07252018 Retail Insights: How Bruce Odette Built Carpet Exchange into a $100 Million Chain By Jessica Harlan
RETAIL INSIGHTS: HOW BRUCE ODETTE BUILT CARPET EXCHANGE INTO A $100 MILLION COLORADO CHAIN
Bruce Odette gives an inside view of his Colorado floor covering businesses -- Carpet Exchange, Colorado Carpet and Rug, and The Flooring Group.
DENVER -- Don't be fooled by its name: 17-store Carpet Exchange didn't get to be an industry powerhouse by limiting its offerings to broadloom carpet.
Instead, the $100-million retail chain, with locations in Colorado and Wyoming, boasts a full complement of hard and soft surface flooring -- and an impressive business in area rugs.
RugNews.com delves into the retailer's stellar growth with president Bruce Odette, the driving force behind the company's success since he and two partners bought Carpet Exchange in 2000. Interestingly though, Odette's history with the floor covering giant actually dates to the late 1980's.
Back then, he was managing a carpet store in Arvada, Colorado, when he was approached by Gary Schwartz and Michael Goldfarb to start a business together. The trio of industry experts founded Carpet Exchange in 1987, and built up a chain of carpet stores in Colorado that caught the eye of Shaw Industries. "They were acquiring major retailers across the country; we were on the list of people they were purchasing," recounts Odette.
Indeed, Shaw purchased Carpet Exchange in 1997, and then exited the retail business a year later. When subsequent owners filed for bankruptcy in 2000, Odette and his original partners bought back their business out of bankruptcy court for an undisclosed sum.
Of its 17 stores, Carpet Exchange has 16 locations in Colorado and one in Wyoming, with another location opening in Longmont, Colorado, this fall.
Recalling the buyback, Odette says, "It felt pretty surreal; it was a really great feeling to get it back." Eighteen years later, the business continues to thrive, with annual sales double the number reported in news articles around the time of the buyback. Goldfarb passed away a few years ago, and Odette and Schwartz now own the business as equal partners, although Schwartz is a silent partner.
Today, the business includes the 17 Carpet Exchange stores, plus Odette's Colorado Carpet and Rug store. All of the locations are in Colorado, except for one in Cheyenne, Wyoming. There's also a wholesale to-the-trade division, the Flooring Group.
Evolving Product Assortment
Like other flooring retailers, Carpet Exchange has evolved over the years to reflect the times. Starting as solely carpet and vinyl, the company began adding other hard surfaces, with area rugs being incorporated in the mid-1990s.
Today, area rugs account for about three percent of total sales. The rest of the business includes hardwood, tile, laminate, carpet, vinyl and COREtec. The company also sells countertops.
COREtec flooring in particular, a wood-plastic composite, has become a significant contributor to Carpet Exchange's profits. "It's the fastest-growing category [in flooring] that I've ever seen," says Odette. "And it's also helped with area rug sales."
"We'll send a rug out the door for anyone who wants it that day," says Bruce Odette of Carpet Exchange, Colorado Carpet and Rug and The Flooring Group.
The variety of offerings helps Carpet Exchange keep its business strong. "The difference between us and most specialty rug retailers is that we have a lot of traffic in our stores," says Odette. "If you don't have traffic, you can't sell rugs. It's a lot harder for a mom-and-pop store to put capital investment into the assortment they need. But we get good turns on our inventory."
One product category that Carpet Exchange steers clear of is decorative accessories. "We can't be everything to everybody, but we're trying to be the very best at what we do," says Odette.
There are three formats to Carpet Exchange stores: a small, 8,000-square-foot showroom; a 25,000-square-foot facility that has a combination warehouse and showroom; and the larger, 65,000-square-foot distribution center that services installations for the smaller outlets.
Anatomy of Area Rug Departments
In the showrooms, the area rug department typically comprises four hanging racks of 8x10 rugs, with around 40 rugs displayed per rack. "The majority of the pieces we show are 8x10s," says Odette, adding that there are also displays of 5x8 rugs. "And we don't just have samples; we sell right off the rack and replenish. We'll send a rug out the door for anyone who wants it that day."
The bulk of the area rugs are sold within the $599 to $999 retail range. Transitional styles dominate the selection, though Odette says the company stocks a "fair share" of traditional designs. Ultra-contemporary designs are low on the list of offerings. And in terms of constructions, hand-knotted tend to be too high-end for the clientele, and the company also stays away from tufted rugs, because Odette says they tend not to be as durable in the region's dry climate.
Because of Carpet Exchange's carpet-installation capabilities, the retailer can offer a wide range of custom rugs, which they fabricate themselves rather than working with an area rug supplier. "We have so many options with all the different patterns and textures out there with our carpet products," says Odette. "We do our binding in-house in one of our stores."
The company prides itself on the longevity of its employee tenure: most employees have been at the company for more than eight years. With training and education across all product categories, the sales staff is able to speak knowledgeably about all types of flooring, and helps cross-sell hard surfaces with area rugs.
Looking ahead, Carpet Exchange is open to expanding where it makes sense. A new location, in Longmont will open this fall. Odette doesn't see the company expanding into other product categories, or opening locations outside of the Colorado area.
Instead, he is content to enjoy what looks to be a strong year. "We're seeing consumer confidence at an all-time high, and that's what drives the retail business," he says. "We're bullish on the remainder of this year."