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COMPANY FINDS BRANCHING OUT TO BE THE RITE MOVE FOR GROWTH.

COLUMBUS, Ohio-What's a retailer to do when it is already close to saturating its market but still wants to grow sales? In the case of Rite Rug, diversification is the answer.

This 19-unit carpet retailer was already the largest seller of floor coverings in the Columbus area. When it came time to look for ways of increasing business, the company sought related opportunities in the flooring industry for new profits. After a two-year stint of acquisitions and expansion, the company now oversees a professional cleaning and maintenance service, a property management flooring division and a facility for new home builders.

The company is privately held by the family of Duke and Stanley Goldberg, who founded Rite Rug in 1934, and it does not divulge financials. But an article that ran in the Columbus Dispatch earlier this year estimated Rite Rug's annual sales at more than $42 million.

The expansion has been led by Don Penrod, president and chief operating officer, who joined the company in September 2000 after a long tenure at Mohawk Industries where he was regional vice president of the Ohio Valley and Midwest regions.

"When I first came in, I was looking at the problems the company had, and after a month of analyzing the numbers, the first comment I made was that we are not overexpensed, we're undersold," said Penrod. His idea was to diversify the company to look for other related opportunities within the industry.

The plan seems to be working. Penrod said the company is on pace to grow by 25 percent this year.

Under Penrod's direction, Rite Rug grew its builder business, which had been started about seven years ago. The company also launched commercial cleaning and maintenance businesses and commercial floor covering businesses, hiring a former Wilson Floors and DuPont executive to head them. These businesses have turned out to go hand in hand, as the cleaning and maintenance division generates replacement sales for the commercial floor covering business.

In addition, the company acquired two of the three largest property management operations in the Columbus area, which service the replacement and cleaning of carpeting and vinyl flooring in apartment buildings.

"There's 40 percent of the population in Columbus that lives in apartments," said Penrod. "It's a pretty transient group, so it's a huge business for us. I'd say we have about 50 percent of that business overall."

He estimated that the builder and property management businesses are two of the company's most successful and profitable operations.

Penrod has no intention of neglecting the retail stores, which are the company's heritage. "Over the 30 years I spent in distribution and manufacturing, I saw every type of retail store that could possibly be put up," Penrod said. "I formulated a lot of opinions on what type of store worked best, and what worked in what market."

At Rite Rug, he has overseen an extensive remodeling plan, spending close to $1 million on the project and using the Mohawk Floorscapes program that he had helped develop during his tenure there.

Despite Penrod's long history with Mohawk, he keeps vendor relationships equally balanced between Mohawk and the other main industry player, Shaw. The company also buys flooring from Armstrong, Mannington and Congoleum.

Rite Rug plans to continue its trajectory for growth into the future. The company recently acquired a stain-on-site hardwood flooring business and plans to add as many as three new stores next year in the central and southwest Ohio area.

"It's our goal to keep retail at approximately 50 percent of our business," said Penrod. In 1995, retail accounted for around 97 percent of the company's business. "It was absolutely necessary for us to diversify to get the sales to support our corporate overhead," he said. "When you're totally dependent on retail, it's tough."
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Title Annotation:Rite Rug
Author:Goldbogen, Jessica
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Article Type:Company Profile
Geographic Code:1USA
Date:Oct 14, 2002
Words:630
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