National Floor Trendsassembled a panel of top executives in the floor covering industry and asked several questions about today’s business conditions:
- TODAY’S CLIMATE: How would you assess today’s business climate in flooring? What has been your approach to the challenges facing the industry?
- OPPORTUNITIES: What long-term and short-term opportunities do you see in thee the big surprises?
- GREEN STRATEGY: We hear so much about the green movement. Specifically, how has this translated to your day-to-day activities?
- CHANGES: What change(s) would you like to see in our industry?
Evan Hackel,
President,
Carpet One Floor & Home
TODAY’S CLIMATE:Today’s business climate is extremely challenging and the quality of business greatly depends on where you’re located in North America. Our approach is to aggressively gain market share and focus on the profitability of our members. We know that in tough times most retailers go into their shell and stop promoting or advertising their businesses; we recommend the opposite. We encourage our members to advertise aggressively so consumers that are in the market for flooring know to go to our stores. In challenging times it’s very easy for retailers to focus solely on store traffic, but in reality there are many ways to improve business and profitability even with reduced traffic flow. By increasing close rates, the average ticket and margins while reducing costs, retailers can make a significant impact on their profitability.
OPPORTUNITIES:The short-term opportunities are really to gain market share, while our competitors are complaining and griping about how business is. The long-term opportunity is to execute our goals and provide customers with an experience that they value. We strive to help our stores build their repeat and referral business
GREEN STRATEGY:The green movement in North America is significant and will only gain momentum. We are very concerned that consumers get truthful information and that we avoid the “green wash” that is taking place in other industries. To do this, CCA Global has created a special committee, the “Innovation Council,” to explore all our options and to develop a socially responsible and easy to understand green program for our consumers. We will be presenting this program to our membership at the summer convention in Cincinnati.
CHANGES:I’d like to see all the bad and disreputable retailers exit the industry and I’d like to see greater focus on customer service. I’d like to see the angst around manufacturer claims greatly reduced. I’d like to see more retailer advertising of flooring products, as flooring competes with other products for the consumer’s dollar. I’d also like to see the industry focus more on fashion and comfort than on price.
Bill Schollmeyer,
VP of Sales,
Johnson Premium Hardwood Floors
TODAY’S CLIMATE: The business climate is probably the most competitive it’s ever been, and definitely the most fragmented it’s ever been. Traditional distribution channels are no longer in place, and while it’s difficult for a manufacturer to maintain profitable business, I believe it’s more difficult for the distributor to grow, or in many cases even maintain, his business. Our approach at Johnson is to build long-lasting relationships with our distributors. Our sights are set on the future; not just moving truckloads today.
OPPORTUNITIES:Distribution is in a state of change, and in many cases, distributors are looking for new supplier partners. The short-term opportunity is obvious: there are many distributors willing to take on a new line. The long-term opportunity is less obvious but equally significant: distributor relationships forged now during this state of turmoil will grow into long-lasting friendships as well as mutually profitable relationships. Many of the “big surprises” are already obvious to many of us - manufacturer consolidations, distributors refocusing on their core areas, and constant growth of non traditional methods of distribution. I believe the biggest surprises yet to be seen will center on the largest manufacturers and how they get their product to market.
GREEN STRATEGY:The green movement appears to have resurfaced after several years of relative dormancy. This is a great thing for our ecology, yet it’s a challenge for our industry. Johnson has always practiced responsible forestry, beginning with our exotic lumber procurement in South America and continuing through our production and finishing in Asia. The challenge for us, and for all manufacturers, is to make the consumer aware of our efforts and product differentiation with respect to green initiatives. It’s a similar challenge to the “quality movement” several years back, during which some manufactures produced high-quality products, and many didn’t. But now quality is a “given” in the consumer’s mind, although we all know there is a difference in the level of quality between many of the manufacturers. Our industry’s challenge is to not let green initiatives also become a “given” in the eyes of our consumers.
CHANGES:I believe we will see a falling out of many of the recently introduced manufacturers of hardwood flooring. When this happens, what I would like to see is a refocusing by distributors, dealers and consumers on the true virtues of a product - the quality, the appearance, and the support people who stand behind it. I’d like to see less of a focus on price and more of a focus on the true value of a product.
Keith Campbell,
Chairman,
Mannington Mills
TODAY’S CLIMATE:Today’s business is definitely challenging. Retail traffic has been slower than expected, though we are hearing that it’s starting to pick up. And the new products we put out in the marketplace this spring are helping with that – they’re attracting a lot of attention from consumers. It’s no secret that the new home construction business has taken a downward turn, but again, we have some new products out there that will help us remain very competitive. As a company, Mannington can weather these storms better than most because of the diversity of our product offering. We manufacture all types of hard surface residential products as well as hard surface and carpet on the commercial side of the business, which so far this year has done extremely well. It’s that balance - and the relationships we have with our distributor partners, retailers and customers - that will keep us moving through these tougher economic times.
OPPORTUNITIES: There are always opportunities out there – opportunities to take market share, to create better products than already exist, forge lasting relationships.
GREEN STRATEGY: The “green” movement has been on our radar screen since before it became a popular and politically correct thing to do. We have always had a sensitivity to the environment, both locally and globally. Manufacturing in New Jersey can be a challenge, as it’s one of the toughest states in which to do any kind of business. But we’ve been diligent in our attention to how we make our products, and how that affects the land on which we live and work. We’ve won a number of awards at the local, state, and national levels for the environmental efforts we’ve put forth, for going “above and beyond” what the law requires. We also have very active environmental programs on all of our sites – from recycling paper waste from offices, to riparian buffers and phytotechnology. (For more information visit: www.mannington.com/global/products/environment/letters.asp)
President and CEO,
World Floor Covering Association
TODAY’S CLIMATE: It is best described as “challenging.” The builder market has cooled off and residential flooring is down significantly in certain sections of the country. Fortunately, the commercial end of the market has some pent-up demand and there are some thriving local economies in the U.S. At the WFCA, we know there will likely always be ups and downs, ebbs and flows, but we assume one thing: all of our retail members want new customers who know what they are looking for and are ready to buy. To generate that type of business, we have consciously positioned WFCA as the unbiased source of information for consumers on all types of floor covering. To achieve this we have developed www.wfca.org, as a powerful and engaging web site that educates consumers and provides a member dealer locator to send them on to a store.
OPPORTUNITIES:There is a real opportunity to create a sense of urgency about replacing a floor - not through the traditional methodology, which has been to slash prices, but through branding. U.S. consumers invest heavily in brands, and move through what Young & Rubicam call the A-I-D-A wheel: “Awareness” of a product develops into an “Interest” about it. That morphs into a “Desire” to have it and finally the “Action,” the actual purchase. While the floor covering industry has a history of doing their level best to turn products into commodities, niche marketing vehicles are now in place where both manufacturers and retailers can afford to target their message and create a brand with laser precision to exactly the audience they wish to reach. Many of the traditional small “mom and pop” retailers who refuse to adapt and change will disappear.
GREEN STRATEGY:While the initial thrust of the “green” movement has been on the commercial side, it is starting to make significant inroads into the residential flooring business. There is much more interest in not just “green” flooring products like bamboo, cork and linoleum, but sustainable products in wood, vinyl, stone and even carpet. To guide consumers through these choices, we are creating a special section on www.wfca.org explaining the various products and options.
CHANGES:The industry as a whole is relatively unsophisticated, particularly in how it has marketed its products and its use of technology. It is amazing to see the lack of brand awareness among consumers. This is the only industry I know of that has allowed ingredient products to hijack and define its brands. In the soft drink industry that would be like having NutraSweet cola without ever knowing of Coca-Cola or Pepsi. It’s refreshing to see some of the major industry players now trying to create awareness of their brands.
The industry is too insulated. The same people get recycled over and over again. Every so often an outsider needs to come in and stir things up, and I’d like to see a little of that. I’d also like to see wide-scale adoption of the Flooring B2B initiative. It is about as difficult to use as the telephone, would save everyone a bundle of time and money and improve order accuracy to near perfection. Lastly, I’d like to see less finger pointing among manufacturers, retailers and installers and more focus on seeing to it that the customer gets the right product installed the right way at the right time. There is a lot that is right about the flooring industry. I’d just like to see it get even better
Randy Merritt,
President,
Shaw Industries
TODAY’S CLIMATE:We must remember that our industry is cyclical, and recent years have been the best in the history of the flooring business. Our approach is to continue what we do best: create innovative products in hard and soft surface flooring, enhance manufacturing and distribution efficiencies, and continually improve our service levels to our customers.
OPPORTUNITIES:Opportunities exist for innovative companies. In all segments of our business, we are focused on the issues most important to our customers – better products, better marketing and better service.
GREEN STRATEGY:You can’t open a newspaper or magazine without reading about the newest green product or service. The introduction of the Shaw Green Edge in fall 2006 was at an opportune time. However, this is not a marketing gimmick that was quickly constructed to participate in a trend. The hundreds of initiatives listed on shawgreenedge.com are processes, accomplishments and practices that have taken Shaw over a decade to put into place.
Environmental awareness is an integral aspect of the Shaw culture. Green has translated in our day-to-day activities primarily through communications. Whether sales, marketing or R&D, we’re all working together to provide the best in eco-friendly design and processes to our customers.
CHANGES:The flooring industry continues to lag behind other consumer durables in the “excitement factor.” We are competing for consumers’ dollars against electronics, home fashions and other high-interest categories. Shaw is creating excitement among consumers with our advertising that presents inspiring flooring messaging. We are carrying that excitement through at retail with innovative products and displays. When a consumer walks through the door of our dealer’s store, we want the consumer to shop there and purchase a Shaw product.
Hector Narvaez,
VP, Sales and Marketing,
Marazzi USA Group
TODAY’S CLIMATE:For ceramic tile, the business climate is down compared to last year-and its been very difficult in states like Florida and California that typically consume more tile per capita. In this type of climate, we feel our high level of service is more important than ever. Our quick deliveries on high-value products help our customers weather these slow months. This is why we have stepped up the introduction of new products and added some key sales and marketing positions to provide our customers with the highest levels of service.
OPPORTUNITIES:In the short-term, we see the need for opening price point products made with high quality. Not simply low-priced imports, but high-quality products at competitive prices that are unlikely to come back as a claim than can eat up the profits. In the long-term, we see a need for innovative, high-end products that will provide our customers with a competitive advantage in the market. Domestic manufacturing has been overlooked for many years, and this year, the big surprise will be domestic manufacturing of high Italian design and quality.
GREEN STRATEGY:Marazzi has been on the forefront of ecological-friendly production processes for over a decade, recycling our greenware, water and glazes. We are also partnering with the Tile Council of North America (TCNA) to identify and establish eco-friendly industry standards.
CHANGES:Regardless of the state of the industry, the biggest concern to me is installation. Tile manufacturers and companies that make setting materials need to address installation standards, certification of installers, and maintaining a future supply of installers. Segments including carpet, laminate, and resilient have done it successfully. I would like to see our segment do the same.
Ron Dunn,
Co-President and CEO,
CarpetsPlus of America
TODAY’S CLIMATE:The climate is the most challenging that our industry has seen in 15 years and it has affected all parts of the country and all product categories. Our approach has been to increase the networking of best practices among our storeowners and managers. Whatever glaring challenge or exposed weakness individual stores are working their way through, someone else has already been there and done that. Networking effective, proven best business practices becomes invaluable during times like these.
OPPORTUNITIES:When business is peaking, the need to align with a resource group does not appear all that necessary. A sustained turndown in business increases the number of storeowners who are taking a closer look at the benefits we have to offer. Short-term, there is opportunity for us to grow our membership at an even greater pace. Long-term, today’s challenges will help us concentrate even more on the disciplines, balances and decision-making processes needed to run retail stores that continue to thrive and survive into the next generation.
GREEN STRATEGY:Later this month our stores will be receiving “Phase I” of our EcoChoice program. This involves a comprehensive offering of soft surface products in two beautiful displays. Our stores will be supplied point-of-purchase materials, advertising support and a national program that supports Arbor Day with each consumer purchase. We are now putting the final pieces together on “Phase II” which will involve hard surface offerings. It will be available to our members this fall.
CHANGES: I would like to see a higher value placed on education and training. This is needed in all segments of our industry. Also, better over-all discernment from distributors and retailers introducing imports to their market. I’m not saying it is all bad, but a lot of what was brought in has been bad for everyone involved. Also needed is a paradigm shift to give the consumer our full attention when it comes to what she wants. In our industry, at all levels, we have a tendency to decide for them or make decisions based on what the competition is doing. For the most part, this has led to “selling down” when today’s consumer primarily wants to be “sold up.” Placing a higher value on quality is part of the remedy. A widespread understanding and belief that better products, higher margins and increased profits are good things would bring a needed and healthy change at retail.
