Spotlight on 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 reported an 8.8% increase in net sales and a 4.9% increase in same-store sales for its first quarter. With 130 stores in 31 states, The Tile Shop displays its tiles in a showroomlike environment that includes full-room tiled displays and a design studio where customers can utilize 3-D renderings to visualize their design ideas.

Chris Homeister joined The Tile Shop as COO in October 2013, and became president and CEO in January 2015. Prior to joining the company, he served as general manager and SVP of Best Buy’s entertainment business group.

Chain Store Age editor in chief Marianne Wilson spoke with Homeister about The Tile Shop and its plans for the future.

How is The Tile Shop positioned?

The Tile Shop has a unique retail offering that caters to both the trade professional and to general consumers who are looking to update their tile options. Our trade professionals include general contractors, interior designers, flooring installers and customer homebuilders.

What changes have you 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, comp-store sales increased in 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.

Turnover of sales associates in your most recent first quarter was down nearly 50% from two years ago. How do you explain it?

Over the last couple of years, we’ve placed a significant emphasis on ensuring that our sales associates are growing and developing by enhancing product knowledge and 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 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 who 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. Just as important, they recruit sales associates and designers to the store that make this vision come alive every day. Further, a pipeline of talent is being readied to step into new leadership roles as the company expands.

What are your key priorities?

This year, The Tile Shop is focused on expanding our brand to additional key markets, such as the Southwest, to inspire homeowners and professional contractors alike to realize their home design dreams. We will also continue to build upon our success with improving the 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 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.

Is online a priority in this 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 past several years, including the launch this past year of an innovative and interactive new design tool called Design Studio that also allows 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 size?

The size varies based upon location, but 14,000 sq. ft. is our new average showroom size.

What’s the store experience like at The Tile Shop?

We’re focused on providing a premier experience that starts with our sales team. We’ve placed significant focus on enhancing product knowledge, customer engagement and leadership development among our current workforce. The result of these efforts has been a class of tenured, motivated leaders at the store level, who have the skills and confidence to provide an exceptional customer experience.

Also, sales associates have been trained to use Design Studio to develop a blueprint of a customer’s space, and specify material requirements and design objectives.

We introduced a new store format in 2016, and it is performing extraordinarily well. It works in both urban and more traditional suburban environments. It includes more design tables and new merchandising strategies, as well as an expanded installation and accessories assortment. In addition, our professionalgrade tools have also increased greatly, which is another reason for our strong growth with this class of customer.

About how many new locations are planned for 2017?

We will be opening approximately 12 to 15 stores in 2017, as well as entering into a new priority market later this year.

We are opening strip center and freestanding stores. We are also opening in urban locations, most recently in Atlanta (Buckhead) and Washington, D.C.