January 2/9, 2017: Volume 31, Number 15
By Vinnie Virga
History, as we know has a habit of repeating itself, and that’s what’s happening again in the floor covering industry. Some or the larger vendors are aggressively raising their margins at the expense of small to medium sized retailers while providing strong competitive advantages to large dealers and national companies. This could have a negative impact on independent flooring retailers and one that should trigger a major rethinking of the path forward for flooring retailers all across America.
Let’s take a closer look at just a few of the current strategic moves by the largest mills:
Most of the larger vendors have aligned programs for their largest customers whereby they may receive special products, brands or programs, or at least a head start on other retailers. That could put a small- to medium-sized dealer at a competitive disadvantage.
One of the largest mills has entered into partnerships with large, national, Internet-only providers selling both hard and soft surface products, including installation.
One of the larger mills announced its intentions to remake itself as a marketing company, indicating that it is seeking to have a direct relationship with consumers.
In these examples, when vendors attempt to bypass the retailer to get the consumer (either directly or via Internet retailers) that could put you at a competitive disadvantage. That is what each and every independent retailer must realize and respond to.
As a proudly independent floor covering dealer, I will share my conclusions. Do they feel that we are obsolete? Some of our industry’s largest vendors may have forgotten that proper selling skills, estimating and installation truly make or break the long-term consumer relationship. These are hallmarks of the independent dealer.
Take the latest round of price increases. Was it out of necessity due to rising costs? Or was it a way to grab more margin? How much of the fuel savings have made it back to your pricing for freight or materials?
If you have come to the same conclusion as I, then the obvious question is what, if anything, can we do about it? Fortunately the answer is a lot.
Here are some suggestions:
First, support only those vendors that support you. In hard surface it’s easy to do. With local distribution usually doing a great job of fulfilling orders quickly and often having national alignments. Similarly, there are still great options in soft surfaces. Many specialty mills provide incredibly good-looking products, tremendous value and have much more limited distribution, which means more margin for you with less competition.
Align yourself with a company that wants independent flooring, cabinet and countertop dealers to not just survive but thrive in this ever-changing market we live in.
At Floors & More we don’t just manage a buying group; we also actually own and operate our own retail flooring and kitchen stores. We don’t work to understand your world as an independent dealer; we live it everyday.
Sitting by and letting others determine my future and our group’s future isn’t in my playbook; should it be in yours? Think carefully about what you just read, but act quickly. The future of your business may well depend on it.