Ken: Okay, today I would like to talk about something that isn’t really the most exciting part of our business; in fact it’s a little bit on the boring side. But, with that being said, it’s carpet for rental property. You know, no owner really wants it or is excited about it. The only thing they know is the stuff they have is too dirty and they’ve got to replace it. So why should they buy my cheap brown carpet over somebody else’s cheap brown carpet?
Well, it starts from the purchase end. There’s a few different ways we can go about this when we purchase carpet for rental properties. The mills offer specials, so we can sit around and wait for a special to happen. And you know, they say, “You can buy five rolls of carpet and we’ll give you a discount on them.” Well, the problem with that is the discount isn’t really all that great and we have no idea when the specials will be available. It might be once a year, it might be twice a year, there’s no guarantee on when they’re going to do these things. So, that’s kind of out.
The second way to do it, which a lot of people in the apartment business do this, they’ll buy seconds. You know, off-quality goods that could have a color problem or a flaw in it. Now, you know, this is a way to go. A lot of guys who are in this business do this. You can buy things really, really cheap, you can sell them really cheap. The problem is, as a customer, if you buy that and the carpet’s fine, everything looks good. The next time you go to buy it, say “I’d like to get that same stuff that we put in last time.” Well, you’re starting from scratch again. Because they have no idea that when they’re buying they’re buying at a price point only, they have no idea what they’re going to get from purchase to purchase. So, every time you would go to buy that you have to start from scratch and that’s a real hard way to have repeat customers. You know, because you want to make it easy on them and not have them start from scratch every time.
So what we’ve done for the past 20 plus years, we decided we would do it kind of the hard way, we would buy ongoing first quality goods running once and we would inventory them. For example, Don, Don has a set of our samples in his office. So they can, if an owner wants to know “What are you putting in my office?” they cans say “Hey look, these are things we use all the time, they’re available every day” it makes it a lot easier.
Also, if we carpet a unit and something gets damaged, a bad tenant comes in and ruins some of it, and you’re Don has to kick them out, they can call us up and say “Hey Ken, two of the bedrooms out of the four got damaged, we need some more of that carpet.” So we can put the exact same thing in and keep the unit looking nice so it’s easy for an owner or a manager to rent the property again. They don’t have to again, either put in two different things where it doesn’t look as nice to rent or have to go through the process of buying a whole new unit. So that’s why we do it in that way.
Now, from our end it’s a little bit more difficult because in doing that, to be able to get good pricing, we have to purchase a lot of it. So we have a big warehouse and we have to buy a lot of it at one time and what that does for us, it gives us the ability to have the same dye lot. Carpet has a dye lot to it. So if you purchase one roll at one time and one roll at another time you can’t use those pieces together. So it creates waste, or for a customer, and this happens a lot in our industry, carpets come in certain width, rooms are a certain size, so we have to seam carpet together.
So you walk into a unit and you’ll see a piece two feet off a wall, it almost looks like different colors, it’s a different dye lot. And that’s very common in our industry because you’re selling very inexpensive carpet and if you’re not buying the same dye lot in bulk then you’ll get things like that. A lot of owners and managers get quite upset when they look and it doesn’t look nice after they spent the owner’s money. So we’re able to use, from roll to roll, it creates much less waste for us and a much better job for the customer in the end.
We’ve also, we’ve just tried to make it as easy as we can for our customers. We bring them samples; it’s literally the same things as long as these carpets are good, as long as they aren’t discontinued. For example, right here, it’s nothing to shake a stick at, but we’ve had this carpet, whether it’s this color, this style for twenty years. It’s changed names a few times, because after four or five years they do change the color lines on these carpets, they’ll update it in some way. So when that happens, we find the closest thing possible to that. So if I haven’t seen a customer in five or six years and they say, “Hey Ken, still got that same brown carpet that I use?” Yeah, absolutely. It just makes it a nice process. We’re always trying to make things easier on our customers.
It’s amazing how many shades of brown we have. This is just a small example of what we inventory. We also do this for realtors. We’ve had what we call our realtor beige or realtors call realtor beige, we’ve had forever. And we have two colors, a light and a lighter. But we’ve had it and if we haven’t seen them for awhile, they know. Over the years they just know. They can call me up, we inventory this stuff, we’ve always got it.
We do it for our commercial customers also. We stock commercial carpet, hard surface floors, sheet vinyl, VCT tile, things you would see in a grocery store, we also do that for the rental properties too. But we have a lot of stuff, it’s not exciting, not the exciting part of our business, but it’s consistent. And everyone knows that has dealt with us for years, it’s not one of those things where they’re going to come in and again we’re going to have seconds and it’s going to be a haggling negotiating thing. And they just know. They’ve got the same carpets, for a long time they were the same price.
Gene and I were laughing yesterday, we talked for awhile. We used to sell it at $7.95 a yard and $8.95 a yard. And people will still call me and say “Hey, Ken, you still got that $8.95 a yard carpet?” and I say “Yeah, I’ve still got the carpet, it’s $15 now.” And of course I brought this whole thing, this is a new one, we don’t bring new ones often, so I thought I would bring a new one. Are there any questions? Yes, sir.
Business Growth Innovators member: Is it worth it for a rental owner to maybe buy a little bit better quality carpet because it’s going to last, you can clean it, it’s not going to break down?
Ken: No. We consider these five year carpets. And the thing is, as Don could tell you, people do not treat a rental property like they treat their own. And you could put something really nice in and if they never vacuum it and treat it poorly, it’s not going to wear any better than this little cheapy guy. You know? So we’re trying to get five years out of things and that’s really a good value for what they’re paying for.
Business Growth Innovators member: I was just going to say use the realtor beige.
Ken: Yeah, you know, because what they do is, they don’t, when they’re looking at a house, they’re not going to get down on the floor and dig their fingers in and lay on the floor. They’re going to feel it. They’re going to see it. And new is new. And whether it’s a $14 piece or an $18 per yard piece, they’re not going to be able to tell by walking on it. So we do it, we put a nicer pad in and they’ll notice that. But clean is what they really notice, right? In fact, we always said in a house for sale, if they don’t notice the floor covering at all, it’s a win. You know, take away the negative. Anybody else?
Business Growth Innovators member: Ken, the $5 carpeting, what’s the, I mean the five year carpet, what’s the average price per square foot on the average carpet?
Ken: Per square foot, you’re about $1.50. Well that’s another thing, the industry has changed, we used to sell everything by the square yard, now everything is sold by the square foot now.
I’ll tell you what, Home Depot’s been great for our industry honestly. Because they can’t cheat, lie and steal like all the little carpet guys used to because they’re too big. Thank you very much.
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