalling the time they replaced an entire wood flooring job simply because the wood had a semi-gloss finish rather than a satin finish. Some companies would likely have given the customer a partial refund rather than replace the whole floor.

“The referrals from this customer since that time have well exceeded the replacement cost,” Kinder says. “They are a raving fan! You’ve just got to make it right with the customer. If you do that, you’ll be rewarded with opportunities.”

Taking Advantage of the Downturn
While the downturn has hurt Pasadena like virtually every other retailer (estimated revenues this year are $2 million, down from a high of $2.2 million), it has served to focus the partners’ attention on all parts of the business. “When business is good you can be sloppy to a point,” Kinder says. “But we’re different now. We look at margins and keep everything sharp.”

The partners have decided to inventory areas of the business that need improvement and focus on one or two of them at a time. “Before, it was just the opposite,” Kinder says. “We were here, there and everywhere.”

The alignment with Mohawk has been an enormous help, especially with online training courses devoted to various business topics.

“We were just two guys who were carpet installers, but Mohawk’s resources have helped us be business owners and good managers,” Kinder says.

One thing Kinder discovered by talking to other Mohawk retailers is that he had to change Pasadena’s financing options for customers. Until recently, Pasadena primarily offered one-year financing. However, with today’s cash-strapped younger families, Kinder bumped the terms up to 36 and 48 months, which has helped to close many more sales.

“One year used to be appealing but we just thought customers weren’t interested in financing any more,” Kinder says. “But the longer terms were a real enticement.”

Still Looking for Growth
Despite the partners’ experience in commercial flooring, unlike some struggling retailers they’ve decided to stay away from this business, and there’s a lot of it in the Washington area. Kinder says there’s little negotiated work available and today the margins are too low to be worth the effort to drive the necessary volume. So the firm has remained focused on residential replacement.

Kinder and Garvey have talked about adding a second retail store in the area as the best way to grow but haven’t pursued it yet, partly because the economy is so unsettled.

Kinder admits that it’s difficult to know where sales are headed over the next year or two, even though unemployment in Anne Arundel County, where Pasadena is located, is running about 7%, well below the nationwide 9.1% rate. Many people are still hesitant to buy flooring, and Kinder says he’s noticed that sales seem to rise and fall with the price of gasoline.

Kinder is focusing more attention on Pasadena Floors’ online presence as a way to drive business and has begun experimenting more with media like email marketing and communicating through Facebook. Kinder is also paying a lot of attention to the website, which offers a wealth of information about the company and its products, as well as special offers.

“Our website traffic has increased, and our web-only offers draw some interest,” Kinder says. “We’re playing around with that. We realize that people look there first.”

Pasadena doesn’t have a set advertising budget and generally limits its advertising to targeted direct mail (generally 10,000 standalone pieces, not in an ad pack) in the spring and fall, and local newspapers, especially after the fall campaign. The direct mail often focuses on solid loss-leader items as well as aggressive financing offers and occasionally some giveaways.

FROM FRIENDSHIP TO PARTNERSHIP

Kinder and Garvey have known each other a lot longer than their 17 years in the retail business together. Right after high school 32 years ago they both went to work for the same company, learning the installation trade, and they've pretty much worked together ever since. They had a commercial flooring business for a short time in the 1980s and later went to work for an interior design company that did a lot of union work in the Washington, D.C. area, operating as a two-man installation crew. The retail business started slowly. Kinder began selling carpet initially, mostly out of his house. When they set up their initial storefront, a tiny place at 350 square feet, located on a busy road, they expanded into resilient flooring. But their biggest move in the early days was becoming the first Pergo dealer in the state, when laminate was a fairly new category. "That kind of launched us," Kinder says. "We got real strong in laminates and they became a tremendous part of our business." Today, Pasadena Floors is a full service business, selling every category, and is aligned with Mohawk as a Mohawk ColorCenter. It was named the 2010 ColorCenter dealer of the year for the Mid-Atlantic region. About half its business is carpet (more than half of that Smartstrand) and the rest is split among the hard surfaces. The trend today is toward value carpeting. It sells only flooring and no ancillary products such as window treatments. Pasadena has a small mainstreet commercial business but residential replacement and remodeling provides the bulk of sales. Only a small fraction of sales, about 2%, is to the DIY market. Kinder handles the firm's marketing and promotions, along with business development, while Garvey oversees sales and accounting, among other functions.