By Steven Feldman
NATIONAL HARBOR, MD.—In what someday may be looked back upon as an industry game changer, CCA Global Partners and Armstrong on Jan. 6 jointly announced a relationship whereby the manufacturer will directly service CCA Global retailers, essentially bypassing traditional distribution.

For CCA Global members, the agreement should translate into better service on a local level. For Armstrong, it means better communication and execution of programs and initiatives through the elimination of a layer in the distribution chain.

Armstrong was quick to emphasize that this agreement by no means should be construed as a paradigm shift as to how it goes to market. Rather, it is indicative of a changing industry and the fact that not all customers are equal in size and according to Paul Murfin vice president of sales and distribution, adding that going to market with a one-size-fits-all approach is flawed.

“The industry in 2010 is different than the one in which we grew up in the mid-1990s,” he said. “Armstrong is competing against some very large vendors that have scale in the way they manufacture products and the number of reps on the street. So we are positioning ourselves to win in a new environment.”

Frank Ready, CEO, Armstrong North American Floor Products, said the company is always looking to find the most cost-efficient way to go to market. “Execution will improve. And with a direct link to CCA members, communication will be better.” He added that the elimination of some redundant costs between Armstrong and its distributors—which will still provide local inventory support and logistics for CCA—will result in better pricing.

Charlie Dilks, chief product officer for CCA, said this arrangement does not depart from relationships with CCA’s other main vendors like Shaw, Mohawk and Beaulieu, noting CCA and Armstrong have always had a direct relationship; it just didn’t behave as such through the supply chain.

“We put a lot of pressure on our vendors to do things to benefit our membership,” he said. “I applaud Armstrong; I think it is courageous. It is taking steps to protect its relationship with CCA and be more viable. That’s good for our members.”

Dilks acknowledged that CCA members must also come to the table. “For this relationshipto work, we have to rethink our sales, marketing and what we do on our showroom floors when it comes to Armstrong. Armstrong is bending over backwards to help us sell more products. We have to back that up with a similar commitment.”

Specifically, there are the five key member benefits:

1. Pricing. Vinnie Virga, president of Flooring America, told FCNews there will be no situation where a CCA member will pay more for an Armstrong product than a non-member because buying power is leveraged through a single conduit.

2. Execution. This is where Armstrong and CCA see the greatest opportunity. Armstrong will hire field reps to execute programs at a local level, including on-time delivery, effective merchandising set-up in showrooms, timely training and after-sale support. “Look at the success Shaw has had by dedicating reps to your stores,” Dilks told Carpet One and Flooring America members. “It has provided advantages over competitors to execute new initiatives.” CCA’s member services team will be directly engaged with this new sales force, indoctrinating them with CCA culture.

3. Rebates. Dilks believes the program will be the most competitive in the industry with enhanced levels on many products and categories, even at the commodity level. Ready added, “This doesn’t make sense if we don’t offer competitive pricing and rebates.”

4. Terms. There will be terms on all products purchased from Armstrong, which will be the sole disseminator of invoices.

5. Product. Dilks noted how Armstrong is a leader in every category in which it manufactures product. “To succeed, you must be on the leading edge of innovation and speed to market. This, combined with the most recognizable brand in the business, is an effective tool to leverage.”

For the program to be mutually beneficial, CCA members will have to increase their commitment to Armstrong and its products, something Ready expects but is not taking for granted. “This program starts with the belief we have to earn your business every day. It starts with products that have to prove themselves in your showroom every day.” He cited Armstrong’s strong track record over the last couple of years and believes it to be the best in the industry, citing introductions such as Grand Illusions, Alterna and Strata-Max. “It’s a process that never ends.”

But product can only go so far. Ready cited Armstrong’s industry-leading brand— which it supports with TV and print advertising every year—as a huge advantage for CCA members. “Last year we outspent every competitor in brand investment 3- to-1. We did not drop one dollar despite the tough climate.” That type of commitment helps to attract 250,000 monthly visitors to the Armstrong Web site every month—people predisposed to buying. “That demonstrates the value of a strong brand and represents a great opportunity for the people in this room.”

It is execution where Ready believes the greatest opportunity lies, especially as it relates to training. “The greatest service we can provide is to ensure your salespeople are properly trained on all Armstrong products in your showroom,” he told both Carpet One and Flooring America members. “Armstrong owes you great training and great development of your salespeople to sell our products. We have become too enamored with display placement and the quick sale.”

Dilks tempered members’ expectations by likening the relationship as a journey whereby change will be seen as time passes. “We can’t expect all the changes to occur [immediately]. We have to protect the current base of business. We will go as fast as we need to not cause any discomfort.” The program will be initially rolled out to ProSource dealers.

Member reaction was cautiously optimistic. Ben Davis, Flooring America Fort Worth, Ft. Worth, Tex., believes it will save money and result in an increase in the amount of Armstrong products his store carries.

Meanwhile, Todd Wright, Flooring America by Carpet Smart, Springdale, Ariz., is hoping the deal will reduce service issues with distributors. And Harris Cohen, Country Carpet & Rug, Syosset, N.Y., believes it will not only result in better service, but also simplify the claims process.

Larry Callahan, Callahan’s Carpet One, Hudson, Ohio, said he didn’t have the best relationship with his distributor rep, “so we’re looking forward to something more efficient and productive.” Also, he noted how better buying power translates into better buying for the consumer.

One of the challenges, Dilks said, will be getting members accustomed to their new reps. “We have a really strong Armstrong distributor—Buckwold Western—but I think it can and will do a better job,” said Kevin Brooks, Design Flooring Centre, Medicine Hat, Alberta, Canada. “However, it will work out better if there is better pricing. Ultimately, that will be better for the consumer.”

—FCNews’ Emily Hooper contributed to this story.