CEO Spotlight: Chris Homeister, The Tile Shop
With home remodeling and housing starts on the rise, The Tile Shop is in a sweet spot. The specialty retailer of manufactured and nature stone tiles, which reported a 8.8% increase in net sales and a 4.9% increase in same-store sales for its first quarter, displays its collections in a showroom-like environment that includes full-room tiled displays and a design studio where customers can utilize 3D renderings to visualize their design ideas.
Chris Homeister joined The Tile Shop as COO in October 2013, and was named president and CEO in January 2015. Previously, he served as the general manager and senior VP of Best Buy's entertainment business group.
The Tile Shop has flourished under Homeister, who has presided over a turnaround that included the application of more analytical-based decision making to its business model. He also has devoted more resources to training associates, increased the company's focus to better serve the professional customer, and brought a more strategic approach to new store growth.
CSA spoke with Homeister about The Tile Shop and its plans for the future.
How is The Tile Shop positioned in the marketplace?
The Tile Shop has a unique retail offering that caters to both the trade professional and to the general consumer who is looking to update their tile options. Our trade professionals include general contractors, interior designers, flooring installers and customer home builders.
Tell us about the changes you've implemented since becoming CEO.
I’ve focused my efforts on three areas: developing our people, implementing new programs for the professional consumer and strategic store growth – all of which contributed to a dramatic improvement in financial performance.
Many initiatives were aimed at encouraging the same type of entrepreneurship that fueled the company’s growth in its early years as well as improving the customer shopping experience.
How are things going?
Our initiatives are working well: Between January 2015 and June 2017, we’ve opened 23 new stores, comparable store sales increased in an excess of 7% each year, and our share price has more than doubled.
Further, employee turnover has significantly declined and new store financial performance has improved dramatically.
What are your key priorities going forward?
This year, The Tile Shop is focused on expanding our brand to additional key markets, such as the Southwest, to inspire home owners and professional contractors alike to realize their home design dreams.
Additionally, we will also continue to build upon our success with improving e-commerce shopping experience, as well as finding unique ways to showcase our tile offerings via innovation and technology to further enhance our customer experience.
In your first quarter, turnover of sales associates was down about 25% from a year ago and nearly 50% from two years ago. How do you explain this — and why is it important?
Over the last couple of years, we’ve placed a significant emphasis on ensuring our sales associates are growing and developing by enhancing product knowledge, sales skills, expanding our sales career path, and leadership development among our current workforce. Developing great people is at the core of our business, and is the key element that has been driving our success.
I’ve also made it a personal priority to establish one-on-one relationships with store managers at each of The Tile Shop’s 129 current stores. And I personally speak to each new store manager before she or he is selected to lead our store. The customer is at the center of everything that we do, and I want to ensure that we have leaders in our store that share this same vision.
Through these initiatives, The Tile Shop has a created a class of tenured, motivated leaders at the store level, who have the skills and confidence to provide an exceptional customer experience and just as importantly recruit sales associates and designers to the store that make this vision come alive each and every day. Further, a pipeline of talent is being readied to step into new leadership roles as the company expands.
In a challenging retail environment, The Tile Shop is thriving. What are key factors in the company’s success?
In the first quarter of 2017, we reported record sales and profits. And we’ve continued to see these record numbers due to our effectiveness of consistently providing a high customer service level, which is certainly a key to our high average order and overall satisfaction.
Additionally, our Pro business has never been stronger, where we are viewed as a trusted partner with our professional customers at each store location.
How does the sales mix break down between regular homeowners and professionals?
Business to consumers accounts for about two-thirds of our business. Trade, or B2B, accounts for approximately one-third.
Is online a priority in your market niche?
More than 90% of our customers visit our website before, during and after their shopping experience with The Tile Shop. This is exactly why we’ve made significant improvements to our website over the last several years including the launch of an innovative new design tool called, Design Studio, allowing both professionals and general customers to customize their room design using The Tile Shop products.
We’ve also improved product pages and design content so it’s easy for customers to get inspiration for their next tile project.
What is the average store (showroom) size?
Size varies based upon location, but 14,000 sq. ft. is our new average showroom size.
How many new locations will the company open in 2017?
We will be opening approximately 12 to 15 stores in 2017, as well as entering into a new priority market later this year.
What type of locations do you prefer?
Locations are determined by many factors, including demographics, proximity to competition and existing stores, distribution centers, etc. We are opening both strip center, free standing, and also in urban locations – most recently in Atlanta (Buckhead), and Washington, D.C.