Best Practices: USA Flooring – December 2024

By Jessica Chevalier

USA Flooring is a five-location North Carolina flooring retail business owned by Kris and Amanda Lloyd. Started by Kris’s father, Ken Lloyd, the business was recently accepted into the exclusive National Floorcovering Alliance group, which speaks not only to its success but also to the innovative approach it takes to solving the problems faced by many flooring retailers.

OFF & RUNNING
As a high school senior in Rockville, Maryland, Ken took a job as a warehouse employee for a neighbor’s flooring store-loading the truck, delivering product and, soon, making sales. Ken was a good communicator and a go-getter, says his son, and was making such good money in his after-school job that he opted to postpone college and open his own flooring business.

He grew his business successfully, launching Ken Lloyd’s Carpet Towne in the early 1970s as a full-service flooring store in Frederick, Maryland and adding locations in Hagerstown and Gaithersburg in 1984. The business began supplying to Ryan Homes, and, simultaneously, Ken was growing a real estate portfolio.

Nine years in and with three locations, Ken began attending community college and decided he wanted to pursue either law school or business. Ken was accepted to Duke, so he sold the Frederick and Hagerstown stores (he had closed the Gaithersburg location previously) and moved his wife, Priscilla, and young family to Durham to pursue his academic goals.

It wasn’t long before one of Ken’s former suppliers suggested that Durham would be a good location for a flooring store, so, to subsidize his studies, Ken and his brother Randall opened a store in the city and signed on to be one of the first Carpet One dealers. The venture was a success, and, in the late ’90s, Ken opened a Georgia Carpet Outlet (GCO) in Durham and then purchased two additional GCO locations from Dick McAdams, who founded Georgia Carpet Outlets, in Raleigh and Fayetteville.

When The Maxim Group, run by AJ Nassar, struck a deal with Bob Shaw to take the fledgling New York Carpet World stores off his hands and later merged them with Carpet One, Ken “saw the writing on the wall,” according to his son, left the GCO franchise and created USA Flooring. He closed the Durham GSO and sold his Carpet One. His new USA Flooring business operated out of the Raleigh and Fayetteville locations. Key to the USA Flooring model is that it combines both the full-service flooring and outlet models in large showrooms, 10,000 square feet or larger.

NEXT GEN GROWTH
Ken’s son Kris and his wife Amanda purchased a minority stake in USA Flooring in the early 2000s. The couple reinvested their annual dividends each year to buy additional shares and, by 2009, owned 26% of the business. At that point, Kris approached Ken and said, “If you aren’t going to grow this business, you need to step aside.” Ken agreed to sell his ownership and financed his son and daughter-in-law in buying them.

“2009 was an interesting time to buy a business. During our first ten years of 100% ownership, we had to learn to service debt and run it on our own. Amanda and I worked our butts off to grow this business,” recalls Kris.

The company boldly added locations: Durham in 2012, Wilmington in 2017 and Winston-Salem in 2022.

Another big change came for the business in 2020, when Kris’s friend Fred Black was brought into the business as a consultant for three months, after Fred was laid off from Enterprise Holdings, owner of Enterprise Rent-A-Car, amid the pandemic. Fred and Kris had met as students at Fork Union Military Academy.

“We knew we would remain friends no matter what, but in that three-month period we found that we were very likeminded,” says Fred. “We took different approaches but came to the same conclusions. Kris brought me on full time as general manager. He has allowed me to grow the company. It’s unique to be in the position we are in to have ownership willing to invest in growing and to be in an industry with high demand. I like to tell the employees that we are in the right place at the right time with the right company.”

Growth in the business has meant adding employees, which Fred has approached strategically. “When I started in 2020 in the industry, I realized that the industry lacked a diverse workforce, so a focus for us has been an employee base that mirrors the communities we serve, Fred notes. “I noticed, being new to industry, that it seemed hesitant to bring new people in. It is challenging to onboard new people, as flooring is a complex product that requires sales experience and customer service experience as well as knowledge of construction and design and project management. But I felt bringing in people from outside the flooring industry was the right thing to do for our company.”

Fred reports that in 2020, USA Flooring had 19 employees, 95% of which were men. Today, it has 59 employees, 60% of which are women. The company leans heavily into employee referrals in hiring and believes that its employees’ willingness to recommend their family and friends for jobs is a testament to the strong culture within the operation.

Over the last few years, the company has grown by 25% to 30% annually and was, in November, accepted into the exclusive National Floorcovering Alliance group.

ESTABLISHING A PRO PROGRAM
USA Flooring is currently targeting industry influencers through prospecting and outside sales effort to support its new partner rewards program. “We record and listen to every phone call that comes in to evaluate our salespeople and how well they manage the call in tone, pitch, problem-solving, asking for business,” explains Fred. “Recently we have begun asking, ‘How did you hear about us?’ And what we have come to realize is that 70% of customers walking in were sent to us by industry influencers, which could be a designer, a real estate agent, a property management company, a restoration company, a builder.”

Fred started researching tools some larger box stores used to manage B2B relationships. “We were researching companies that can manage rewards programs and came across the Incentive Group,” says Fred. “The CEO reached out, and for the last nine months, we have been building an amazing platform that is a great tool to communicate with partners sending customers to us and rewarding that loyalty. We expect our employees not to wait for customers to walk in but to go find them through prospecting, and now we have given them the tool to enroll them in our rewards program. If independent retailers are going to compete with the box stores, they need this kind of program.”

LABOR STRATEGY
The bulk of USA Flooring’s installation is subcontracted. But Fred has come to realize that, with the company’s rate of growth, it needs a quality control department to uphold its standards. “We built that,” says Fred, “and hired some of our best installers as full-time employees, and they are doing pre- and post-walk-throughs, helping our RSAs on measurements on larger or more complex jobs, and being on the ground in the home as much as possible during an installation.”

In addition, the company has transitioned to requiring 100% of payment up front for non-billing accounts, eliminating the hassle of chasing down outstanding payments. USA Flooring holds the installation portion of the payment in reserve until the customer signs off that they are happy with the installation. Then, payment is dispersed to the installer.

BUSINESS OUTLOOK
USA Flooring is looking to “expand in the market through calculated risk,” says Fred. To do that, the company must scale up the operation without compromising on quality, optimize processes and implement automation.

“Real estate expense is a challenge to scale,” says Kris. “Committing to five-year leases is a risk.”

In addition, training employees is always a challenge. The company has crafted its own training program that offers modules of education for different stages of employment: newbies, assistant manager, branch manager and so on.

“Employees are the only appreciating asset a company has,” says Fred. “We partnered with Bill Ritinski at Mohawk. Bill brought in the opportunity to work with a third-party company to build out our RSA training. It’s all done online. It’s a big burden on smaller retailers to bring in new people, so Mohawk is leveraging its power to bring in help for its Edge partners.”

In addition to being a Mohawk Edge retailer, USA Flooring is also part of Shaw Flooring Network.

USA FLOORING TODAY
Soft surface, including carpet, pad and area rugs, is USA Flooring’s top-selling category at around 30%, loosely followed by LVT at 26%, laminate at 13%, hardwood at 8%, mouldings at 6%, sundries at 4% and ceramic at 4%. Ceramic is a growing category due to builder work. And the company also expects growth in sundries through Shaw’s TotalWorx program, which complements USA Flooring’s partner reward program.

Kris notes that labor is another big component of USA Flooring’s revenue.

USA Flooring does some mainstreet work but is focused on residential business primarily. “If you chase two rabbits,” says Fred, “you won’t catch either, but if you chase one, you might catch it. When you look at the North Carolina flooring market (dollars spent on flooring), we have less than 1% of total flooring share, even as, perhaps, the largest independent retailer in the state. Our goal is to take marketshare and not chase too many rabbits.”


Copyright 2024 Floor Focus 


Related Topics:Carpet One, Mohawk Industries, Shaw Industries Group, Inc.