Tile Shop recovers and builds momentum with product innovation

Chris Homeister walks the walk as the Tile Shop's top executive. Since he joined the company three years ago, he's a ­do-it-yourselfer at home.

"I've tiled multiple bathrooms, a backsplash and some flooring," he said.

At work, the projects have been a little harder.

The Plymouth-based retailer, which has nearly 120 stores in 31 states and seven in the Twin Cities, turned itself around in 2014 after two years of big losses and a supplier payment scandal involving a relative of its former chief executive. Homeister's elevation to the CEO role at the start of last year coincided with a frenzy in home sales and a shift in consumer spending ­patterns that has favored home improvement retailers, including such bigger rivals as Home Depot and Lowe's.

Tile Shop and the tile industry as a whole are seeing annual sales growth near 9 percent or more. Homeister credits innovation for the gains.

"There are many more types and sizes of tile than ever before," he said. "We've gone from 12-inch squares to rectangular and large format tile 8-by-24 inches, or 3- and 4-feet long tiles."

Each Tile Shop store displays 30 to 50 vignettes to showcase products. Steve Quint, a Minneapolis architect, checked out the Tile Shop in Plymouth last week for a fireplace project in his lake home and was impressed by the selection.

"I haven't shopped for tile for almost 20 years. There seems to be an awful lot to choose from," Quint said. He does a lot of shopping on the internet but said he feels it's important to see tile in person for color, texture and feel. "It's helpful to see it with the grout in context."

As other retailers have done, the Tile Shop is blurring the lines between shopping in stores and on digital devices. A new tool called Design ­Studio lets Tile Shop customers see a virtual layout of their room with different tile ­selections. "You can experiment with color, tile dimensions and grout color," said Luke Crownover, senior assistant store manager in Plymouth.

Those who haven't shopped tile in a while will see tile planks that look like wood grain, subway tile in one-third offsets, tiles with 3-D depth, and faux designs created by inkjet printers. Tiles can now resemble ­natural surfaces such as marble at a lower cost, allowing them to have a ­similar look and feel with better performance and less environmental impact. Marble look-alikes made from porcelain stain and scratch less and don't involve removal from the earth. Porcelain tile made to resemble wood doesn't warp with moisture, can be made to be more slip resistant, and doesn't take from the forest.

This fall, Tile Shop will add an upscale line of 12 exclusive designs from fashion designer Ted Baker that are expected to be sold as art pieces. Prices will range from $150 to $450 for the pieces in 16-by-20 and 8-by-20 floral designs. "It's an alternative for customers who want to show their artistic side," said Kevin McDaniel, director of product design.

It's also another example of the selection evolution. ­Baker's tiles look like a fabric pattern but tiles in other ­collections have been designed to look like linen fabric, thanks to new ­printing techniques.

Tile Shop is also changing the way tile is displayed. New stores are getting smaller, being downsized from an average of 20,000 square feet to fewer than 15,000.

"We'll start interspersing the vignettes throughout the store instead of the perimeter," Homeister said. The revised layout will put tile samples closer to the vignette. The price tag of each tile includes a QR code so customers can see a picture of it installed in a room. Salespeople have tablets to check stock while the customer is still making choices.

"There's nothing that can sour a customer faster than taking time to choose a tile and then be told at the checkout that it's on back-order," McDaniel said.

He stresses that customer service is a key element to the company's success. Consumers get six months to return unused tile, far longer than the typical 30 to 90 days in retail. Such supplies as tools and saws, as well as its own line of caulk and grout are also sold. Consumers can get simple cuts done in-house. Free do-it-yourself "how to tile" workshops are presented Saturdays at 9:30 a.m.

About two-thirds of Tile Shop customers are do-it-yourselfers.

Tile Shop is now on more solid ground financially compared to 2013 when former CEO and founder Robert Rucker fired his brother-in-law for netting $1.1 million in illicit consulting fees from Chinese manufacturers. A year later, Rucker stepped down as CEO. He remains on the board of directors. He said that he was unaware and disappointed by the activity.

In the company's second-quarter results last week, executives raised sales and per-share profit outlook for 2016. But investors were disappointed that sales growth had slowed. Tile Shop shares, which reached their highest level since the 2013 scandal earlier this month, fell 14 percent during the week.

John Ewoldt • 612-673-7633