September 16/23, 2019: Volume 35, Issue 7
By Steven Feldman
I recently spent three days with some of my favorite people—the National Floorcovering Alliance members and its suppliers. Really good people, great businesspeople. Keep your mouth shut and your ears open and you may learn a thing or two.
During the group’s closed-door meeting, where the members share best practices and business conditions, it was revealed to me after the fact that, on average, members are flat to slightly up after the first eight months of the year. It’s a little concerning in that NFA members, given their vast resources and buying power as a group, traditionally show greater increases. If NFA members are flat, the industry has to be down.
There are a number of reasons contributing to this. For some, like Deb DeGraaf of DeGraaf Interiors in Grand Rapids, Mich., weather played a key role earlier in the year. When your governor is telling people to stay indoors because of frigid temperatures, they are not going to be out buying flooring.
One of the biggest culprits is the changing product mix. Today, it’s all waterproof all the time. That’s what people are buying, which is nice except for the fact that retailers tend to make more money on a carpet or wood job than they might on a rigid core installation.
I was talking to Michael Longwill of Airbase Carpet Mart about this phenomenon. Waterproof is spreading like wildfire. My thoughts? I don’t think anyone really wants to buy carpet or vinyl or laminate or tile or wood. Those are products; I believe people gravitate toward attributes. Waterproof is an attribute. Stain-proof is an attribute. Comfort is an attribute. Soft is an attribute. Those are solution-providing words. Do you know what would happen if we changed the word waterproof to rigid core at the consumer level? You don’t want to know. Maybe we should change the word hardwood to “home- value-enhancing flooring.” Kidding.
Another factor impacting retail flooring sales in 2019 is something few people talk about today—something I broached more than 15 years ago, a few years prior to the Great Recession. Back then hard- wood and ceramic tile were all the rave. The economy was good and people were investing in their homes. Real estate prices were through the roof, and for many housing was so exorbitant that owners were investing in their existing homes rather than move.
It was a Catch 22. On one hand, retailers were making good money selling hardwood flooring and ceramic tile—maybe a little high-end carpet as well. But here’s the thing: The replacement cycle for carpet is supposedly seven to 10 years. Do you know anyone who ever replaces a hardwood floor or ceramic tile floor? I don’t. Well, I do; when someone moves into a new house. Maybe. But they surely are not replacing the floor they installed 15 years ago. If they would have bought carpet instead of wood, they would have been back in your store by now. Now you’re hoping to sell their kids, friends or possibly another room in their home.
Then there’s Floor & Décor. We don’t talk about this disrupter enough. Look at its sales volume. You don’t think a lot of that is coming out of your hide? They’re as much a threat as Home Depot, Lowe’s and Empire ever posed.
But possibly the biggest culprit impacting today’s sluggish flooring sales is the media. For whatever reason (I’ll keep my theories to myself), they want to scare people into thinking another recession is right around the corner if not here already. Doom and gloom. Lower people’s confidence. Doesn’t matter if unemployment is at historically low levels. Doesn’t matter that the stock market remains near all-time highs. Doesn’t matter that the economy is good. Doesn’t matter that people have disposable income. Yes, housing is off. And yes, we’ll go into a recession at some point because those things are cyclical in nature and we are due. But the top economists know it will be brief and won’t be bad. That’s bad news for the media, which would love nothing more than a recession—real or fabricated—to last, I don’t know, for about 14 months?
The economy is good. Do what you do best, drive people into your stores, increase your closing rates and you’ll be fine.