Carpet Exchange: Best Practices - Oct 2016
By Jessica Chevalier
For leading a nearly $100 million flooring business—the 27th largest retail flooring operation in the U.S., according to our Focus Retail 100 list—Bruce Odette is remarkably chill. Chalk it up to that cool Denver vibe, or the fact that, at the age of 52, he’s spent well over half his life in the business—first, and briefly, as a carpet installer; then in retail sales; retail management; and, finally, at the helm of Carpet Exchange and Colorado Carpet and Rug Flooring Center—but Odette makes the task seem effortless.
That ease hinges on the fact that the years have nurtured the sort of unquestioning pragmatism in Odette that few ever manage. He knows what works and how to keep it working, and he’s not worried about jumping on trends, operating reactionarily or garnering accolades for his success.
Along with that, Odette has a stunning commitment to life-work balance. When asked what keeps him up at night, Odette answers with a laugh, “The dogs. But seriously, I don’t bring work home with me anymore. After this many years, I put my best effort forward when I’m in the office. When I’m home, I’m all about family. I don’t lose sleep over flooring—not anymore.”
A WINDY ROAD
None of this is meant to suggest, however, that Odette is lackadaisical. Quite the opposite, one of his particular skills seems to be hyper-focus—the ability to draw lines, committing to what is worth the effort and ignoring the white noise. And the road to where he is today has been rife with white noise.
Gary Schwartz opened Carpet Exchange in the 1960s in Seattle, Washington and moved into the Denver, Colorado market in the 1980s. At the time, Odette was a young man working his way up the ranks of the flooring industry. He’d started installing carpet in 1983 but soon realized that the job wasn’t for him. “I learned quickly that I needed to use my mind versus my body to make money,” he explains. “I have a lot of respect for installers; installation is one of the hardest jobs I’ve ever done.”
Odette entered the sales side of the business in 1984, managing a business called Carpet Yard. When Carpet Exchange launched in the Denver market a few years later, Schwartz tapped him to run that store, and Odette went on to open an additional ten Carpet Exchange locations.
In 1996, as part of its strategy to move into the retail flooring business, Shaw Industries purchased all the Colorado and Wyoming Carpet Exchange stores. Later that year, Odette opened Colorado Carpet and Rug, only a block away from the original Carpet Exchange location, and shortly thereafter a second Denver-area Colorado Carpet and Rug location. But Odette’s role in his new enterprise was to be short-lived.
Shaw Industries announced it would exit the residential retail business in 1998, selling its almost 300 locations to the Maxim Group. “When Shaw got out of retail, the Maxim Group bought me out of my new business to get me to manage Carpet Exchange,” explains Odette. “Maxim Group president A.J. Nassar flew in, made the deal in an hour and left. Carpet Exchange wasn’t doing well then—none of the retailers under Maxim were. The Maxim Group only stayed in business for a year and a half before it went bankrupt nationally. In that 18 months, I turned Carpet Exchange around and then bought back the 11 stores—along with my two Colorado Carpet and Rug locations—with my original partner in July 2000.”
Today, Odette has 17 Carpet Exchange locations and two Colorado Carpet and Rug locations, one of which includes a to-the-trade division called The Flooring Group.
Schwartz remains a silent partner. His original Washington-based Carpet Exchange locations are now part of Great Floors.
A BETTER SHOPPING EXPERIENCE
Odette believes that a better shopping experience—and a better organization—begins with better employees. “Beautiful stores and beautiful products mean nothing if you don’t have good people,” says Odette. “I have an average of ten-year tenures on my sales floor. For having 100 sales associates, that’s pretty impressive.” Carpet Exchange holds onto its employees not only by offering competitive compensation and benefits, but also by listening to them and imparting the sense that they are valued in the organization.
Besides setting Carpet Exchange apart from other independent retailers, Odette notes that having an experienced staff also sets him apart from the big boxes, where service is often catch-as-catch-can.
While the industry often discusses the shortage of quality flooring installers in the market—a shortage which is expected to get more severe—Odette believes that the scarcity of young people who see retail flooring sales as a career is just as pressing, if not more so. “I believe that the biggest challenge for our industry is getting young people interested, finding those who want to come and sell flooring. It’s not super glamorous. It’s not IT or tech or pharmaceutical sales. How do we attract a younger generation to flooring sales long term? It’s a big deal.”
While Odette obviously takes great pride in his seasoned sales staff, he also realizes that, at some point, his employees will begin to retire, and the task of filling those shoes will be mountainous. What’s more, he points out that the learning curve in flooring sales makes the challenge even more daunting—especially considering the proliferation of flooring materials. “When I started in flooring, it was carpet throughout the house and a 4’x4’ piece of vinyl at the entry. Not anymore. The learning curve for flooring is too long. It takes a full year to understand all the surface types and be fluent at selling and answering questions about installation. It’s not like selling shoes or even furniture. Two weeks of training is nothing. It takes months.”
One of the reasons that Odette so greatly values his educated salesforce is because he frequently comes across customers who have been mis-educated by sales associates at competing firms. “Lack of training of sales associates in our market leads them to tell false stories,” says Odette. “When you are saying that a 25-ounce polyester carpet will wear like iron, that’s not setting a correct expectation.”
While these failures may sometimes be an outcome of deceptive sales practices, they are often simply a result of poor education. Employees who don’t have a full understanding of the products misrepresent their characteristics. They over-sell, and the result is customers with overblown hopes.
“We sell expectation,” explains Odette. “If we meet that expectation, the customer will be happy. They will give us a referral. That’s our goal: to set expectations correctly. We are willing to say ‘That product’s a great price, and it should last you five years.’”
Odette, who identifies himself as a big believer in karma, maintains that honesty will most always win the customer over. “We close a great deal of sales just by being honest with our customers,” he notes. “We won’t bad mouth the competition, but we will correct their misrepresentations. The customer will always be happier at the end of the day if you set the correct expectation.”
Over the past ten years, Odette reports that consumer expectations have changed dramatically, and he chalks that up to carry-over from other retail environments. “Customers expect more from us than they ever have before. That’s the precedent set by retailers like Nordstrom’s, where you can return anything at any time for any reason—just because you change your mind. Flooring doesn’t work quite the same way.”
True to its name, Carpet Exchange began by selling carpet almost exclusively. Today carpet, pad and labor still account for a surprising 63% of Carpet Exchange’s volume, but the retailer also carries a full range of flooring products and has added the tag line “Your Floor Store” to communicate that fact. Over the last five years, the company has seen its hard surface offering increase dramatically and reports that LVT is doing very well, citing US Floors’ Coretec line as particularly successful.
Carpet Exchange streamlines the shopping experience for the consumer by winnowing its broad selection down to what it calls key items, which it features prominently on the floor. Key carpet items are displayed on waterfalls, and key hard surface items are shown in large samples. These key items account for 80% of total sales.
Says Odette with a laugh, “Less is more, but you still have to have more.” While Carpet Exchange seeks to reduce customer stress by narrowing the consumer’s focus to the key racks early in the shopping experience, it steers them toward its expanded selection if they can’t find something to fit their needs among the key items.
The company also reports a strong area rug business, which is not something often heard among full-line flooring retailers today. Odette believes that the key to selling area rugs is having significant traffic in stores, and that is something that many small retailers struggle with. “The biggest challenge for smaller dealers is that area rugs are a big capital investment, and they won’t get turns without traffic,” says Odette. To drive that traffic, Odette advertises his rug business in Carpet Exchange commercials, and, in addition, he invests in his inventory, believing that word of mouth referrals play a particularly important role in driving area rug traffic and that having a reliably good selection of SKUs feeds those positive recommendations.
In addition to his retail flooring operation, Odette runs the aforementioned to-the-trade business, which shares a space with one of his Colorado Carpet and Rug locations, and also operates ten Costco flooring operations across Colorado under the Colorado Flooring Industries brand.
Odette began working with Costco roughly three years ago and reports that the business works well for him because he has the necessary synergies established in his traditional retail operation to run the business in a cost-effective manner. “As a business on top, it is excellent, but as a stand-alone operation, it would not work,” he surmises. “It is very demanding, and the margins are low. Plus, you are kicking back so much to Costco that you really have to have all your ducks in a row.”
In addition to these businesses, Carpet Exchange fabricates granite slab through its own facilities. And it owns all of its buildings.
For the last 16 years, Odette’s wife, Patrina, has been heading up marketing and advertising for Carpet Exchange. Previous to that, she spent nine years at the local CBS station and is also a professional photographer.
Carpet Exchange advertises on television exclusively. Patrina writes the scripts for the commercials, which do not include Bruce, Patrina or, for that matter, any of the Odette family members or pets.
Odette believes that focusing a brand on a particular individual is an error that many flooring retailers make, “One of the biggest mistakes I see people making is putting themselves in their commercials, selling their personality rather than their brand. I’ve seen many local businesses in Colorado where the brand was the person—and when the person died or stepped away, the business became defunct. We focus on promoting flooring and our Carpet Exchange brand.”
With regard to its website, carpetexchange.com, the company does invest in online strategies to increase its visibility. Jay Flynn, vice president of sales and marketing for flooring industry online marketing firm Creating Your Space, explains Carpet Exchange’s strategy: “Carpet Exchange is an example of a business that was built on their strong traditional advertising, but they are shifting online to stay in front of their customers. They clearly understand that although having a great website is essential to capture today’s flooring consumer, the website is not enough on its own—the website needs to be visible and easily found on search engines and other important online locations. By using analytics and multiple online marketing tools to target specific products, services and customers, we are able to cost effectively drive new leads into Carpet Exchange’s stores from the Internet.”
Carpet Exchange dabbles in social media, but it hasn’t jumped in to make it a primary advertising medium, which is a deliberate choice on Odette’s part. “Who really wants to like a flooring company?” he asks. “Young folks aren’t going to follow a flooring store. We dabble in social media. Is it a difference maker? No. We do Pinterest, Facebook and all that, but it’s not a driving force for us. As an industry, however, we do need to find a way to pull younger people in.”
One forum that Odette believes is impactful for the younger generations is Yelp; however, he feels that its impact is largely negative. In spite of the fact that he doesn’t respect the medium, he does participate, believing that it would be a more significant error to abstain.
“Yelp’s a scam, but it’s so powerful that you have to stay really aware of it,” says Odette. “We go online and answer every complaint and try to resolve every one to the best of our ability. Because Yelp only posts reviews from Yelpers, it’s not a fair shake to the public. We started using Shopper Approved, which is an unbiased review site. If you go on our website, you can see all of our Shopper Approved reviews right there. In the last three months, we have had 100 reviews that are four star plus ratings.”
Odette believes that deterioration of pricing is one of the most significant challenges facing flooring retailers today. “Deterioration of pricing is at an all time low,” he says. “Carpet prices are lower than I have ever seen. A product that you sold for $15.99 yesterday could be $5.00 less today—and you can’t count on having ten additional customers to make up for that difference. The way things work today, as a retailer, there is no price advantage whether you’re buying one roll or 100 rolls. “
Odette notes that while retailers can’t control the price of goods, they can develop a strategy to steer customers toward better products, adding, “Retailers have to have a strategy to move consumers away from commodity products. You definitely have to have a strategy to stay branded. SmartStrand is our wellspring. It’s been a godsend because it’s a quality product that we can still sell at a higher price to consumers who want something better.”
Mohawk and Shaw are Carpet Exchange’s two largest vendors. In choosing what soft surface products to sell, Carpet Exchange takes a holistic look at how it is going to market with its strategy of branded yarns, then chooses products to fill any needs that exist.
Copyright 2016 Floor Focus