Best Practices - August/September 2007

By Lisbeth Calandrino

Most retailers probably wouldn’t make huge changes to their business when sales are strong. But that’s exactly what Barry Blenis and his partner, David Evans, did in February, 2002 when they purchased the Albany, New York landmark Discount Carpet Supermarket Outlet from founders Cal and Lois Kellis, who were retiring. At the time, the business was already profitable, doing more than $1 million a year. Five years later, they’ve more than doubled their sales.

“When we bought it, the business was strictly soft goods,” Blenis says. “And the only carpet and rugs sold were those which were stocked in this 25,000 square foot showroom. There were no special orders. About 60% was cash-and-carry and 40% was install business. You picked from what was here.”  He said the product ratio was 85% carpet to 15% rugs. 

Neither partner had any experience in the flooring business. Blenis, a young retired executive vice president and chief operating officer at Albank Financial, and Evans, an attorney and accountant, and former senior tax partner at UHY Advisors in Albany, had been looking for a business and were told about the discount outlet. Though two other groups had made offers, the previous owners opted to sell to Barry and David. 

“We ran the business as it was for a year,” Blenis says. “As non-flooring executives, we took that year to assess where the flooring business was going. We came in with no predispositions. We looked at market trends and saw them moving heavily into hard surfaces. After that initial year we began to bring in hard surface. (The store name has since been changed to Discount Flooring Supermarket Outlet to reflect the new product mix.) Our projections were that over five years, hard surface would account for 40% and soft goods 60% of sales.”

“About two and a half years ago, we also decided to put in a fashionable store-within-a-store into our 25,000 square foot showroom because we felt that more couples were becoming more willing to spend more money on their homes.” The store features higher end versus traditional warehouse products, including ceramic and porcelain tile, hardwoods and laminate. The warehouse now features not only remnants, but also good-better-best grades of residential and commercial carpet, resilient and area rugs, and will include machine made and handmade Orientals.

Blenis reports that over the past three years, business has been growing well, more than doubling, in fact, and that the hard goods end has been growing most rapidly. Already about 30% is hard surface. The majority of the business is residential, but the company does commercial projects, usually on a relationship or referral basis.

“The hard thing about commercial is that you have to set up a separate division because it is very different from retail,” Blenis says. “Retail is working with customers in their homes. Commercial is working with a contractor and specs and you may never seen the owner.”

Seventeen people run the entire business, eight of whom are on the sales floor. Right now, there are no outside sales people. Blenis says the company is “looking to reach out to designers to work with the store. We think there is a niche for the types of products we offer and we want the designer to bring customers here and to work here. We cut, bind, deliver and install.”

Most of his installers are subs, “but we manage them closely. If you are a sub and do not do what we want, you do not work for us anymore. Right now we have two subs working exclusively for us. We utilize manufacturer’s training for sales and installation.”

In any conversation with Blenis, he will revisit one theme consistently, and that is to deliver value beyond the expectation of the consumer. One way his organization does that is with a post-installation follow up and a customer rating sheet.

“We do the call and we do the interview verbally,” Blenis says. “We have a manager who is not involved with installation do the interview. It’s how we keep quality control on our  installers.” He says the company is always looking for ways to make the next installation a better experience for the customer.

Another thing that’s important is inventory. “In soft goods, a little swatch does not show the customer the full effect. We will roll out 20 feet or more so the customer can see the carpet and walk on it and see how the light hits it. We have the space to do that. Same for hardwoods. We’ll put together a whole section of hardwoods so they can see what the floor will look like—not just show them one piece. Showing how something actually looks on the floor is a great tool and it contributes to high customer satisfaction.” He said customers have called to make a purchase over the phone, but the preference is to have them come in and look at it, even if they‘ve seen the product or something like it elsewhere.

Inventory is a mix of qualities and grades. Blenis says there are customers with limited budgets, others who are willing to spend a bit more, and still others who will spend whatever it takes to get exactly what they want. “Customers will pay as long as they get their expectations met.”

That’s why warranties are important. “We only go with manufacturers who will stand by their products.” 

Changes in the inventory precipitated changes in merchandising. The store-within-a-store concept was huge, he says, and in the warehouse section display boards show off a full product offering’s color line. That‘s important, says Blenis, if we have ten rolls in five different colors of nylon but there may be as many as 30 colorways. 

Floor Focus asked Blenis what secrets or practices he would share with other retailers. He says, “Business has changed a lot in five years and will keep changing as the consumer is better educated from magazines and research online. As a retailer, you have to meet that. Consumers need to know you have the depth of product knowledge they are looking for. It‘s hard to sell customers something if they are not sure you’re knowledgeable or make statements you can’t back up. Don’t frustrate the customer.” 

Next, he said, “We believe a successful retail business has to do with offering wide product lines, wider even than the customer might expect. Why? Because once you hear what they are trying to do, you can show more options they may not have thought about to enhance the beauty of home or save money. Whatever you do, bring value to the transaction, don’t just take the customer’s money.” 

He illustrated the first two points with increased inquiries into radiant heat. Now, his company explains that a radiant system has to be carefully designed and suggests adding a thermostat under 3/4” oak, for example, to prevent radical heat swings which can damage the wood over time.

The Discount Flooring Supermarket Outlet spends a healthy 5% of its gross sales on advertising. “Albany is a very expensive ad market. We use cable TV, some network and radio. Less than 1% on print, typically seasonal home redecorating supplements and the Yellow Pages. We see the impact of print diminishing all the time.” 

What about all the news about a tightening market? He said, “From a businessman’s standpoint, if you see business shrink and it appears to be a small window, don’t make a lot of strategic internal changes, but you might try some unique approaches to get a bigger piece of a smaller pie. Customers don’t like gimmicks. They want to come in and see real value.

“As we see it, it’s a matter of exceeding customer expectations in terms of product, installation, wearability, etc. That’s why we focus on the follow-up with every installation—to make sure the customer is happy in every way. Customers will talk about that great experience.”

How important is that practice? According to Blenis, it’s responsible for a large part of the business growth. Right now, he says, more than 40% of the business is referrals—and growing. “You don’t get that unless you are performing at or above customer expectations.”

Copyright 2007 Floor Focus