May 8/15, 2017: Volume 31, Issue 24
By Reginald Tucker
Carlsbad, Calif.—Starnet kicked off its 25th anniversary conference in a big way earlier this month, drawing a record number of members and manufacturer reps alike. The event also marked a key turning point in the evolution of the organization.
“We have more than 700 people here—that’s the most we’ve ever had,” said Jeanne Matson, president and CEO. “The mills and vendors are bringing more people than they used to. And our members are bringing more people, which is the byproduct of a good, strong economy.”
Not only are more people coming to Starnet, but the mix of attendee profiles is shifting. “We’re seeing more regional vice presidents here and more local people, which is really good because we’re getting the message down to the street on how critical the relationship is between the Starnet member and our vendor partners,” said Leah Ledoux, director of strategic accounts.
Indeed, Starnet members have evolved over time, right along with the overall industry. Matson, who has been with Starnet for 10 years, said the group has seen a lot of change over the past quarter century. “I think we are more sophisticated as a group, and the members are doing their businesses in a more technology-based way than they did in the past. The challenges with evolving flooring materials and what that means in terms of installation is changing and causing them to be smarter.”
At the same time, the more things change some lingering issues remain. “Labor continues to be an issue—the members can’t seem to find enough good installers,” Matson said. “But that’s one of the areas where Starnet can really provide assistance.”
For instance, Starnet strives to help members connect with one another. This is not only for the purpose of networking but also problem solving. Matson cited an example where one member, Jeff Lasher (The Rouse Co.), was able to help another member who had an issue with wood and humidity.
Starnet is also working to better serve its members by developing strong educational programs. Members got a glimpse of that objective via the sessions offered at the conference. “We really try to gear the education to some of the issues such as resolving family leadership issues, profitability issues and running a business, because a lot of our members started out on the installation side,” Matson said. “These seminars help them focus on the day-to-day business issues.”
Starnet’s work doesn’t end there. The group’s leadership also works closely with vendors to ensure success for suppliers and contractor members alike. (The price of admission in the group is at least $5 million as members are expected to meet a certain purchasing threshold.) “Our vendor partners are important to us,” Matson said. “We work hard to make sure they are getting value from this group, so there’s more of an emphasis on partnerships.”
While the market shift to hard surface hasn’t necessarily changed Starnet’s vendor lineup, it has changed its purchasing strategies. As Matson explained: “The carpet tile sector was up slightly last year, but broadloom was down. Hard surface continues to be strong, especially ceramic. Many members were not in ceramic 10 years ago, and a lot more are doing it now. LVT is strong as well. End users are demanding one-stop shopping.”
Equally important is the focus on programs, especially as it pertains to cleaning and maintenance, and strategic accounts. “We now have 40 companies in cleaning and maintenance,” Ledoux said. That’s up significantly from 10 years ago. “We have a national network so we can do national accounts now. It’s a profitable business for our members.”
Having the ability to do turnkey services and installation and then floor care, Ledoux said, gets Starnet members “in the door. We have 100 points where we can service the customer. A lot of clients don’t want to have subcontractors come in who don’t work for them. With our members we have the ability to do that in terms of both installation and floor care. It’s a strong point with end users.”
Key drivers
Starnet leadership cited several key end-use sectors that are driving the business. Healthcare continues to top the list, especially on the assisted-living side. Meanwhile, education has stayed pretty strong. Hospitality, which entails a lot of direct selling, has also grown; corporate has been pretty solid.
“We try to drive specifications through our vendor partners in corporate applications,” Ledoux explained. (Members collectively generate more than $3 billion in sales.) “That’s been a consistent segment for us.”
Many contractor members are reaping the rewards. “We’re in the fortunate position that we’ve had to turn down work,” said Randy Rubenstein, president of the Seattle-based contracting firm that bears his name. “We have more jobs than we can handle. Corporate clients are hiring; Amazon brought in all these workers to the city, and as a result multi-family construction is up. We’ve been getting a lot of that work.”
In keeping with the overall market shift to hard surfaces, Rubenstein’s mix is changing accordingly. “We do a lot of work with terrazzo and LVT,” he said. “In many other commodity categories we find we just compete with our vendors. There’s better margin in terrazzo; it’s just the material and epoxy and we do it on the job site. It has been very profitable for us.”
Mill partners are prospering as well. “Our first quarter was up by single digits, and multifamily is strong,” said Russell Grizzle, president and CEO, Mannington Mills. “The shift from soft surface to hard surface is just unbelievable.”