With the industry’s top-tier distributors (Belknap-Haines, Tri-West and Galleher) growing organically and through acquisition—gobbling up regions and states in the process—could the stage be set for the emergence of a bonafide national flooring distributor?
If successful, it would mark the first time a true flooring distributor stuck the landing. Flooring historians will recall that former heavyweights L.D. Brinkman and Hoboken Floors both made attempts at going national but ultimately failed.
At its peak in the late 1990s, Brinkman operated in the Southwest, Southeast and West Coast—38 states in all—and generated annual revenue of $400 million. By 2003, however, it had filed for Chapter 11 and was never the same.
Hoboken Floors had a similar meteoric rise—and fate. Former employees claimed Hoboken grew too fast in an ambitious effort to become a national distributor. With sales of more than $550 million and 1,000 employees—and customers that included Home Depot and Lowe’s—Hoboken was at the top of the distribution world before unraveling. It went bankrupt in 2007.
Fifteen years later, there are still no national flooring distributors in the U.S., but that could change. “While there has never been a successful nationwide flooring distributor up to this point, the game is changing and, as a result, the likelihood there could be is certainly a possibility today,” said Jeff Striegel, president of Elias Wilf, an industry veteran of 40-plus years.
Striegel is not alone in that thinking. “We believe a national distribution model is possible given the advances in technology through e-commerce, supported by a network of local branches and distribution centers to meet the needs of flooring installers and contractors across the country,” said Ted Kozikowski, CEO of No. 3-ranked Galleher, which maintains a footprint that covers the Western and Southwestern regions of the country.
Kozikowski said such an undertaking would require a “high-touch” local branch organization across the country supported by strategically placed warehouse distribution centers. “This combination of national scale supported by e-commerce, proprietary products and local branches should offer customers the benefits of scale without losing the consultative aspect that is so important to our industry’s success.”
Scott Rozmus, president/CEO of FlorStar Sales, also makes the case for a national distributor. “As consolidation continues, it is a matter of time before you have one or more independent distribution firms that operate nationally,” he explained. “You already have this in places like Canada (GSO Shnier). While the Canadian and U.S. markets are different, there are sufficient parallels to suggest it is not a question of if but when in the U.S.”
Tri-West Ltd., Santa Fe Springs, Calif., is the No. 2 ranked flooring distributor with 2022 sales projected at $400 million. Its territory now encompasses more than one-third of the U.S., mostly on the West Coast but as far east as Colorado. Whether a company of this scale can make the leap nationally is open to debate, according to Dave White, Tri-West president.
“Other than the Shaws and Mohawks of the world, I don’t see a distributor having the resources to set up national distribution,” he told FCNews. “Bigger is not always better, and the product preferences still vary considerably between different parts of the country. I foresee larger regional distributors that have the scale and logistics to really be successful. I think there will be more consolidation with distribution, and smaller distributors will be purchased if they can’t compete at that level or have a good succession plan in place to continue growing in the future.”
Potential roadblocks
According to Striegel, the biggest impediment to national distribution historically has been the reluctance of major national brands to buy in. If they had embraced a national model, they simply would have gone direct and done it themselves.
“Typically, the distributor was aligned with one of the four sheet vinyl manufacturers (Armstrong, Mannington, Congoleum or Tarkett) and their other lines played off of this,” he said. “However, as the industry has changed with the rapid growth of both imports and LVT—along with the decline of sheet vinyl sales—this alignment has changed dramatically. The other significant change is that as the sheet vinyl category collapsed, we witnessed companies like Mannington and Tarkett evolve into entirely different companies with acquisitions into entirely new categories. The divesting of wood and laminate by Armstrong, along with the most recent Armstrong chapter 11, furthers this dynamic as well.”
Galleher’s Kozikowski believes a national distribution model can offer customers tremendous advantages in terms of volume discounts, inventory availability, delivery options and product selection. Asked whether Galleher could be a national distributor one day, he responded, “Anything is possible.”
