“You never know who’s swimming naked until the tide goes out,” said Shaw president Randy Merritt, evoking a quote from Warren Buffett that drew knowing nods and laughter from the retailers on hand. He was speaking at a retreat for members of the three-year-old Shaw Design Center program. His point, of course, is that the challenges facing the flooring industry are very much like the receding water in Buffett’s metaphor: They have a way of revealing short comings that would otherwise stay covered-up.

Merritt was offering the business equivalent of swimwear: “It’s time to be fanatical about everything going on in your business,” he said in his opening remarks. He and the Shaw management team went on to offer instruction that was highly detailed and pinpoint specific. The one-word theme for the retreat hosted by Shaw at a posh resort in Palm Coast, Fla. was “Synergy.” It was not selected just to reinforce the importance of a top manufacturer working with A-list retailers. It was yet another call for “benchmarking,” which has become the buzz word for retail groups urging their membership to compare notes. “In times like this you need to understand every line on your balance sheet,” said Merritt, who after a brief pause, added matter-of-factly, “I’m amazed at how many people don’t understand that.”

Using a fictitious model-“Randy’s Floors and More” they called it-dealers on hand were offered specifics on how to better control costs and increase productivity. They were told about a better yardstick to measure employee productivity and inventory turns. They were encouraged to use creative promos-“We pay the sales tax!” for example-as they go about wooing customers who have suddenly become jittery about spending.     

The tone set throughout the three-day meeting was far from alarmist. In fact, it was quite the opposite. With a broad smile and a relaxed demeanor Merritt welcomed members of the Design Center program as “Our best customers and our best friends.” After commenting on the “challenging environment” he shared the mindset that went into preparing his remarks. “These folks don’t need to see all that,” said Merritt referring to charts and slides that would confirm what everyone in the room already knew. The Shaw leadership understands that people trudging through a fierce storm would rather have a raincoat than a weather report.

Which explains why Ken Jackson, Shaw’s executive vp and chief financial officer, emerged as a beacon of light at this meeting. After he good naturedly cautioned the audience that he was about to suck the air out of the room with a mountain of charts and accounting lingo, he went to work. Using “Randy’s Floors” as an example he demonstrated how marginal reasonable improvement in a few key areas can make a world of difference. He talked about actionable items-decisions almost any retailer can make right now that will assure better cash flow and improved profitability. He proved that the expected gains, including a mere 1% increase in gross margin, can have a huge cumulative effect. In essence, Jackson was telling the Shaw retailers they need not try to push the boulder up a hill. A better approach is to smash it to bits and carry it up in your pockets a piece at a time. It’s a gradual process but the results are far more reliable.

Jackson, a well-respected accounting pro who joined Shaw in 1996 from the prestigious firm Arthur Anderson, also assured them he would help shoulder the load. He shared his direct phone line and e-mail address and encouraged the retailers to contact his with questions or if they needed advice. He knew his numbers but more importantly he knew his audience:  The Shaw Design Center members are elite, highly successful floor covering retailers, many in the business for decades. Although it certainly wasn’t planned this way, the group, which has 140 dealers operating 167 locations, was launched in 2005-just in time to confront the “challenging environment” Merritt spoke of. 

The accounting info presented was a bit dizzying. But Jackson was also wise enough to sprinkle in a few bits of sage advice and common sense. There is only one way to begin when setting goals, he said. “You’ve got to know where you are…” While he was, of course, speaking about balance sheets and not physical location; at that moment it seemed clear that every one of the 100-plus retailers in the room knew exactly where they were: The right place to be.