We packed a lot into 2022 and are so thankful you walked, listened and watched with us.
Mark Quinn: Today, I am so excited. We have a company that is celebrating its 50th anniversary in 2022. One of the biggest in the industry we have. Ive Culp and Jeff Veach here from Culp Incorporated.
Jeff Veach: We started, the company was started about my grandfather. We were an upholstery fabric distributor, and so our first, first entree was an upholstery fabric, and we had it, we had it going well. We had built, you know, several acquisitions. We had 16 US facilities. We were just, we had it figured out or they did.
I was. coming through school and trying to figure life out and probably taking tequila shots. But I, I was, uh, coming up the ranks and my grandfather knew at that time that we needed to get in the mattress fabric business. And so we just did. I don’t know why he thought we should. He just did it. And thank goodness, because about that time, the whole upholstery business, whole furniture business pivoted to.
We lost so much of what we had built and done acquisitions to gain and had to really retrench into a whole different model while moving what we had available over to Asia, which was a number one huge strategy. But right alongside it was getting into the mattress fabric business. And so we’ve always been blessed to have two ORs on the water.
Mark Kinsley: Jeff, how are you focused on marketing the company differently than in the past? What are you doing now?
Iv Culp: Thanks. One thing that’s really beneficial to that Mark is having been a customer of our own, of our company, so kind of growing up in the cut and sew and.
it starts, I think, on the creative front. Um, we’ve, we’ve got a group now that we call our brand experience managers. And on the very front end, these are a talented group of, uh, design people. That can make it a one stop shop from Cov fabric to cover through. And it’s more of a design services type of mentality.
How can we provide solutions on the front end? Uh, and then what’s great is, is they’ve talked about we have this, this large platform that is then scalable. So we’re, you know, we love tot that we’re onshore, near Shore, shore and offshore, so we can kind of through the cycle of a product line, if you think of a bell curve, we’ve got to kind of help the whole thing.
At the very front end, that team of our brand experience managers is just focused on that. An engineering product. That is one easy for a customer to come in and align the goals of what they’re doing, understanding how it can work through our supply chain, and designing and creating product that will be more seamless for customers.
They have a better experience, not only on just the creative side, but they’re thinking about it from an engineering aspect and how we can form quality, how it’ll be scalable, how we manufacture it globally. So, you know, of course we’ve got a lot of digital things that we’ve also added. We can talk about, we’ve, we’ve uh, the live furnish that we luckily were a part of before covid hit, and then we saw that and invested in that, and we’ve got our whole library of pieces there.
So what i’s grandfather saw? The speed to market. We’ve always identified as speed to market’s. And I think this industry, you know, seen it for the last 10 years, the disruption that’s happened with an industry. Uh, the, the importance of speed to market is, is more now than ever. Um, when it comes to front end and executing that globally, I think, you know, it’s, before riff touched on it was, it was always very North American centric with a a few key people controlling all but that diversification.
Now and how you can scale that globally and be from creative through is very important. So I feel like with what we’ve done from our digital side and then our creative team on the front end is something that we’re just hyper focused on every day. How we can improve that, uh, down through the process.
Mark Kinsley: Drew Millard is on the show today. He’s the VP of Human Resources with Tempur Sealy International, TSI.
Drew Millard: I’ve seen this in company cultures, especially in my legal background, that like you don’t go to HR cuz that’s when people get fired.
No, HR should be there to just help folks stay out of the first level of trouble, you know, before they get all the way to the end. And I, that’s still something that we have to combat is people feel like if some, if we’re going to hr Yeah. People are gonna get fired.
Mark Quinn: So Drew, tell us something before we, we bounce outta here. Let’s give actual value to this audience so you are. In a space that’s a, a very dynamic one right now.
I mean, a lot of people are having trouble hiring employees, right? That’s a big piece of this. So can you give, just like there’s a lot of retailers and even manufacturers out there, give a a little bit on that. Like, what, what are you reading about or seeing out there that is actually helping people bring people back into the workforce and, uh, be engaged and excited about their job again?
Drew Millard: Yeah. So, so I think, you know, one thing we’re noticing is, is just a big shift in kind of the whole picture, right? That even a couple years ago, five, 10 years ago, especially, like, it, it is all about the hourly wage, right? Or the, the salary. Like that’s what drove behavior. And nowadays we started to see the shift, even pre C O V D, where like vacation means more to folks than extra.
And so they’re starting to look at the full package of what does the company do for me? Like the total rewards the company offers, not just the, the baseline compensation. And so I, I, I think we’ve always gotta be thinking of that. And a lot of those things don’t cost us money, right? It’s not some of the things like vacation, okay.
There may be cost to that, but there’s other things that we can do just from a work environment perspective. that, that people are considering because that, I mean, all the stats that you read, people are leaving jobs and they don’t have other ones lined up cuz they’re just fed up. Right? They don’t like the environment that they’re in.
So I think really assessing what can we do that’s maybe free that provides that kind of environment that people just want to be a part of. It’s not so much we gotta raise wages. That’s been a lot of companies responding is raise wages. You really don’t have to, you gotta, you know, take that reflective look of.
What, what is our work environment like? Because it, it means a lot more to people than just the wages. That’s certainly what we’ve seen is you can raise wages. It doesn’t necessarily impact turnover. It’s, and, and I wish there was a silver bullet, but it’s really a lot of the small things. Do you recognize your employees?
Do they feel respected and appreciated? That that’s what matters the most.
Mark Kinsley: retailers, you’re not as in charge as you once wore. So who is in charge?
Mark Quinn: So we were learning our way in with furniture retailers and manufacturers and saying, Hey, what are the blind spots out there? So Mr. Kin. Based on those conversations, what was, what were some of your takeaways uh, in terms of how manufacturers and retailers are looking at the industry?
Mark Kinsley: so I heard this comment, retailers are not as in charge as they once thought. And so I asked, uh, you know, some of our participants to expound upon that. And it was fascinating to think, okay, in, in the past, retailers were able to, you know, pit vendors against each other or put a little pressure on so they could get the right price.
They had lots of different options when it came to merchandising their floor, but in the furniture space, you know, so many of these manufacturers or these distributors are now bringing in the containers and having to play a little bit of Russian roulette from time to time with these containers, they’re paying these exorbitant costs.
And on the furniture side, it’s a little bit different than the mattress side because years and years ago, uh, you know, they didn’t have the anti dump. Duties put in place, and a lot of this manufacturing was taken offshore. So now you know you have infrastructure in place and capital in place that’s deployed really strategically to bring in these containers, to distribute them throughout the country to these different retailers.
And retailers are sitting here going, I have consumers walking in saying, I want what you have. So the retailer hasn’t been as much in a place to dictate the terms as they used to be, and, and then meanwhile, back at the ranch on the manufacturer supplier side of things, you’re gonna continue to see massive consolidation, which could further put the reins in the hands of the manufacturers and not the retailers.
Mark Kinsley: Are you making these costly, completely unnecessary mistakes when it comes to financing? Craig Leffew is going to help us sidestep the landmines and land more business for your stores.
Mark Quinn: you mentioned, you mentioned Waterfall. Can you take Mark and I through, the Dummies on this call? Mark and I, can you take us through the difference? So you mentioned Waterfall is Koalifi a waterfall, um, uh, is it a waterfall solution or if not, how is it
Mark Kinsley: if anybody who doesn’t know just what is a waterfall, you gotta start.
Craig Leffew: Overtime. It’s great. Yes. Um, so I’m happy, happy to explain it. And some people call it a cascade, uh, depending on, on the route that, that they take. But really, a lot of businesses now look like this. You’ve got a a tier one product in there.
I’m talking like a, wells Fargo. We can name drop on here?
Okay. Like a, a Wells Fargo, Sychrony, a TD um, you know, and,
Mark Quinn: and when you say tier one, that’s for really good
Craig Leffew: credit, right? Correct. Yep. Yep. Okay. Um, and then you have your tier twos, and then you’ve got your lease own options, uh, which would be, you know, your Koalifis..
So yeah, typically what they would do is you would come out and you’d plug them all into, uh, a platform and then the customer could apply in that waterfall and it would take the questions that are asked for the, the tier one, and then it would, whatever, you answered that with it.
But in, if you didn’t get approved for tier one, It would waterfall to tier two and then it would take the information you put in for that and put it in the tier two application. Uh, any additional information they needed to approve you, you would have to provide. And then the same thing would happen going if you didn’t get approved for tier two going to tier three.
It sounds uber exciting, but uh, you know, it’s, it’s. Clunky sometimes as the, as me explaining it. Um, you know, and then the customer is there and the whole time staring at the rsa. Uh, and so, you know, we, we believe that if you take all that out of it, you know, we can,
Mark Quinn: but Craig, can I, can I pause you there real quick?
So when you say it takes whatever the information is from tier one and drops it to tier two, is that a manual thing? Is the re is the retail sales associate go? No, it just automatically happens.
Craig Leffew: Yeah. Which is okay. It’s better than. Doing like three different applications. Right? So that’s, but, but
Mark Quinn: it, it populates automatically.
But the RSA is still required to go in and hit submit a second time or submit a third time. So that’s not automated. It’s literally them having to say, okay, that didn’t work. Let’s go here.
Craig Leffew: Yes. And more importantly, the customer is, is getting a no in that process takes, you’re gonna approve for this, but we can try this.
Whereas in our system, they don’t get a no unless they’re not approved for anything.
That’s a big difference. We think from a customer experience standpoint, it’s it’s revolutionary.
Mark Kinsley: We are a nation facing inflation. It’s here, it’s real, and it confronts consumers every day when they go out to make a purchase from fuel to food. How can we compete? What can you do about it in your furniture and mattress store?
Mark Quinn: let’s think through some things that people out there can do that maybe, um, will be able to end around this whole problem, which is inflation, I think.
Kind of goes back to what we were talking about a second ago. You know, explain the inflation to your customers. Right? So maybe it’s on a website, maybe it’s when they come in, maybe there’s a easel, maybe it’s whatever. But you know, um, some explanation in terms of, Hey, look, it’s, you know, raw materials, so things have gone how gone up?
However, we’re still really aggressive and this is how, so yes, inflation’s happening, but this is how we’re handling it. So effective communication back to the consumer. We’ve, you know, we’ve, we, so the opportunity might be. Work with your suppliers, get new bed specked and, and place on the floor that are more aggressive than they’ve been in the past, or, you know, re-merchandising or anything like that.
But make sure you’re communicating with the consumer as to why it’s happening and
Mark Kinsley: how it’s happening. And one thing that yo Adrian said, we love Adrian. Yeah, cheer for Adrian. One thing that Adrian said, uh, who’s a producer for the show and the voice of the fam, uh, in our audio story, she was saying, look, if I need to buy something right now from my home, you know, they’re going into a home construction project.
I don’t know what the prices are gonna be in a year, so I’m more likely to secure that purchase now so I don’t have to deal with hybrid prices even later. So I don’t know that it kind of goes to what you just said about explaining inflation and explaining that it’s pro probably never gonna be cheaper than it is right now.
Because even if the rate of inflation declines, you know, back to a normal cadence of two to 4%, prices are just gonna go up. That’s just the, the way the world has worked. So maybe, you know, letting people know that now is always gonna be the best time to buy. And maybe if you want to, you know, treat it around a sale, people, you know, hit your wagon to that, which is.
and what’s relevant.
Mark Kinsley: It’s not the strongest of the species that survives, but the one most responsive to change our nectar’s headcount cuts an early response to change.
And if so, how can you prepare
Create financial degrees of freedom. Hmm. And so this is a scenario where, hey, take it from the mattress industry. There’s a good, better, best. So for example, how do you create financial degrees of freedom? , well, the best possible scenario, earn more customers. Uh, Airbnb is an example of that.
They pivoted to more long-term stays during the downturn. So they’re trying to get more people to stay for longer periods of time. And they were very successful at that during the, the covid shutdowns in the downturn because people wanted to get outta their house, but they couldn’t be around other people so they couldn’t go to these big hotel properties.
So that was a financial degree of freedom, uh, freedom for them. Um, Zappos, whenever things went in the can in 2000. They increased their selection and worked very, very hard on their average order value. So just like you said, taking bigger inventory positions, continuing to have great product, and then whenever somebody does come into the store trying to get that average order value that that ticket up each and every time.
So focusing on that now, um, other ways to create the, you know, these financial degrees of freedom. Um, just improve your unit economics. , can you reduce, you know, some of your spend in certain areas? Can you improve your roi? Can you get payback? You know, like Zappos did on a customer’s first order, which is very hard.
You know, it’s a lot of times people are looking at lifetime value. Um, and then you get into the excess, like, what, what is the excess that we can cut? And the the thing is, whenever you have constraints, your creativity can flourish. You know, it’s like if Mickey Mantel didn’t have a fence, He’d just be hitting balls 600 feet into the Spring River.
But a fence put up allows you to know what’s a home run. So put those constraints on your team and get as creative as possible. And then you gotta, you gotta do a reset if things start to get real and you’re facing cuts and businesses starting to suffer. And when I’m, when I say that, you gotta bring your team back together in a mind of, of the purpose.
The purpose behind your business. Why are you here? The the change that you make in people’s lives, and you gotta be sure that you’re living out that mission that you have as an organization and make sure everybody’s playing money ball with you, right? Put everybody on the same team. How do we get more creative?
And how do we cut expenses? How do we sell more? How do we increase tickets? All the things that we’re talking about doing. Now’s the time to plan for.
Zeen is a next generation WordPress theme. It’s powerful, beautifully designed and comes with everything you need to engage your visitors and increase conversions.