Transforming the Home Furnishing and Remodeling Industry Through a Co-Operative Approach
Family businesses can be found throughout the home furnishing and remodeling industry whether it’s flooring, tiling, furniture, home contracting, or interior design. As is the case with many other industries, however, big box retailers and consolidation within the industry have taken a big piece of the market, making it anything but a fair fight for local or regional businesses.
There’s a lot at stake in this David versus Goliath struggle. For small business owners it starts with a passion to own and grow a business, a desire to remain autonomous and control their own destiny, and a commitment to personalized and localized service to customers. The roots can easily be several generations deep.
What can be missing, however, is the knowledge and access to all the business tools that can help a business to operate more efficiently and market itself more effectively. So, too, can the leverage of purchasing power and other economies of scale enjoyed by large national chains.
It is for these reasons that the home products and remodeling industry are ideally suited for the co-op model, which has become a dominant force already in areas such as flooring and lighting. With this approach, independent retailers, contractors and interior designers can effectively level the playing field and compete by leveraging purchasing power and resources, while still retaining individual control of their own enterprise.
The co-op model
When the term ‘co-op’ or ‘cooperative’ is used, what can come to mind is an agricultural business where farmers work together to market their products. While co-ops have certainly been successful historically in the farming sector, their presence in the U.S. economy is significantly broader. In fact, in 2017 co-ops accounted for $214.4 billion in business in the United States.
At its root, a co-op is simply a business that is owned and operated by and for the benefit of its members.Co-ops can be found in the energy, financial, arts, healthcare, retail, and non-profit sectors. They can be established to serve just about any type of consumer need. In fact, some of the brands people have grown up with that are actually co-ops include Ace Hardware, Organic Valley, Fairtrade, U.S. Central Credit Union and Land O’Lakes.
Because of its membership structure, co-ops empower its members to compete more effectively in a marketplace. This is because individual members benefit from the business tools and buying scale that would not be accessible to them on their own. Together, as a group, members enjoy a collective purchasing power and a la carte access to expertise, business resources and other tools to help them manage and grow their business.
A flooring business grows under co-op model
It is a way of doing business that resonates for John Taylor, a third-generation owner of a family flooring business in Ft. Myers, Florida. After 40 years as an independent business, Taylor joined Carpet One, a flooring co-op run by CCA Global Partners, after being introduced to the model by some of his flooring dealers. Now 21 years later, Taylor’s flooring business has grown from a single store to four locations.
“Joining a co-op has been not only a way for me to protect my flooring business from the onslaught of the big box retailers, but it has been a platform for my business to grow,” says Taylor. “Within the co-op, I have access to best-in-class administrative tools, credit card processing rates, insurance policies, employee training, and marketing tools.”
The work of co-ops like Carpet One is to identify the best of these services and tools, negotiate the best rates for its members, and then make them available with the training and education that is needed to implement them. Unlike the franchise model, co-op members are not forced to follow a highly prescriptive and standardized formula. Instead they retain a high level of autonomy without having to pay stiff franchise fees.
“We have access to business tools that we never had before and I still have control over everything,” says Taylor.
This autonomy extends to selecting from a range of resources they want to employ to manage their business. As members also own stock in the co-op itself, they are incentivized to help each other through sharing of best practices, as profits from the co-op will ultimately flow back to them.
“I have learned so much from the other members. Looking back to the time before we joined the co-op, it felt like we had our heads in the sand. We are better with the co-op than without it every day of the week,” explains Taylor.
In addition to adding three additional Carpet One stores, Taylor has also added two Pro Source locations – a wholesale floor covering business that is also managed under the CCA Global Partner network.
CCA Global is a unique entity itself – and also a co-op. The company was co-founded by current chairman and CEO Howard Brodsky, who began as a flooring business owner. Witnessing the trend of large corporations causing independent family-owned flooring stores to go out of business, he felt there was an opportunity to introduce the co-op model to this sector.
After the flooring co-op grew to include several thousand members, Brodsky decided to establish CCA Global as a means to bring the co-op model to other home related products and services including lighting retailers and contractors.
Today, the co-op has expanded to include 14 divisions and more than 3000 locations in North America. Illustrating that the model works well in just about any retail or service sector, the co-op model is now utilized for sporting goods retailers, bicycle shops, childcare facilities and even non-profit organizations.
“Virtually any market that is served by a number of family-owned businesses can benefit from forming aco-op,” says Brodsky. “The core principles of how to run a business are similar even if there are some market-specific dynamics. It comes down to equipping independent owners with the services to sustain and grow their business and to do that at a scale where they can compete with large national companies.”
In addition to benefitting from the leverage and discounts in purchasing supplies, more seemingly mundane examples of co-op assistance include negotiating insurance and credit card processing fee rates. CCA Global has experts in these areas that understand how to attain the best possible market rates, including discounts for the group.
“For a family business that has to go out and purchase insurance from a local provider or negotiate credit card rates themselves, they may know they are not getting the best rate, but they often don’t know how far off they are,” says Brodsky.
Operational, sales and management training are also key aspects of the CCA Global co-op model. Training is both in-person or online, and all content is based on proven, established tenants of the industry. This includes a best practices module with input form other members.
“It is tough for any business owner to be good at everything – some people are great marketers, some great buyers and some are great at operations,” says Brodsky. “So, we capture what people in the co-op do well and put it together in a ‘best practices’ module, so other owners can understand the ‘secrets’ of running a successful business in that industry.”
Marketing is an area in particular that many businesses can find overwhelming to manage on their own. CCA Global provides assistance with models and templates of web sites and e-commerce solutions that work well in an industry, as well as assisting with a range of social media options.
“Digital marketing and social media are very complex today and can be overwhelming to those that are less familiar with this type of marketing,” says Brodsky. “So, we offer experts in digital marketing and search engine optimization that can help quickly establish and promote over these important marketing channels.”
According to Brodsky, who was recently inducted in the Co-Op Hall of Fame, the leverage and power of co-ops doesn’t only help individual family businesses thrive and succeed, but can also strengthen the industry – and even the economy – as a whole.
“Family businesses are the foundation of the U.S. economy and we can invigorate these businesses and local communities by finding ways to level the playing field,” explains Brodsky. “When local businesses do well, it’s not just a win for the owner. With a co-operative approach, the vitality and viability of the entire industry can be raised and it can even impact the overall economy,” adds Brodsky.
Del Williams is a technical writer based in Torrance, California. He writes about health, business, technology, and educational issues, and has an M.A. in English from C.S.U. Dominguez Hills.