Flooring retailers are gearing up for a new calendar year in much the same manner as they did a year ago: with some trepidation about the economy but ready to seize opportunities wherever they may arise.
That approach served dealers well in 2023 as they adroitly navigated around and through an obstacle course of inflation, high interest rates and slowing retail traffic to win by focusing on higher-end goods and growth segments, including commercial.
Whether they can do it again remains to be seen. Each year is different, with its own set of variables. The main difference in 2024, of course, is this is a presidential election year. How that shakes out is open for debate. Some flooring retailers say presidential election years restrict buying while others disagree, arguing that because only a handful of swing states are in play, it should be business as usual for the most part.
Most retailers concur with Rick Ogle, CEO of Brewer Flooring Group, Oklahoma City, who said he would gladly take 2023’s results in 2024. “My everlasting hope is that rates come down a little bit and everybody will be riding high again,” Ogle said.
The specter of persistently high interest rates hangs over the heads of many flooring leaders, skewing their outlook to some extent. As Jon Dauenhauer, co-owner of Carpet World in Bismarck, N.D., explained, “I’m concerned about the impact interest rates will have on new construction business. We have seen a strong downturn in spec homes being built but are pleasantly surprised with custom builds. We do remain optimistic that home remodels and flooring updates will be strong. We feel if the consumer is not building new, they will spend money to make their current home more comfortable.”
To that point, a just-released Federal Reserve Bank of New York survey found that American homeowners are increasingly reluctant to move, due largely to an unwillingness to trade an existing lower mortgage rate for a higher one. According to the New York Fed, the odds of changing one’s primary residence over the next 12 months dropped in November to its lowest level in a decade.
Flooring retailers are aware of this trend; their hope is that homeowners who are staying put will invest in their space. “Since many people have decided to stay in their current home, I’m excited that our remodel projects for bathrooms will provide some nice custom projects for our team,” said Carlton Billingsley, owner of Floors and More, Benton, Ark., whose business has achieved record sales four years in a row. While Billingsley predicts the retail segment will slow in ’24, he added this caveat: “Our backlog for commercial is strong, so I expect to see those [robust] numbers stay the course.”
The economic uncertainty for 2024 is prompting some retailers to consider containing costs by pulling back on marketing and local advertising; however, others eschew the “prevent defense” approach and believe the best defense is a good offense. “We have continued to market ourselves and advertise as much as we always have,” said Ted Gregerson, president of Ted’s Floors & Beyond, Anniston, Ala., who is coming off double-digit gains in 2023. “We are convinced that with us continuing to increase our market share in the commercial segment—as well as continuing to look for ways to diversify—we will have another stellar year in 2024.”
Rather than pulling back, BFC Flooring & Design Centre, Edmonton, Alberta, Canada, is expanding beyond flooring—into cabinets, countertops, window coverings, wallpaper and drapery. “We are excited to see what opportunities this creates for the coming years,” said Rebecca Tonowski, general manager. “I believe diversifying will be the key going into the next few years of uncertainty around the economy.”
Another Canadian dealer, Raffi Sarmazian, co-owner of Sarmazian Brothers Flooring, Waterloo, Ontario, Canada, said he sees an improving economic climate as the year progresses, with inflation levels slowly returning to pre-pandemic levels. “I remain optimistic that the market will open up in the second half of 2024 once interest rates stabilize and start to decrease,” he said. “I believe there is a lot of pent-up demand, and consumers are waiting for some more confidence in the economy to purchase homes and spend money.”
For some, it’s about blocking out the noise and focusing on the things they can control. “We will continue to do our best to take care of our customers and separate ourselves from the competition,” said Paul Deschenes, manager, Schneider’s Flooring America, Vernon, Conn. “When the economy picks up, we’ll be ready.”
Ben Case, owner of The Carpet Collection in Lockport, N.Y., suggested “harder times” are ahead, yet remains confident of the future. “I plan to make a concerted effort to find more accounts with recurring business,” he said. “In the end, we will win.”
