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NAFCD: Distributors see value in networking

November 9/16; Volume 30/Number 11

Screen Shot 2015-11-12 at 4.20.26 PMOrlando, Fla.—The North American Association of Floor Covering Distributors (NAFCD) continues to evolve as it seeks new ways to provide value to membership. While the recent annual convention—held here Nov. 3-5 in conjunction with the North American Building Materials Distribution Association (NBMDA)—provided valuable networking opportunities and insight on key issues that impact all wholesalers, the organization continues to provide resources throughout the year to further enhance distributors’ businesses. FCNews sat down with the executive board at the convention’s trade show event for a brief round-table discussion to examine some of the issues impacting distribution, the association’s initiatives in 2015 and plans for the coming year.

What was the NAFCD up to in 2015?

Chaidez: The biggest initiative was to reemphasize the NAFCD brand, which is the value of networking within the industry. It’s the value of reaching out to all the different partners in the industry, bringing them together, learning from each other and exchanging ideas. What we have seen at this conference is the result of that.

Jaeckle: We launched an online biweekly newsletter, Distributor Digest, which, among other things, emphasized the value of this conference. We also interview someone within the industry and provide links to all articles written on distribution. Those could even be from outside the industry. The newsletter also provides information on events, partner discounts, education opportunities, products of the NAFCD and more.

Screen Shot 2015-11-12 at 4.24.28 PMWe also strengthened our partnerships with NWFA [National Wood Flooring Association], WFCA [World Floor Covering Association] and Surfaces. Among other things, this involved being part of their organizations and having them offer space to the NAFCD at their events for our members to network.

Mandell: WFCA is more retail oriented. It’s about working together.

Jaeckle: The main interest involves sharing information on key issues to both, like installation. We rely on the success of the retail segment, and that is WFCA. Anything we can do to help them helps all of us.

Chaidez: One of the things we did in 2015 was schedule a conference call with all past presidents to get their thoughts and input on the direction NAFCD should take. Bobby Weiss of All Tile suggested working closer with WFCA. Also, everyone said we should focus on the value of networking and tailor the conference to be a networking event.

Did membership increase in 2015?

Mandell: We increased membership on both the manufacturer and distributor sides. We looked outside the normal realm. For example, we are focusing on adding value to members who used to be with FIANA [Flooring Installation Assocation of North America] and get them involved.

Chaidez: DespitScreen Shot 2015-11-12 at 4.24.36 PMe consolidation in the industry, NAFCD added 10 distributor members, 11 manufacturer members and four allied members, like software companies. Allied members are those who provide services to the industry. It was a total of 25 new members, our largest increase in quite some time.

How was 2015 from a business standpoint?

Powell: A lot of people saw a slowdown in the summer, seemingly driven by a stock market blip and the labor shortage with installation.

Chaidez: It was a year of change for the industry: strong commercial, strong builder, modestly improving residential.

What do you mean by change?

Chaidez: It’s about the changes we are seeing with our customer base. Customers are diversifying their businesses. Commercial is now venturing into property management. Ceramic-only dealers are now going into wood. Hard surface-only dealers are now going into soft surface. And distributors who weren’t selling supplies are now getting into supplies. The industry is adding complexity into their businesses so they can continue diversifying their offerings.

Screen Shot 2015-11-12 at 4.24.44 PMJaeckle: We all had to react very quickly to Lumber Liquidators. We have seen the importance of knowing your suppliers and knowing everything about the products you are bringing in. Compliance is important to consumers and retailers, and we as distributors must ensure we are delivering products that meet all environmental concerns and requirements.

Is private labeling becoming more important?

Jaeckle: In the last five years we have doubled the amount of private label lines. Reasons for that include having more control over the product, single distribution and product differentiation.

Mandell: With private labeling you are not required to have as many SKUs. You decide what you are going to bring in. And it is personalized to your market.

Chaidez: We see private label brands as a way to fill distribution gaps. The whole concept of narrow and deep is easier to manage—a narrower number of SKUs to allow for deeper inventory levels.

What changes are you seeing in product?

Chaidez: Wood continues to take share from carpet, LVT continues to take share from laminate, the new WPC product takes share from LVT and laminate, and ceramic is taking share from all categories.

JaecklScreen Shot 2015-11-12 at 4.24.50 PMe: In ceramic, the wood look is unbelievable. Three or four years ago it was a blip. Now it is our third best seller in tile. And five years ago 12 x 24 was nothing. Today that size accounts for more than 40% of our sales.

Powell: WPC products are continuing to gain momentum. They offer the best features of LVT and laminate without downsides. USFloors getting its patent approved has been huge. There seems to be an intent to keep the quality up, meaning the lower quality imports will lose their place in the market which is good.

How has labor shortage impacted distribution?

Mandell: It definitely impacts claims. A huge reason why people have claims is because installers are not certified or properly trained. Another impact is if people have to wait too long to have their product installed, it lends itself to more DIY. This is positive for home centers, negative for distribution. I think it is fair to say the industry doesn’t have a solution for this.

Chaidez: The question is, what is the role of the manufacturer and distributor to create more demand to train new people in becoming an installer? Higher wages? More certifications? The job itself is gaining more value because there is more demand than installers.

What are some of NAFCD’s initiatives for 2016?

Jaeckle: We want to continue growing our membership base. We have realized our strength comes from numbers and diversity.

We are also hoping to enhance some of our benefits to our members such as the private analysis report. That is a voluntary report where distributors submit financial data such as sales percentage per category, how many SKUs, etc. We want to get more flooring specific, things like sample expense. We would also like to have more flooring-specific education at our next convention.

We are looking at instituting a program for our members to get discounts on various services to add value. Examples would be ADP, Ferrell gas, Grainger, fuel cards, transportation logistics. We also want to develop a strong pipeline of people who can serve in this organization. We have to get people engaged. We want to know we have a list of people who actively want to serve.

Mandell: We also want to diversify the board, especially our manufacturer board members in terms of the products they sell. Also more geographic and size diversification. We are not always looking for mid to large distributors; we also want to get the perspectives of smaller distributors so we can understand everyone’s challenges.

What has been the reaction to this event?

Jaeckle: We have received positive feedback. The membership is energized. They love the schedule, speakers and roundtable discussions. The most consistent message is they love the energy from the networking opportunities. This is the only event that offers that opportunity; Surfaces is too big.

[In terms of what we can do differently] people want to see more levity and fun. The membership breakfast is an important function of the organization; maybe we can do some things to liven it up and make this event more engaging. We can keep the formalities but make it more interactive.