FloorScapes Develops New Benchmarking Tool

Phoenix, AZ, December 3, 2007--Research shows that many businesses have little understanding of their actual profitability, and even the savviest of businesspeople feel they could do a better job of managing the bottom line.

This is especially true in the floor covering industry, where most stores are independent and run on a wide variety of accounting and operating systems.

But Mohawk Floorscapes dealers are about to get a powerful new tool for measuring profit, one unprecedented in the flooring business. And not only will they understand their own stores better, they’ll be able to see how they measure up with other Mohawk Floorscapes stores across the country.

In 2007, Mohawk Floorscapes dealers entered a new phase in the development of the store system. In addition to products, merchandising, and promotion, dealers began developing an in-depth analysis of their business operations, working with a new team of Mohawk regional managers to build profiles on operating costs, margins, human resources, and other key business elements.

Almost immediately, many dealers began to see ways to make significant improvements through this newfound knowledge.

Now, Mohawk Floorscapes dealers will be able to take this information to a new level. A new benchmarking tool for comparing Mohawk Floorscape dealer financial performance has been created. This tool allows dealers to work around state tax laws and other issues that cause differences in financial statements, and directly compare the operations of Mohawk Floorscapes stores in different areas of the country.

The Mohawk Floorscapes Advisory Board, a panel of dealers representing regions across the nation, were the first to use the new tool.

“The results were remarkable,” said Manny Llerena, vice president of retail marketing for Mohawk. “This benchmarking tool lets dealers see if their approach to the key aspects of their business is the most effective and profitable method. If it’s not, they have the information to identify a better solution.”

The new benchmarking tool allows dealers to directly compare results—with stores that have their same business model and operating structure.

“A dealer will be able to look and see if he or she is paying too much for sales compensation or banking and finance charges. The dealer will then be able to look at the best practices of peers, and know that a solution to a problem has been proven to work. The floor covering industry has never had anything like this, and Mohawk Floorscapes dealers will be the first to take advantage of it,” Llerena said.

Floorscapes dealers will begin loading their 2006 information into the system in late December, with 2007 information being added shortly after the end of the year. The result will be a two-year database that will allow stores to get a very clear picture of the true cost of their operations.

And that, Llerena noted, may be the most valuable element of the Mohawk Floorscapes program introduced to date.

Mohawk is also developing a communications network exclusively for Mohawk Floorscapes dealers that will allow interaction, provide them with product opportunities, dealer-to-dealer tips, financial specials, and other valuable information.

Building on Key Business Practices

The benchmarking tool is the latest in a year’s worth of work on the business operations of Mohawk Floorscapes stores. In the last year, dealers, working in conjunction with their Advisory Board, have established seven key business practices that are designed to help stores better use technology, branding, and the core principles of the Mohawk Floorscapes concept.