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How the category leaders help retailers make money

January 22/29, 2018: Volume 33, Issue 16

By Lindsay Baillie

 

The flooring industry’s largest manufacturers are making significant efforts to provide multi-channel solutions for their respective aligned retailers. Both Mohawk and Shaw Floors are listening to retailers and consumers to uncover the best ways to support the independent flooring retailer via product innovation, merchandising, digital marketing and lead generation.

FCNews spoke with Seth Arnold, vice president of residential marketing, Mohawk, and Dan Crutchfield, director, Shaw Flooring Network, Shaw Floors, to uncover what both manufacturers are doing to help their aligned retailers succeed.

 

Product. “In particular with independent retailers, there has been a trend away from soft surface flooring. When we look at developing products in order to stop that trend we have to develop extraordinary features. Take products such as SmartStrand Silk Reserve, for example. If we take the main feature of the category—soft—and maximize it to astonishing levels while providing durability, we’re helping retailers command the highest possible margins even if they are not getting the same square footage.

“We also recently launched Air.o, a hypoallergenic alternative to carpet, which doubles the number of people who would consider soft flooring. This is a gold mine for retailers because when a consumer walks into a showroom she might have her heart set on soft flooring but then feel her only option is hard surface due to respiratory issues. When the retailer can turn that around it increases her likelihood of purchase and allows the retailer to command a trade-up margin.”

Merchandising. “We spent six months talking to consumers about how they shop for wood. We found consumers have very high standards for wood but get completely overwhelmed. Also, the consumer actually simplifies things by thinking of laminate and hardwood as one category. Our new laminate strategy is to merchandise it with a branded collection called RevWood and put it together with our hardwood products. What we’ve seen from consumers is you can provide greater choice with a simpler value proposition that speeds up the decision and allows retailers to make more money on every sale.”

Digital marketing and lead generation. “We’re currently developing digital merchandising lead-generation packages for all of our hero products.  Every retailer that has utilized these tools is coming back asking for more because they’re seeing higher traffic. They’re seeing better qualified leads and they’re driving sales. When you’re visible online and have good content, that is how you get good leads.”

Overall. “The No. 1 thing we’re doing to help ensure the success of all retailers is Omnify. There’s this growing younger demographic that has a bias toward digital. If an average retailer has 25 people walking through their physical front door, there are 1,000 people walking through their digital front door. It seems to me the most important thing Mohawk can do is help improve the close rate on the 1,000 who are looking digitally without giving up the 25 people who are walking through the physical door. I truly believe Mohawk is three to five years ahead of any other flooring brand when it comes to connecting the digital and physical strategy.”

 

Product and merchandising. “Private labels and exclusive product programs—including our most successful collection and display system—have been hallmarks of the Shaw Flooring Network since its inception. Even more important, we are committed to the future of our members with styles, trends and innovations that meet today’s consumer demands. We want to make sure we are designing products, collections and merchandising units that complement

the way consumers want to shop vs. the way our industry has traditionally wanted to sell. We are committed to researching consumer behaviors so we can help our members be successful in today’s marketplace.”

Digital marketing and lead generation. “The world of digital marketing changes rapidly. And, because it is an increasingly important part of the consumer’s purchase process, digital marketing can be a particular source of anxiety for a lot of retailers. The Shaw Flooring Network is committed to helping members, and we offer a complete suite of services. For social media support, we offer a world of content for Facebook, Twitter and Instagram through Promoboxx. We provide easy-to-build, professional flooring websites—complete with product catalogs—and support through Shaw Web Studio. In addition, we help retailers garner positive reviews and maintain their digital reputations through Share It Forward. As digital marketing trends evolve—and they will—we will continue to work with great service providers and internal professionals to offer new and enhanced digital marketing tools and expertise.”

Overall. “Shaw has conducted an extensive amount of proprietary consumer research over the last 12 months. Plus, the company is investing time with key retailers to better understand their challenges, needs and opportunities—and how Shaw can formulate a stronger partnership in helping them achieve success as they define it. Using what we are learning from both the consumer research and our customers, we’re continuing to evaluate our findings to offer meaningful solutions that benefit our valued retail partners. Shaw Flooring Network aligned retailers have already been exposed to some of this data, but that’s only the tip of the iceberg. We’re listening to consumers and learning their motivators and drivers more than we ever have so we can develop strategies around eliminating their headaches. By acknowledging any potential issues head on, we hope to assist our valued retail partners with combatting abandonment and other common concerns that could lead to the loss of a sale, making them savvier to consumer needs and expectations.”

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Randy Merritt reflects on four decades in the flooring industry

January 8/15, 2018: Volume 33, Issue 15

 

Randy Merritt officially retired as president of Shaw Industries on Dec. 31, 2017, after 40 years in the flooring industry, all for one company. He built a reputation based on honesty and integrity. A gentleman in every sense of the word. As humble as a man can be. FCNews publisher Steven Feldman for months was trying to convince Merritt to reflect on these past four decades with a front porch, rocking chair view. While it went against his humble nature, he finally agreed to sit down in December, the text of which follows.

The road to Dalton
The reason I was in Dalton was a guy named Bryce Holt. Bryce was the father of my college (NC State) roommate’s wife. Bryce is also the father of David Holt from Mohawk, who I’ve known since he was probably 14 years old. So, I got to know the Holt family very well in my college years.

When I realized I wasn’t getting into med school, I needed to find a real job. I’d always admired Bryce and his success, although I didn’t know much about what he did. I called him up and said, “Mr. Holt, you know I’m just looking to find a job working for a good company.” He asked, “What do you want to do?” I said, “I don’t really care. I just want to work for a good company where there’s an opportunity.” And he said, “I think I know the place.”

I had never heard of Shaw Industries, and of course it wasn’t Shaw Industries then. It was Star Finishing. It was the biggest thing I ever heard of. It was a $100 million company—1976 was the first year Shaw broke $100 million. And to be honest with you I wasn’t even sure how many zeros were in a million. As a college student you didn’t think of things in millions—hardly in thousands.

Hello, Dalton
When I got to Dalton, I thought, man, this is a small town. We didn’t have the Internet back then, so I didn’t really have a way to do any research on Dalton, Ga. I knew nothing about how big it was and didn’t know the carpet industry. The first week I remember someone mentioning the term “tufting machinery” and I had to go to a dictionary to find out what that meant.

I grew up in a very small town, a manufacturing-driven town very much like Dalton. It’s kind of interesting actually as Lexington, N.C., was right there in the central part of Piedmont, which was the furniture capital of the 
world, with High Point, Thomasville, Lexington. And
there were a lot of similarities
in the towns. The furniture 
industry was made up originally of a lot of tiny furniture companies. Most of my high school
 friends’ families had something to
do with the furniture industry. A
lot of them became very wealthy
 because the same consolidation
that ultimately happened in carpet happened in furniture. And the Burlingtons and Mascos came in and bought up the small family furniture companies. But that’s where the history of Dalton and Lexington went in opposite directions because in the furniture business they began immediately moving all the manufacturing to Vietnam, Malaysia and Asia, and the carpet manufacturing always stayed right here in Dalton. And Dalton has continued to prosper and grow, and Lexington is a ghost town of empty buildings that used to be manufacturing facilities.

David Wilkerson
I started May 10, David started Aug. 23. Two weeks after I met David he asked if I wanted to come live with him and a guy named Greg Wheat, another trainee. Greg’s parents had a farmhouse down Houston Valley Road. I said, “That would be awesome,” because I was living in a little one bedroom apartment with rented furniture and nobody to talk to.

I later bought a house and David moved in with my brother and me. They lived with me right up until I got married. In fact, David was building a house that was supposed to be finished by the time I came home from my honeymoon, but wasn’t. He and my brother actually lived with Sharon and me for two weeks after we got married. We lived in this tiny house, and I came home one day and Sharon is sit- ting at the kitchen table just crying her eyes out and said, “They have to go.” So we were roommates probably two weeks longer than we should have been. I introduced David to his wife, Becky, and they have been great friends of ours for 42 years. Our kids grew up together. We went on vacations together. He’s still one of my very best friends.

Vance Bell
Vance Bell was one of the first people I met—truly the first week I was here. Vance was one of four salespeople. All our customers were located in Dalton because we were making carpet for other manufacturers. Back then they didn’t sell carpet by the square yard; they sold it by the truckload of a color. You had Vance, Jim Morris, Doug Squillario and Bill McDaniel. Bill and Jim have passed away. Doug is still alive but has been retired for a long time.

We were close to the same age. Probably the first two years I just knew him as a salesperson. I was trying to learn about the industry so when I got a chance I would ask him questions. When Sharon and I got married in 1979 we bought a house downtown and ended up being almost next-door neighbors to Vance and his wife. Our wives became good friends, and Vance and I became better friends. Vance and I have literally worked together for our entire careers here.

Vance has always been very strategic looking at business. And the trait I’ve valued most about Vance—and this was so valuable to us when he became the CEO in 2006 and I became the president, right at the beginning of the Great Recession—was he is so calm and steady. He doesn’t get real excited and he doesn’t get real depressed. During those very challenging years he said we are going to have to do some tough things, make some tough decisions. But the one thing we weren’t going to do is let our customers feel our pain. And that was a kind of a mantra for us—that we would do whatever we needed to better prepare ourselves for the future. Vance is a very steady hand and I’m more emotional. If I’m ticked off you’re going to know it. I wear my emotions on my sleeve. We made a good team in that regard.

From product development to sales
I was in product development, which is where all the trainees started. Back then we didn’t have a formal training program. We started in product development and would work in a dye facility and then a coating plant and then a yarn mill. One day Bob [Shaw] called me and said, “I need you to go see one of our biggest customers.” One of our first acquisitions was Magee Carpets, and the biggest distributor Magee had was Carson Pirie Scott. Carson at the time was a big distributor throughout the Midwest with
one location in Florida. So I went to Chicago to see Dean
 McKinney, Roger Hunt and
 Jimmy McDonell. The problem was Shaw Industries was growing, Magee Carpets was growing, Carson Pirie Scott was growing. But we weren’t growing together.

Back then you had more mills than you could count on all your hands and toes, and a distributor like Carson was buying from World, Galaxy, Salem, Horizon, Trend, you name it. They had lots of choices, so I just went in and said, “My mission here is one thing: We’re growing, you’re growing. Why aren’t we growing together?”

They looked at me and said, “Randy, we don’t know. We love Shaw. You make beautiful products; your salesmen are here at least once or twice a month. We don’t know why we’re not growing together. We have 13 branches around the country. Are you calling on them? Because we put all these products in our showroom and then those branch managers come in and they pick the products they think will sell in their market, and that’s what they inventory.” I said, “Maybe we’re not calling on them.” So I went home, met with Bob and said, “I think the problem is we’re not really calling on the right people.” About a week goes by and he calls me up and says, “You really think that would make a difference?” I thought it would. So Bob said, “Okay, starting Monday they’re your account.” I was now in sales and reporting to Vance.

I got out a map and plotted where these Carson locations were and decided I wasn’t going back to the main office in Chicago until I went to see all those locations. I still remember the people who ran those branches to this day: Buzz Grows in Chicago, Tom Mielcarek in Milwaukee, Joe Boisvert for Minneapolis, Don Penrod in Columbus, Dan Kaufman in Cincinnati, Harvey Johnson in Florida, Frank Hemmer in Cleveland. Sure enough we hadn’t been calling on them. So I started working on that relationship and trying to figure out what we could do to differentiate ourselves from all these other mills they were buying from. When I started we maybe did $7 million with Carson and within a couple of years we were doing $50 million.

What I learned there, and I still tell our trainees today, it’s great to know the owner of the business. It’s great to know the buyer for the business but you better pay attention to the people who are actually selling your product because they’re the ones who can help or hurt you.

Transition from soft to hard
It was not really difficult for me to transition from carpet to hard surface because once you accept the fact it’s all flooring and our mission here is to provide the right kind of floors. It goes back to what Mr. Buffett said was one of the reasons he was attracted to Shaw—every building he’s ever seen has a floor. So our job is to simply figure out what the consumer wants on her floor and give it to her.

The early customers
One of the first customers I
remember meeting is Larry 
Nagle. He was a great customer, a tough buyer and
bought a lot of product from
Shaw Industries. I remember Marv Berlin from New York Carpet World and Duke Goldberg from Rite Rug. Back then it was Mr. Berlin and Mr. Goldberg. They were huge. For most of my career I was just watching as other people dealt with them. I remember Miles McComas of Carpetland in Baltimore. And what I remember about Miles was that he was a true gentleman. Here was a guy who ran a big business and could be a gentleman doing it. Another guy I remember like that is Ron McSwain. He was such a classy guy. And I admire the way he ran his company and the way treated his people. And I think with his son, Jason McSwain, the apple doesn’t fall far from the tree.

I remember Michael Goldberg when he was a young whippersnapper and trying to be like his dad. And I think what’s made Rite Rug successful is Michael has been willing to do things differently than the way Duke did it. And he’s had to change. It’s a different world today. Duke would come into the Chicago showroom and buy 50 truckloads of carpet. That just doesn’t happen anymore. You know Michael will buy way more than 50 truckloads; he just doesn’t buy them all at one time.

I remember Rick Meyer and Jerry Rosenberg. I have great respect for the Blumkins at Nebraska Furniture Mart. Another one of my favorite people is Levon Ezell of L.D. Brinkman. He was just a worldclass guy. Dean McKinney was a world-class guy. Harvey Johnson is a world-class guy. Of course the challenge is that when I start naming people, I’m of course going to leave someone out unintentionally. I’ve met so many wonderful people in this industry, it’s impossible to name everyone.

While I remember those guys, I’m really excited about some of the young people I see in our industry, bright young minds. The Boyajian brothers at A.J. Rose in Boston. The Akin brothers of Akin Carpet One in Oklahoma. Dan Mandel in Southern California. Matt and Ryan Bechtel of Contract Furnishings Mart in Portland. Eric Langan of Carpetland in Illinois. Sisters Dana Chirico and Lauren Voit of Great Western in Chicago. All just really bright, creative people who are passionate about the flooring industry. They have all stepped into their family businesses and have successfully grown and moved their respective businesses forward.

The toughest negotiators
Sandy Mishkin and Alan Greenberg at Carpet One. Marv Berlin at New York Carpet World. He was tough. Michael Goldberg is tough. Olga Robertson is tough but fair. One of the toughest was Allen Stein. I’d see Allen and Mishkin argue over a nickel for three days.

I think one of the things people are beginning to understand is that fighting about the nickels you pay for something isn’t as important as solving how we can sell it for a dollar more. We should be asking ourselves how do we work together to sell products for more money? How do we trade consumers up instead of trading consumers down? Buying is still extremely important, but how we work together to sell for more and to create better, more innovative products are what’s really important. The whole LVT category is a great example of where we’ve learned to sell products for more and together we have made a greater profit. How do we continue innovating and giving consumers a better, more stylish product, all while making more money?

St. Jude
Our partnership with St. Jude Children’s 
Research Hospital started in 2012, and until
 then I didn’t know any more about St. Jude
than you do. My children were healthy. But
 Shaw was looking for a nationally recognized 
philanthropic effort that we could support 
and our customers could relate to. The one that kept rising to the top of the list was St. 
Jude, which was great for me because it fit right in with my passion for children.

I’ve always had a soft spot in my heart for children. You saw it from our conventions, from the day we started a show for our network that was about the families. And I’m really proud that some of those first children at the Shaw Flooring Network conventions are today working in their family businesses and selling Shaw products. I’ve also worked for years with our Boys and Girls Club here in Dalton. I spent years on the Big Brothers/Big Sisters board of directors.

So when we had the opportunity to develop a partnership with St. Jude it was a perfect fit for me personally. I took a special interest in it from the first trip I made out there. It’s a life-changing experience. You see all those children and what they’re going through and what their families are going through. And you realize what St. Jude does for those families and for children all over the world who are diagnosed with these horrible diseases.

But the point I make about St. Jude is while it’s a good thing to do and it makes you feel great supporting them, it’s also good for business because we’ve been able to leverage that relationship with customers by saying, “You can support St. Jude too by supporting these products and we will give a portion of whatever you buy back to St. Jude on your behalf.” And since 2012, we’ve given just under $8 million back to St. Jude. We’ve built a good partnership that our customers heavily support and believe in, and I think there are plenty of people at Shaw who are passionate about that goal and will carry it on for a long time.

Miss the most
Easy answer. All the people here at Shaw and all the customers. I did not stay at Shaw for 42 years because it was a $5 billion company. I did not stay at Shaw all these years because I had a big job. I didn’t stay at Shaw for any other reason than I love the people I’ve worked with and the customers we worked with. It’s a great industry. People have given way more to me than I’ve given to them.

The constants
The constant is caring, passionate people who work hard to do those things we’ve talked about, who pay attention to the customer, who listen to what the customer wants. When Vance was first selling he would go to his mill customers and say, “This is what we can make. What color do you want to buy?” Today it’s, “What do you want” and we have to figure out how to provide that, whether it’s color or style, texture, or flooring type. There are so many choices today. We have to give customers what they want. The thing I’ve always felt about the flooring industry is there are good quality people who care about making lives better, people who care about making your home happier and something you’re proud of. They care about making your office building more functional and more pleasing. Our goal is to make the spaces where people work and live more beautiful.

Customer evolution
When I started, most
of our business was selling to other manufacturers and those manufacturers were selling primarily through distributors. When we started selling directly to retailers, the largest retailer in America was Sears. Sears used to stock every SKU they showed on their floor in a giant warehouse. Imagine dealing with the style variation and all the things we have today and then trying to stock every SKU. In fact, Shaw Industries is the one that convinced Sears to just show and sell the product and let us service it for them. Other large flooring customers during that time were department stores Macy’s, Rich’s and Kaufmann’s. Today those stores either don’t exist or aren’t where consumers go to shop for flooring.

Advice
I’ve had literally hundreds if not thousands of trainees come through Shaw Industries and sit in front of me, and the first question is always the same: “What kind of advice would you give me?” I tell them it’s not rocket science. It’s things most of us have been taught since we were little. And I think the most important piece of advice I can give is the Golden Rule. My mother told me very young to treat people the way you expect to be treated and 
things will be fine. So throughout
 my career, whether I’m someone’s
guest or trying to figure out how to
 do business, I try to treat people
the way I want to be treated. For a salesperson that’s the key to selling. Treat people the way you want to be treated. Here in Dalton I want to eat at a place where the people treat me the way I want to be treated. I don’t care if it’s the best food in town.

In today’s world product is the price of entry. Everybody has to have good product. The difference is the way you’re treated, the way you’re serviced, the way people take care of you. The best salespeople, when they’re talking to you, you’re the most important person in the world to them at that moment.

Ch ch changes
The entire world has changed more in
the last five years than it had in the previous 20. Technology, the speed that
 things happen, is amazing. You’re sitting here with two smart devices and a computer—20 years ago you would have been writing in shorthand. The world is faster and it’s going to change more in the next five years. I think it took something like 30 years for radio to reach 50 million or 100 million users. It took half that time for television to reach that many users. It took four years for the Internet to reach that many users. And today there are millions and millions of searches per minute. Information flows so much faster and consumers expect things faster.

What’s next
Consulting? I would never say never but I don’t see that happening. I wouldn’t do anything that would hurt or compete with Shaw Industries. If there’s a way I could share some of my knowledge and help one of my good retailer friends, maybe. If I could do some training about leadership for someone, maybe. I don’t have any plans right now. I just plan to be a granddaddy. I plan to continue helping children in some way.

The one thing I will do is keep reading Floor Covering News and keep up with the industry. I told Vance my next role for Shaw is cheerleader, booster club, whatever I can do to help. And I have Vance’s cell phone number; if I see something I don’t like I won’t hesitate to pick up the phone and call.

 

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What keeps top executives awake in 2018?

January 8/15, 2018: Volume 33, Issue 15

By Ken Ryan

 

There is no rest for the wicked or—it would seem—for the flooring executive with so much to consider: How the next big launch will fare in the market? How to keep your talented staff engaged and motivated? How best to navigate the digital landscape? Indeed, the daily grind can be daunting, especially when the decisions you render can have such great consequences.

Larry Browder
chief sales and marketing officer, Karndean
“Making sure we continue to have a forward-thinking, aggressive strategy that continues to keep us ahead of our competition.”

Jeff Fenwick
president/COO, Tarkett
“Keeping our employees engaged and energized, especially in the environment we live in today where there is so much white noise. It’s tough to keep people focused and engaged in this kind of world. For us we’re really disciplined about measuring our employee engagement and making sure our folks have a voice.”

Paul Murfin
president, Mohawk resilient
“As evolving as the category is, it’s [about] staying in front of the curve so we continue to keep our product line relevant in the marketplace.”

Don Maier
CEO, Armstrong Flooring
“My biggest concern is also our greatest asset—our people. I believe deeply that it all begins with talent. To support our growth, Armstrong Flooring needs to attract, develop and retain the highest level of talent in each and every position. I tell my team all the time I do not just want to have a winning season; I want to win the Super Bowl. To do this, we do not just need a great team, we need the best team. I see the most important part of my job is to ensure we win this war for talent.”

T.M. Nuckols
president, Dixie Residential
“With the growth in hard surfaces, I am concerned with the replacement cycle of flooring in the future. Consumers will replace their flooring less frequently than they have in the past, which presents volume and profitability dilemmas for the entire value chain.”

Piet Dossche
CEO, USFloors
“How can I continue to lead and educate our industry to not fall into the trap of commoditization and price erosion of this exciting new product category: Composite Core Waterproof Flooring?”

Chris O’Connor
president/COO, Congoleum
The industry is changing at an unprecedented pace. Our continued success lies in our ability to stay ahead of the competition by not only understanding the needs of the market but also by leveraging our nimble size to respond to those needs faster and more completely than anyone else.

Michael Raskin
CEO, Raskin Industries
“Executing all of the ideas that I have and choosing which ones to go with. No matter who you are, everyone is spread very thin today; the market is moving fast and the economy is good, and I think it’s making sure everyone is following up and taking care of your customers’ needs.”

Don Finkell
president/CEO, American OEM
“The big question is the impact of tax cuts and a reduced regulatory environment on the housing market. The risk is Congress might not be able to get all of these things passed—along with a disappointed stock market. But I am optimistic that the strength of the economy and the pent-up demand for housing will overcome the dysfunction in our political system.”

Drew Hash
VP, hard surface product portfolio, Shaw Floors
“In laminate, the broad range of products available within the market can create misconceptions for this product category, making it increasingly important for manufacturers and flooring retailers to be able to effectively communicate the benefits and attributes of each product line.”

Brad Williams
VP, sales and marketing, Boa-Franc (Mirage)
“While politics dominated  2016, weather led the way [in 2017] with the most active hurricane season since 2005. This major flooding coupled with heat and dryness on the West Coast fueled some of the largest fires we have seen. These catastrophes will lead to new construction and renovation. seems to put things on hold in the short term.”

Derek Welbourn
CEO, Inhaus
“Competition is often the most challenging; however, in the bigger picture I think it helps keep everyone focused and ultimately results in creating better products and service. This helps the categories overall and results in more business for everyone. With new product developments, there is more competition across product categories than ever before.”

Wade Bondrowski
director, U.S. sales, Mercier Wood Flooring
“Our challenges come from quantifying what is a hardwood floor vs. imported stained plywood or cheap rotary peeled products, along with the pricing pressures they bring. The others are the wood knock-offs—LVT, WPC, ceramic, etc. All have wood lookalikes that are good in styling and design with a lower price. But I wonder why our industry is so concerned with going to the basement and trading dollar down. per square foot.”

Paul Rezuke
director of sales, U.S., Wickham Hardwood Flooring
“The market remains strong and most economists believe that barring any unforeseen issues things look solid right through 2019. What concerns me is the uncertainty regarding potential trade regulatory restraints.”

Bob Baldocchi
chief marketing officer/VP business development, Emser
“We have 70-plus locations and five different segments that have their own sets of challenges. I wish I could point to one thing; there is still a lot of business out there to be captured even with the labor shortage.”

Darrell Locke
VP, residential sales, Lexmark Carpet
“Industry consolidation. As the industry continues to narrow, consumers and retailers will continue to feel the pinch with limited suppliers and less fashionable selections. Consumers will be forced to settle.”

John Turner Jr.
president, Dal-Tile
“The changing environment in retail. With the emergence of Floor and Décor or Tile Shop, and with Lowe’s and Home Depot competing with those models, it’s going to create stress on flooring retailers. Those who invest in well-trained RSAs … will win.”

 

 

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Executive forecast: Industry leaders look forward to robust year ahead

November 27-December 11, 2017: Volume 32, Issue 13

By Ken Ryan

 

Words like “sluggish” and “tepid” to describe growth in the flooring industry are being replaced by “healthy” and “sustainable” as some of flooring’s top executives see an industry that is now accelerating to a respectable cruising speed as we approach 2018. The catalyst driving this momentum is winning products—the still-booming LVT market and across-the-board innovations in other segments.

We expect 2018 will be even better than 2017. Continued GDP expansion, employment growth and rising wages will drive consumer spending. Residential new construction and refurbishment growth is responding to demographics, and lack of housing inventory with mixed use development continues to shine. After a lackluster 2017, commercial should be stronger in 2018 with rising business confidence.

The big unknown for 2018 could be corporate and individual tax reform. This could be an accelerator for all of the above.

In terms of the biggest challenge facing the industry—short and long term—it is adequate supply of qualified installation. Manufacturers are responding with easier-to-install flooring, but attracting and retaining qualified installers must be dealt with on a local basis. In general, the greatest opportunities are for manufacturers to truly understand consumer and end-user needs and requirements, which result in innovations with real solutions. Also, manufacturers need to transparently provide information and tools for consumers to make better flooring decisions.

We continue to invest and spend capital at record rates, [dedicating resources to] new businesses, new manufacturing platforms and new technology. We will continue to expand our revolutionary StrataWorx carpet tile platform with new looks and new installation methods. We are also investing heavily in our key brands with the rollout of the new Anderson Tuftex brand, a new consumer campaign on COREtec and exciting soft and hard surface introductions from Shaw Floors.

As an industry, we must be diligent about changing consumer purchasing habits—the move to digital, her desire for transparency and ease of transaction, and the reputation and integrity of our products. If we acknowledge and understand the consumer, and offer products, services and selling environments that relate, we will continue to prosper.

 

The variables that tend to drive the success of our business—employment and income, the equity markets, inflation, consumer confidence—are in a good place.  Flooring is a discretionary purchase; therefore, [consumer] confidence is important. If you look overall at the market there are a lot of things that are favorable for the consumer. The GDP is now tripping above 3%, so all things collectively are positive for the floor covering business.

What’s driving it? Never has there been more innovation nor excitement than we see today. Every category is being impacted by true product innovation. We think that is weighing in on stimulating the consumer to come into the category. Air.o is just one example of an innovation that is driving industry growth. To be successful innovation has to be understandable—it has to be executable on the retail end, and it has to be promoted.

Our biggest challenge as an industry is standing out in front of a very inundated consumer. Of all the things that keep me up at night it is that flooring [must] stay top of mind. Are we, as manufacturers, doing everything we can to make the product exciting? Are we adding value and making it relevant at a time when that consumer is about to part with $1,000 to $3,000? Are we continuing to excite consumers? (And that starts with first exciting our retail partners.) The charge of the industry is how do we stand out in front with the most innovative products—not just vis-à-vis flooring but vis-à-vis other big-ticket products like electronics or refrigerators with Internet capability.

As a company, we are going to continue to refine and improve our execution in digital marketing and consumer lead generation in conjunction with our retail partners. Most consumers are starting out in the digital universe in their journey. Mohawk wants to be front and center in that process so our retail partners win in that selection process.

Our whole business culture is built on product innovations that are brought to market with exciting stories and opportunities for our retail partners to upsell their customers. As for big initiatives for 2018, you’ll just have to stay tuned for January.

 

Across the industry, we expect to see a continuation of the measured growth we’ve seen this year, with ongoing migration to hard surface flooring and continued robust growth in the LVT/rigid core category. At Armstrong Flooring we are well positioned to capitalize on the market surge in LVT with the recent increase in our domestic LVT production capacity and leading the way with the introduction of revolutionary new products such as our Diamond 10 Technology, rigid core and exclusive Pryzm LVT flooring.

There are tremendous opportunities out there. As one example, we recently repurposed part of our Stillwater, Okla., resilient sheet plant to produce LVT. This increases our domestic LVT production and leads to better capacity utilization for our sheet business.

Ongoing challenges within the industry include recruiting experienced installers and retail associates to help educate the consumer/end users on their purchase decisions.

As our economy heats up, likely increases in raw materials, energy, transportation and operating costs would likely need to be covered with increased pricing. Additionally, the industry is dealing with overcapacity in some product categories.

Our strategy in 2018 is to improve our mix of sales to higher-growth products like LVT and rigid core, while maintaining strong competitive positions in our legacy categories. At Armstrong Flooring, we’re focused on innovation—not just in products themselves—but in the way we do business. Our marketing campaign, “The Floor Is Yours,” goes beyond illustrating the design and performance of our floors and enables us to tell stories that really connect with consumers. We recently launched a new website to inspire homeowners and guide them through the purchase journey, and we will continue to collaborate with our distributor partners and aligned retailers to ensure we are delivering not only exceptional products but also an exceptional experience for our customers.

One initiative in 2018 is our retailer-centric program, Elevate, which helps independent specialty retailers grow their businesses. Elevate offers resources to drive store traffic, maximize the in-store experience and enhance sell-through via an aligned connection with Armstrong Flooring. We will continue to expand that program in 2018.

 

Overall, we anticipate the industry in general—and Mannington specifically—will continue to see good growth in the residential market. We expect to experience a similar pace as we’ve seen over the past 18-24 months: Roughly a 10% increase in single-family starts and a 4%-5% increase in remodeling activity. LVT/WPC will continue to be the stars of the show. There is nothing on the horizon right now that will change the momentum of that category relative to the other categories. All the other product segments are more aligned with the growth curve in remodeling.

Whereas the economy has driven consumer sentiment in the past, today I think the wild card is the political scene. The X Factor, I think, is tax reform and its impact on both spending and investment decisions.

The biggest challenge we face in the industry is the rapid change and shift in consumer preferences. I can’t think of a time the industry has seen such a shift between categories like we’ve seen over the past two to three years. There’s been incredibly rapid growth in LVT coupled with the emergence of WPC as a major category in and of itself. It has literally changed the game overnight, and that continues to evolve. With so much change in the product mix, retailers and consumers alike are finding it confusing. Our greatest opportunity lies in how we, as manufacturers, help them simplify and focus amongst so many choices.

As always, Mannington has an outstanding lineup of new product introductions rolling out at Surfaces. We can’t tell you much more than that—you’ll just have to come to our booth to find out.

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Book Smart: Recommended reading for businesspeople

January 16/23, 2017: Volume 31, Number 16
By Lindsay Baillie

Screen Shot 2017-01-16 at 11.02.05 AMFCNews asks industry members to cite their favorite books about business. Here are their top picks.

Olga Robertson, president, FCA Network
“It’s not really considered a business book, although Peter Drucker is the gold standard for getting things done. His book, ‘Adventures of a Bystander,’ is the best business book I’ve read and every five years or so I pick it up again. It’s a fascinating journey from his early childhood through both World Wars. He was an observer of life and its participants with many life lessons to appreciate and emulate. His management style has been criticized and copied. It’s about getting the right things done and using your time efficiently and effectively. He famously said managers get things done right and leaders get the right things done—that says it all. I’ve recommended this book to anyone who will listen.”

Scott Humphrey, CEO, WFCA
Three of Humphrey’s favorite leadership books are: the Bible, which he said provides “great relational and leadership advice;” “It’s Your Ship” by Captain D. Michael Abrashoff, which, according to Humphrey, is an “awesome story of leadership with practical examples;” and “The Tipping Point” by Malcolm Gladwell, which explores how little things make a big difference.

Jon Pierce, general manager, Pierce Flooring & Design
“The message I get out of reading this book (“The Purple Cow” by Seth Godin) is to never stagnate and strive to always be remarkable. Constantly reinvent yourself or you may be left behind. Seth uses Starbucks as one of his examples of the need to keep trying new things to stay ahead of the game. I have, on a few occasions, handed out copies of the book to key people in our industry.”

Scott Roy, president & CEO, Gilford-Johnson Flooring
“Good to Great: Why Some Companies Make the Leap and Others Don’t” by Jim Collins. Roy’s quick takeaways from this book are: “Having the right talent is critical to everything you do; hire for talent, teach them the skills of the job. Make sure employees are on the right seat on the bus; don’t keep people who aren’t doing what they should be doing.”

Another is “The Fred Factor: How Passion in Your Work and Life Can Turn the Ordinary into the Extraordinary,” by Mark Sanborn. A few takeaways from this gem: “Everyone can make a difference, no matter what job you have,” Roy said. “Relationships are critical no matter what industry or business you are in. Create value—go above and beyond what the customer is asking for; take it one step further than the competition. Differentiate yourself every day.”

Tom Jennings, vice president of professional development, WFCA
Jennings recommends two books. “The first is ‘The One Minute Manager’ by Dr. Kenneth Blanchard and Spencer Johnson. [Dr. Blanchard’s] books were famous for taking an hour read—about 100 pages and straight to the point. It taught me how to focus on the act, not the actor.”

Another Jennings pick is “Swim with the Sharks Without Being Eaten Alive: Outsell, Outmanage, Outmotivate and Outnegotiate Your Competition,” by Harvey Mackay. “He has developed a checklist of about 50 items designed to help his people learn more about customers. This list can be applied to employees as well. He taught me that you have to learn as much as you can about your employees and customers. We all do business with people we like and with people who are responsive to us.”

Mike Montgomery, operational manager, Montgomery CarpetsPlus Colortile, Venice, Fla.
“This book isn’t so much about business as it is about selling. Dale Carnegie’s ‘How to Win Friends and Influence People’ provides everything about being in retail sales.” A few takeaways: “Be yourself and become friends with your customers; people buy from people they like; don’t just try to get the sale, try to build a relationship; people don’t want to be sold; you want to be a tour guide not a salesperson; get their name and then use it. Carnegie’s book reemphasizes these points.”

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FCNews asks: What’s keeping top executives awake at night?

January 2/9, 2017: Volume 31, Number 15
By Ken Ryan

new-imageIf you are a CEO or a high-level executive in the flooring industry, there is no shortage of issues on your mind. From government over-regulation to the dearth of installers to the vagaries of consumer buying habits, executives have a lot to think about. Many, however, have learned not to sweat the small stuff or be too concerned about things they can’t control.

FCNews asked a cross section of manufacturer, distributor and retail executives that question.

Neil Poland, president, Mullican Flooringpoland-neilAutomation of our plants is an area of operations I think about a great deal. The wood flooring industry is small, so most of the automation is customized which increases the cost. It is very challenging to find the most efficient equipment, systems and technology at a price that will provide an acceptable return on investment.

Eric Demaree, president, Carpet One Floor & Home
The competitive landscape continues to change, and all independent flooring retailers are facing digital upstarts, channels that do not invest in any assets to support our industry and discounters like warehouse clubs that only compete by gutting the price. As manufacturers continue to make products that cater to the DIY consumer, and as they target millennials, independent retailers are going to need an authentic, compelling, competitive advantage that consumers value and will be willing to pay for. Stand-alone retailers are going to find it more difficult to compete in the years ahead.

Scott Rozmus, president, FlorStar Sales
As we look at the landscape today, I wonder about how the next generation is going to pursue floor covering buying and whether we and our vendor and retailer partners are prepared and best preparing to address that.

Keith Spano, president, Flooring America/Flooring Canada
Retail growth through innovation, both digital and physical, present challenges. We’re in a mature industry and in any retail environment you must continue to reinvent your business every year to stay relevant and top of mind. New product offerings and new approaches to reach more customers through technology that changes by the minute. The Internet has changed everything from how we shop to how we communicate and how we as retailers sell product.

Nick Freadreacea, president, The Flooring Gallery
Being a business owner always means you will lose sleep over the issues of the day. Today’s top three current issues: How do we get salespeople interested in the flooring industry as a career? How do we recruit installers into the industry? How does small business handle the spiraling cost of doing business—i.e., health care, taxes and insurance cost?

Brad Williams, VP sales and marketing, Boa-Franc
What is our competition doing around the world? It used to be about beating local competition, but now we are in a global game and innovation is happening at a high speed. Project choices are crucial to success and being able to not go forward in some projects is just as crucial as the time, effort and investment required to innovate. Losing time, effort and investment on prioritizing a non-successful project in the end really can set you back in the innovation race.

Raj Shah, president, MSI
As the industry grows, staying disciplined is becoming more difficult. Scaling those disciplines in a growth environment is difficult. The tight job market, increased demand and possible immigration reform affects overall installation capabilities.

Roger Farabee, SVP of laminate & hardwood, Mohawk Laminate & Hardwood, N.A.
What keeps me up at night? The economy in general and what impact a Trump administration will have on that. We need an economic environment that provides the confidence needed for consumers to invest in their living spaces at a higher rate than we’ve seen since the recovery began.

Derek Welbourn, CEO, Inhaus
The main issue that keeps me up at night is my son who just turned 1. Besides that I think most executives should be open minded and receptive to new ideas and look to adapt their businesses to reflect constantly changing markets. For example, as a laminate producer, we have been successful and continue to grow our laminate sales; however, it didn’t stop us from investing in a product category that could be considered to be cannibalizing the laminate category. We feel both have a position in the marketplace and future.

Eric Langan, owner, Carpetland USA (The Langan Group)
A couple of the business issues that concern me are e-commerce and the availability of qualified installers. E-commerce has been, and will continue to be, a growing segment of our industry. Organizations need to get educated quickly to determine their approach to this part of the business. Secondly, the availability of quality installers is a concern. The younger generations, for the most part, do not want to work with their hands. Therefore, availability of quality installers will be a concern going forward.

Jeff Striegel, president, Elias Wilf
The continued challenge of evolving alongside the industry as it relates to the ever-changing dealer base and the emergence of new competitors. Then there is the basic product evolution itself as hard surfaces increases share and morphs into high-level excitement with new products like LVT and WPC. The ongoing search for maximum efficiencies required within flooring distribution in today’s competitive environment is another. It is paramount that Elias Wilf doesn’t lose site of our 100-year philosophy of understanding that people buy from people, and the importance of maintaining close relationships with our team and customers is critical to long-term success.

Travis Bass, executive VP, sales and marketing, Swiss Krono
The opportunity for a repeat of an incident such as the “60 Minutes” episode on formaldehyde in laminate flooring causing a very costly stampede of unsubstantiated concern.

Bruce Zwicker, CEO, Haines
The slow growth market, tightening profitability led by margin and the loss of share by independent floor covering dealers in the residential retail remodeling market segment are worries for the industry. I also see opportunities in becoming more efficient in providing service to our customers, in redeploying focus toward winning customer segments and products, and in refining and delivering more powerful value to customers.

Todd Gates, VP residential sales, DuChateau
The responsibility to ownership, the employees and their families to make the best use of available resources in order to sustain the long-term health and prosperity of the company.

 

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Nebraska Furniture Mart names new president, COO

screen-shot-2016-12-20-at-9-41-20-amOmaha, Neb.—Nebraska Furniture Mart’s Tony Boldt, presently the company’s Kansas City store director, has been named president and COO. The transition is part of long-term succession planning for Nebraska Furniture Mart’s future. Current president and COO Ron Blumkin will still be active in the business as Chairman, and Irv Blumkin will remain with Nebraska Furniture Mart as CEO.

“Tony is a focused, dedicated and creative leader,” Ron Blumkin stated, “who will be an exceptional leader for Nebraska Furniture Mart’s future.” In his new role, Boldt will continue the customer-focused vision and mission for Nebraska Furniture Mart.

“I am extremely fortunate to have the skilled and dedicated team at Nebraska Furniture Mart to deliver exceptional products, value and service to our customers,” Boldt said of his new role. “I look forward to leading this dedicated team and continuing on with Nebraska Furniture Mart’s strong commitment to our customers and communities we serve.”

Boldt has had significant experience within Nebraska Furniture Mart starting at Homemakers Furniture, a subsidiary of Nebraska Furniture Mart in Des Moines, and in 2002, taking a leadership role directly for Nebraska Furniture Mart in the warehouse in Clive, Iowa. Boldt rose to store manager of the Clive, IA Nebraska Furniture Mart operation before transitioning in 2011 to Omaha as the appliance and electronics general sales manager. In December of 2012 he was promoted to his current position as store director of the Kansas City Nebraska Furniture Mart store where he has successfully led and managed all aspects of store operations.

As Chairman, Ron Blumkin will continue to oversee Nebraska Furniture Mart’s subsidiaries including Homemakers Furniture in Des Moines, Iowa, Floors Inc. in Omaha, Neb., and Grandscape in The Colony, Texas. In addition, he will be an ambassador for Nebraska Furniture Mart inside and outside the company.

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NAFCD: Distributor show plays off vibe of the ‘Windy City’

November 7/14, 2016: Volume 31, Number 11

By Reginald Tucker

screen-shot-2016-11-11-at-11-05-40-amChicago—The overall energy level here in the Windy City was already high earlier this month, thanks in large measure to the gutsy play of the hometown favorite Chicago Cubs who dug out of a 3-1 hole to win the 2016 World Series—the team’s first championship title in more than 100 years. Some of that excitement seemed to have rubbed off on the visitors who were in town for the 7th annual North American Association of Floor Covering Distributors (NAFCD) and North American Building Material Distribution Association (NBMDA) convention, which broke a few records of its own.

NAFCD figures show 940 people—including nearly 60 first-timers—attended the event. More importantly, that total represented about 90% of NAFCD’s distributor members. Torrey Jaeckle, NAFCD president and vice president and CEO of Jaeckle Distributors in Madison, Wis., said total membership was up 14% this year—a trend he believes is indicative of the value the group brings to both manufacturers and distributors. “More importantly, I think it reflects that outlook on the entire industry. People are only going to invest in an organization like this if they see a positive future for our industry.”

More important than the sheer number of new members is the type of member NAFCD is drawing. “This year we added another Mannington distributor and a new Armstrong distributor, so now every Armstrong distributor is in attendance,” said Geoff Work, NAFCD treasurer and vice president of R.A. Siegel. “When you think about the distributor base, it’s all the large primary distributors in the U.S. and Canada that are here. The more quality distributors you have here, it becomes a must-attend event.”

Show organizers cited a beefed-up conference speaker lineup, high-level executive panel discussions as well as altogether new components such as the Partner Pavilion on the exhibition floor where attendees had the opportunity to participate in complementary one-on-one, 15-minute consultations. In addition, NAFCD and NBMDA also developed a matching program for first-time exhibitors in attendance.

“Enhancements to this year’s event not only improved the attendee experience, education and networking, but it contributed to the overall success of the event,” said Kevin Gammonley, executive vice president, NAFCD and NBMDA.

Jaeckle agreed, citing feedback from distributors and manufacturers alike. “People liked the fact that there were more educational offerings this time. Our opening keynote session [featuring Ken Gronbach, who discussed demographic changes] was more educational this year than entertaining—although it was probably a little bit of both. We wanted to make it more lighthearted and fun this year, but we also wanted to provide attendees with something they could take away from the conference. Everything I’ve heard thus far tells me the event was better this year, and last year’s was pretty good.”

screen-shot-2016-11-11-at-11-06-07-amOther telling statistics include the strong showing of NAFCD manufacturer members (74% of the group’s 226 manufacturer and allied members, by the group’s count) along with about a dozen first-time exhibitors. “You have the key decision makers from all the major distributors here—presidents, heads of sales and operations, etc. Many of the relationships that I have personally developed started here at NAFCD, then led to further conversations at Surfaces. That graduated into exploring discussions about new products.”

Vendors in attendance attest to the value the show provides in terms of both networking opportunities and product development direction. “This show allows us to meet with our existing customers, to get feedback on new products and to get exposure to potential new distributors,” said Bill Schollmeyer, CEO of Johnson Hardwood Floors. “It’s a valuable event for us.”

That same sentiment is shared by Philippe Erramuzpe, COO of USFloors. NAFCD/

NBMDA 2016 served as the launch pad for the company’s Fusion brand. “This new product line expands the portfolio of those distributors who are already stocking USFloors or Shaw-branded product,” he said. “It’s a turnkey program for the distributor to diversify his product offering even further.”

 

Executive roundtable: NAFCD leadership talks industry trends, initiatives

During the recent NAFCD/NBMDA convention in Chicago, FCNews’ managing editor Reginald Tucker corralled the NAFCD executive committee to get their views on this year’s conference as well as general goings-on in the industry and within the organization. Participating in the discussion were: Torrey Jaeckle, NAFCD president; Dunn Rasbury, distributor director; Heidi Cronin, president elect; Geoff Work, treasurer; and David Powell, vice president. Here’s what they had to say:

Looking back at one of the comments that economist Alan Beaulieu made during his presentation this morning about the forecast for 2017 and how it’s shaping up to be a great year for the flooring industry, are you in agreement with that prognosis based on what you’re seeing in your own markets?
Dunn Rasbury:
Generally speaking, most of the people I talk to have a pretty positive outlook on the business. While many people did not have a banner year in 2016 they certainly had a decent year. From my perspective, A&M Supply is preparing for substantial growth in 2017. The distributors who are here this week are serious and looking for product; they’re shopping the different booths.
Heidi Cronin: Just look at the show floor on the last day of the exhibition—they’re still here. I haven’t seen this many people still walking the floor compared to years past.
Geoff Work: Hearing [Beaulieu’s] presentation this morning, it’s reassuring knowing the payoff from the investments we’re making in people, warehouses and product are going to be kicking in next year and over the medium term.
Torrey Jaeckle: The point that Alan Beaulieu made about growth projections of 2%-3% is important. We’ve gotten into this mindset that if it’s not double-digit growth that it’s not where it should be.

There are several new components to this year’s conference, the Partner Pavilion being one of them. The educational program was also expanded. What was the driver behind those changes?
Jaeckle:
The feedback we received last year was the business meeting aspect was too dry. As an organization you have to have those meetings—and vote on directors, etc., but we wanted to make it more lighthearted and fun so we developed different videos and things like that just to show you can have meetings like this and still have fun.
Cronin: We made it more personal. In order to engage membership and get them more involved, they need to know we are real people. It’s not just people sitting in a room putting in a lot of hours. You get to be a leader and work with the best people in the industry. This board is fantastic; it’s a great group of people and you get an education. It’s very rewarding.

screen-shot-2016-11-11-at-11-07-58-amNAFCD’s partnership with the NBMDA is now in its seventh year. How has that alliance added value and where do you see opportunity for further collaboration?
Cronin:
For some flooring distributors here, the markets they serve cross over into other building materials. So members of NAFCD, for example, can take advantage of discounted memberships with NBMDA. We’re also partnering to do more with the World Floor Covering Association (WFCA), National Wood Flooring Association (NWFA) and really try to tackle the issues facing the floor covering industry at large. The goal is to come up with solutions to keep this industry viable.
Jaeckle: Together we’re able to deliver a product that’s stronger than either association could produce on their own. There are several benefits. For one, the two associations share resources to cover, for example, the cost of having speakers here. Also, there’s a lot you can learn from other associations by talking to professionals outside your own industry. This gives you additional perspectives on how others might be doing something different than what you’re used to. That diversity provides valuable insight.
NAFCD and NBMDA are also collaborating on the distribution management university offered each fall in conjunction with this convention. This is a specialized, one-day training session specifically designed for managers at distribution centers, including branch, sales, general and operations managers.

Looking at the broader NAFCD initiatives, can you talk about some of the other objectives you’re working on or other plans in development?
Cronin:
We created a new category of membership under the banner of “organizational.” This pertains to entities such as the Bravo Group (FCNews, Sept. 5, 2016) whose members could potentially join NAFCD and increase our presence.
Work: NAFCD has begun looking into issues that don’t necessarily affect distributors directly on a daily basis, such as the lack of qualified installers. But we’ve decided that NAFCD is going to take some ownership and do its part in helping to solve that problem. We’re reaching out beyond our purview to be impactful there.
Jaeckle: One of our main initiatives and objectives this year was to attack that problem by partnering with the WFCA and other associations. It’s something that no one has ownership of but still affects the entire industry. At some point we want to be a part of the solution.
Work: Earlier this year we launched the Savings4Members program. It’s a program that NAFCD members can access to see if there’s a better way to allocate their spending—be it fuel, transportation, payroll, office supplies or a variety of other categories.
David Powell: We continue to look at educational offerings. There have been some ideas floated that we might look at next year to bring value to not only distributor members but also to our critical manufacturer partners. This will ensure we have a more well-rounded offering.

The 2017 NAFCD/NBMDA Annual Convention event will take place Nov. 14-16, at The Broadmoor, in Colorado Spring, Colo.