With more than 2,700 locations and 800 independent retailers, Rick Bennet oversees a cooperative that has significant strength in numbers. In fact, CCA Global Partners Inc. has more purchasing power in its floor covering business than Home Depot.
Founded by two independent retailers in the floor covering business in 1984, Howard Brodsky and Alan Greenberg, CCA Global Partners’ primary business is Carpet One Flooring & Home. CCA is a cooperative of 14 independent brands in the home improvement industry with more than $10 billion in aggregate gross sales and more than 100 consecutive quarters of profitability. Its retail floor covering stores and its non-floor covering businesses each see annual revenue of about $5 billion.
“These people have come together with our management and our infrastructure and are able to bring scale to their business and compete with big box and other large retailers by banding all of their purchases and resources together,” says Bennet, co-CEO at CCA.
Despite that ability to band together, the downturn in the housing market had an impact on CCA and its independent retailers.
“We entered the downturn early and I would suggest that we’re coming back out of it later,” says Bennet, who was formerly president and CEO of Kauffman’s and vice chairman at May Department Stores. “These guys are small independents and so they have been really rocked. The biggest challenge we continue to face is just keeping people up and moving ahead.”
Bennet has had the task of helping his retailers cope with the downturn, push through it and now move forward.
“We are not exclusively floor covering, but it is at the core of our business,” Bennet says. “Many of the things that we have opened up are things like cabinets or lighting, but they are all home improvement, so we are closely tied to the housing business and the economy has been tough out there and housing has been the worst of it.”
Here’s how Bennet and CCA Global Partners Inc. have helped independent retailers through a tough time and as a result, repositioned them for the future.
Face the facts
In a tough economy it is very hard to have to start rationalizing business and look at cutting costs. When times get tough it comes down to basic math, and you can’t spend what you don’t have.
“You do what you’ve got to do,” Bennet says. “The tougher challenge has really been the emotional one. When you go through five or six years of downturn and you’re waiting for things to bounce back, the drag on people’s patience and emotions is really tough and much more problematic than just the cost cutting that had to happen a couple years ago.”
During those years Bennet often found himself on the phone with owners of their business facing such challenges as having to fire a friend or relative.
“I get calls from guys saying, ‘I need your advice. We’re under a cash flow press and I’ve shed all the workers that I can and I’m now down to family and I’m facing firing my brother-in-law. What do I do?’” he says.
At that point, tough business decisions have to be made.
“You have to save the business first, because if the business is saved and things get better then you can re-employ,” he says. “If the business dies, then you’ve got no chance.”
One of the biggest problems CCA deals with is assuring its independent retailers that it’s OK to ask for help.
“If you’re in trouble as a small business, the best thing you can do is ask for help earlier, because then there’s time to do some of the tough decisions and save the business,” he says. “If you wait until your balance sheet is totally upside down and you’re facing bankruptcy there’s very little that can be done.”
The other challenge CCA faced was market attrition. About a third of the independent retailers in CCA’s space have shut down over the last eight years.
“Our store count is down only fractionally,” Bennet says. “Now that the pendulum is starting to swing, people actually get under more cash flow pressure because they’ve got to invest in buying product as the business starts to turn up.”
Today, business is starting to turn around for CCA and its retailers. Some of them, however, are hesitant to invest in the business, to rehire people and spend money on advertising and marketing.
“It’s tough to cross that line because you’re worried about the next customer that’s going to come in the door or when the next downturn is going to be,” he says, “and you’re nervous about launching a new ad or hiring a new person.”
But that’s where CCA’s decades of experience come in. CCA tries to provide incentives, coaching and a sounding board for people who need to make those tough decisions. The message — the time is now to switch to offense.
“Their brain tells them, yes I should, but their heart tells them, I’ve just been beaten up so badly I’m not sure I can make that investment,” he says. “The market has definitely shrunk, but it’s time to start investing in the business and get market share and it’s hard for an independent guy to step across that line.”
Reinvest and branch out
The first step in getting CCA’s independent retailers back on track following the downturn was to have them reinvest in their businesses to take advantage of new opportunities in the market.
“You first start with people whose basic business is in pretty good shape,” Bennet says. “If somebody still hasn’t made the tough decisions, then you’ve got to make the right business adjustments to your expense model before you go making investments.
“If you’re dealing with a small business that has operated with some discipline, made those cuts and their basic business is in good shape, then you have to start investing in people and advertising to move forward. If the business is growing, then it might be time to push them into the next step, which is to open an adjacent business. If they’re even stronger, then you may suggest that they open a branch.”
CCA itself made similar moves to advance its brands over the years. CCA was originally Carpet Co-op of America. The first strategic change for the company was to move from a carpet co-operative to a floor covering business. What was originally the Carpet One business became Carpet One Floor & Home.
Today, CCA is making the next strategic shift, which is to spread out beyond floor covering into all aspects of the home improvement field, as opposed to filling only one part of it.
“We’ve moved into the kitchen and bath business with cabinets,” Bennet says. “We have a lighting business, and we continue to contemplate other additions to that. We’ll try to engage in anything that involves home improvement so we provide synergies and leads to our dealers, as well as synergies with the customer.”
When looking to break into new markets you have to ask yourself, what’s the value that you’re providing? As you answer that question you determine where you can add on.
“For us it’s a service equation,” Bennet says. “We’re in the customer’s home and we’re providing the service. What other products can you add to that? It’s the question of what do you do well and how do you do more of it rather than trying to add stuff that’s irrelevant to your business.”
Even CCA had to learn the hard way that going too far outside your core area is a difficult undertaking. A number of years ago it tried its hand at tuxedo rentals.
“It was out of our space,” he says. “You get out of your sweet spot and you’re operating a little bit more in the blind, and you bring less expertise and value. It taught us to stay close to home.”
It comes back to that core question of, where do you add value and what are you good at. You have to make sure you get honest answers to that question.
“When you go into a new business, make sure you’re leveraging things that might work for you,” he says. “Whenever it came to standing something up that was brand new because you thought it might fit, you have to second guess it. You can dream up things that you might add to any of those business structures, but if it’s outside of the core of what you do, you have to be careful.”
CCA keeps asking the question, ‘What do we do well and how do we add to that?’
“If it’s small business, it has to do with the home and we can provide scale, then it’s an open place for us to work and we’re always looking for those places,” Bennet says.
“The world of housing has gone through a lot of attrition, so as that bounces back we’re in a terrific position to pick up a lot of share, and being able to bolt on these different extensions of what we do is a lot of fun to work on. We feel better today than we have in five or six years.”
How to reach: CCA Global Partners Inc., (800) 466-6984 or www.ccaglobalpartners.com
Don’t be afraid to ask for help in a tough situation.
Make the necessary efforts to save the business.
When good times return, be ready to invest for the future.
The Bennet File
CCA Global Partners Inc.
Born: St. Louis
Education: He has a degree in business from University of Central Missouri and a MBA from Washington University.
What was your first job and what did you take away from it?
I was a short-order cook for a little drive-in restaurant called Carl’s in St. Louis. I started working for Carl himself at 90 cents an hour. It was all about good relations with the customers.
What is the best business advice that you’ve ever received?
I had a mentor once say to me, ‘If it is to be, it is up to me.’ That stuck in my head very strongly, and I really believe in the power of self-determination. I try to impress that in our company. If you’re going to spend time trying to figure out how somebody else screwed it up, you’re not going to get anything done.
The second one is Peter Drucker’s advice, which was managing your strengths. So many people spend all of their time trying to correct their weaknesses. You have to know what you’re good at and what you love to do and leverage that. I try to live by that.
If you could speak with someone from the past or present, with whom would you want to speak with?
If you were going to redo some flooring in your house, what product would you use?
This new product line of New Zealand wool is exceptional. It’s beautiful. I got out ahead of the launch and put some of it into my home, which we just remodeled. The brand name of it is Just Shorn, as in shearing a sheep. I love the distinctiveness of wool and the softness and warmth under your foot. It’s an exciting addition to what we do, and it’s a terrific product.