Hearth & Home February 2017

Scott Horvath, owner of O’Malia’s Living, Carmel, Indiana.

The Newbie and The Veteran

By Bill Sendelback

The combination of an industry novice with an old hand is driving change, and growth, at O’Malia’s.

Photos: ©2017 Abstract Photography Terry Wieckert Photographer. www.abstractphotographyinc.com.

Take a total newcomer to the hearth and patio industries with his fresh perspective and ideas, and add to the mix an industry veteran with his profound knowledge and history, and you have O’Malia’s Living in Carmel, Indiana. That seemingly unlikely pairing has paid off with a 54% sales increase since the company was purchased in April, 2015.

That sounds like a winning combination.

The O’Malia’s name started to become an icon in the greater Indianapolis market in 1966, when Bill and Helen O’Malia opened a fireplace shop. About the same time, Bill’s brother Joe started O’Malia’s Grocery, a venture that grew to 20 locations throughout the metro area.

“There was an O’Malia’s Grocery on almost every corner,” according to Scott Horvath, the new owner of O’Malia’s Living, the continuation of Bill and Helen’s fireplace shop. “People around here are very familiar with the O’Malia’s name, but they mostly think of it as a grocery store. They don’t yet think of O’Malia’s as a fireplace or patio store. So we’re trying to tell central Indiana that O’Malia’s is much more than just a grocery store. O’Malia’s is also fireplaces, patio and HVAC.”

Horvath was completely unfamiliar with hearth and patio retailing after teaching business at the college level for 15 years. Looking for a change in life, he got to know Helen O’Malia at local Rotary Club meetings after Bill passed in 2006. Helen, before her passing in mid-2016, was then in her 80s and ready to sell.

In April, 2015, Horvath made the purchase and set out to bring in the hearth and patio expertise he needed. After posting the job with no results, he consulted with leaders and retailers in the hearth industry and learned of Steve Pulone, son of hearth industry icon, the late Ron Pulone, founder and owner of Sunset Fireplace Fixtures that was acquired in 1998 by Portland Willamette.

Steve Pulone, general manager and vice president of Operations.

Steve Pulone has 32 years of experience in the hearth and patio industries, starting with his father at Sunset in 1985, a company created by Steve’s grandfather. After the acquisition of Sunset occurred, he became a hearth distributor, then a manufacturers rep, and finally a retail patio salesperson, all in his native Southern California.

A couple of phone calls from Horvath, and a visit to O’Malia’s, and Pulone was on board; he’s now general manager and vice president of Operations under Horvath. That gave Horvath the industry expertise he needed to combine with his own fresh, outsider ideas.

“I brought to O’Malia’s the business principles I had taught,” says Horvath. “I’m very much into education, including getting our employees National Fireplace Institute (NFI) certifications.” Central to Horvath’s direction for O’Malia’s is a book entitled “Hug Your Customer.”

“When I was teaching,” he says, “I instructed my students that customer service would drive who they would become.” O’Malia’s employees read a chapter a week and then meet to discuss it and what customer service means to the company.

“Primary is (to recognize) how we are serving the customer, and whether we are serving them in the most appropriate way. That is what distinguishes us – providing the best customer service in town.”

Horvath also is very aware of the importance of O’Malia’s legacy and the customer service the company has provided over the years. “For the last year, we’ve been saying, ‘Let’s recognize the last 50 years of O’Malia’s, but let’s make sure that we’re relevant for the next 50 years, that we still provide the best customer service, but at the same time we’re not old and stodgy.’

“I was very fortunate. When I bought the business, the O’Malia family already had built a client base that appreciated the level of customer service O’Malia’s provided. That important client base now provides us with the cash flow we need to sustain the business.”

Sales success is evident, but how is this collaboration of new and old working out?

“Scott’s management style is great,” says Pulone. “He doesn’t micro-manage. He trusts my industry knowledge and says, ‘Just do it,’ letting us expand our product offerings.” In the new management’s first patio season, Horvath gave Pulone a budget and raised his eyebrows when Pulone only spent half of it.

“My plan was to bring in display models and then sell custom orders off of those,” says Pulone. “At year-end, sales were up, we had very little inventory carry-over and we were under budget.”

Today product growth and diversification have resulted in O’Malia’s Living offering patio furniture, pergolas, outdoor fireplaces, gas fire pits, grills, wood, gas and electric fireplaces, mantels, glass doors, gas logs and fireplace accessories. New to the product mix are HVAC items such as furnaces, air conditioning, heat pumps, air purifiers and air humidifiers.

While grills represent only 8% of the store’s business, with displays such as this, that figure is bound to rise.

While hearth products are 58% of O’Malia’s sales, with outdoor furniture accounting for 32% and grills 8%, the company’s HVAC efforts are just taking hold and represent only 2% of the company’s sales.

“We’ve really grown our outdoor category, but growing our HVAC end is definitely a goal,” says Horvath. “Heating, air conditioning and direct-vent gas fireplaces are becoming so similar that we’re looking at this category which would offer our technicians year ’round installation possibilities.”

Horvath’s HVAC efforts began in January, 2016, and now he has two HVAC technicians in addition to his regular hearth and grill installation and service teams. “It’s a work in progress,” he says, “but it’s an area in which I truly believe we can grow.”

Horvath combines his HVAC efforts with his hearth efforts to form O’Malia’s Comfort Living division. “There are a lot of opportunities for the fireplace industry to learn from the HVAC industry in terms of innovation, in-home sales and customer service,” he says. Patio furniture and grills now are in the O’Malia’s Outdoor Living division.

The neutral gray floor color allows brighter colors to shine, such as the orange fireplace wall and the umbrella display.

The economy in central Indiana “is not booming, but is very steady and growing,” according to Horvath. “It’s not 2007, but is very similar to the economy of 2004. People are very interested in reinvesting their dollars back into the local economy, so we’ve done very, very well.”

The Indianapolis region has experienced a resurgence in homebuilding, offering O’Malia’s another growth opportunity on which the former owners didn’t focus. Horvath recently started a commercial sales division, with a sales team calling on and working with an increasing number of landscapers, homebuilders and designers.

Falling back on his teaching background, Horvath’s new Pro Partners program offers continuing education to his commercial partners, as well as economic and logistic benefits to make it easier and more profitable to work with O’Malia’s.

The company caters to the region’s more affluent customers with patio furniture and grills in its Outdoor Living division. On the Comfort Living side, with hearth and HVAC items, O’Malia’s serves all economic levels of consumers.

Steve Pulone, the industry veteran, brought a fresh perspective to O’Malia’s 10,000 sq. ft. showroom. “Steve really brought in a vision,” says Horvath. “I gave him a budget, and he redid the whole showroom. Today it’s relevant, looks great and pops with color.”

The store has two entrances by necessity of the layout, one into the patio furniture and grill products area, and the other into the hearth and HVAC area. Gas and wood burners are together in the fireplace area rather than being divided by fuel. With no outside display area, the outdoor products are displayed inside, including a complete outdoor kitchen with fountain and two fire pits.

Note the bank of glass windows running the length of the room, bringing natural light into the store.

In the hearth section, a local company built cabinets for O’Malia’s electric fireplaces. “People sometimes have a hard time visualizing how an electric model might look in a wall. Now we can demonstrate what a built-in installation might look like.”

Not only does O’Malia’s showroom look new and fresh, it also smells better, too. Horvath subscribes to a program from Scent Marketing Company that supplies a different scent each month to fill the showroom.

“We’ve got 40 burning models,” he says. “That’s a lot of gas pumping through our 10,000 sq. ft. So when the customer comes in, instead of smelling gas fumes, this month he smells mulberry spice.” He points out that retailers such as Pottery Barn and Restoration Hardware use the same program.

Going hand-in-hand with Horvath’s focus on customer service are his efforts to improve his installations and service programs. While some dealers farm out these functions, Horvath feels strongly about having them done by in-house employees.

“It just makes sense,” he says. “It gives us much better control. O’Malia’s is a family, and we provide family-style service. To control that and make sure that message rings true with the customer, it only makes sense to keep it in-house. If we were to subcontract out the installations, we couldn’t guarantee that we’re following through with the customer service we want, and that the customer expects and deserves.”

Over the last year, O’Malia’s service division has grown from two people to five, and chimney-sweeping capabilities have been added. And, yes, O’Malia’s technicians do read the book “Hug Your Customer.” “They buy into the same culture we are all about,” he says. “We take care of our customers from the start to the finish.”

Like the other new perspectives Horvath has brought to O’Malia’s, the company’s advertising and promotions are not the usual list of media advertising but instead reflect the trend toward social media.

“For the last year, we’ve really focused on our promotional efforts and making sure we’re relevant online when people are searching for our products,” says Horvath. “Eighteen months ago we didn’t have a Twitter account, nor were we on Facebook. Now we have both with a nice, growing following on Facebook.”

Attractive cabinetry shows customers that a fireplace and television don’t have to compete for the same space.

He also has rebuilt the website and is doing Google Ad Words and partnering with Bing. “Most of what we are doing is either increasing our online presence or doing local community marketing,” he says. And that includes supporting and sponsoring local youth sports, plus using advertising panels at local sports fields.

Horvath also feels that giving back to the community that “has given us so much is an important part of our business model.” So 5% of O’Malia’s net profits go back to the community to support family- and faith-oriented organizations and charities.

He doesn’t spend time thinking about his competition, whether it’s specialty retailers or mass merchants. “In order to grow our business, we have to increase our market share by taking business from someone else. But we don’t focus on that. We simply focus on improving ourselves and trying to do the best we can. If we do that, ultimately we will win business from our competition.”

Horvath has thoughts for the industry and for other dealers.

“As an industry, we need a lot more young people who think differently and think how we can be more innovative to bring customers to our stores during more than just November and December. We need to look for new ways of doing business.

“As dealers, you should look for your niche. Find a way to develop a culture and passion that your employees can rally around, and stay true to that. Don’t deviate from it. It might take years, but it will ultimately produce good results.

“Regardless of what some old timers in the hearth industry say, there is incredible opportunity to grow in this business,” says Horvath. “The first vendor I met asked me, ‘Why did you buy this (company)? Everyone I know is selling out.’ That comment really disturbed me because it caused me to pause and question what I had done.

“But the more I thought about it, the more I realized that the hearth industry has a lot of opportunity for growth. But you have to take advantage of that opportunity.”

With a new perspective and solid experience, it appears that O’Malia’s Living is doing just that.

SNAPSHOT

Store Name: O’Malia’s Living

Address: 115 Medical Drive, Carmel, Indiana 46032

Number of Stores: One

Owner: Scott Horvath

Key People: Steve Pulone, GM & VP Operations; Neil Clifton, Director of Service Operations

Year Established: 1966

Web Site: www.omaliasliving.com

E-Mail: Email

Phone: (317) 846-6812

Number of Employees: 12 full-time

Gross Annual Sales: $2 million

% of Gross Sales by Category:

Hearth – 58%
Outdoor Furniture – 32%
Grills – 8%
HVAC – 2%

Square Footage: Showroom – 10,000; Warehouse – 8,000

Lines Carried:
Hearth – Jøtul, Lopi, Osburn, Fireplace Xtrordinair, Mendota, Dimplex, Modern Flame, Ambella, Collinswood Design, MagraHearth, Stoll, Design Specialties, R H Peterson Co., Grand Canyon Logs, Golden Blount, Hargrove
Outdoor Furniture – SunVilla, OW Lee, Cabana Coast, Windward, Peak Season, Treasure Garden, Seaside Casual
Grills – Big Green Egg, Broilmaster, Twin Eagles, Delta Heat, Del Sol

% of Annual Gross Sales for Advertising: 2.75%, all for social media and local sports promotions

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