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National Floorcovering Alliance: Opportunities lie in diversification beyond flooring

April 30/May 7, 2018: Volume 33, Issue 23

By Steven Feldman

Cancun, Mexico—As the National Floorcovering Alliance (NFA) embarked on its spring meeting here last month, Dave Snedeker, president of the group and division merchandise manager, Nebraska Furniture Mart (NFM), set forth one mission: get a feel from each member as to how the NFA board can add value to the membership. At the end of the day, the answer was, in a word, diversification.

As successful as NFA members may be—after all, they comprise some of the biggest and best independent flooring retailers in the country—many have not ventured beyond their core business into products like window treatments, countertops and cabinets. “Some members are looking at [diversification],” Snedeker said. “Some are just starting in it. Some aren’t doing it at all. So we’re just trying to make the connections easier so they can decide if that’s the route they want to take.”

NFA will facilitate this by bringing these types of companies to their meetings and opening up the communication lines. “I can’t think of a better way given the format of our meetings than to bring in somebody like a countertop, cabinet or window coverings supplier,” said Deb DeGraaf, co-owner, DeGraaf Interiors, Grand Rapids, Mich. “We’re amongst a group of people we trust and value their input.”

DeGraaf sells window treatments and countertops. “We’ve grown our window treatment business quite a bit, but I would like to do more with it.”

Macco’s Floor Covering Center in Green Bay, Wis., sells neither cabinets, countertops nor window treatments, so there is plenty of opportunity to grow in these non-flooring categories. “There are a lot of sand boxes we’re not playing in right now that we need to explore,” said Jim Walters, president.

Likewise, diversification into non-flooring products is uncharted waters for Flooring 101 in Ventura County, Calif. “Like many in the group, we’re definitely looking at those avenues where we don’t participate now,” said Ian Newton, president. “The beauty of the group is sharing ideas. There are a lot of people out there making those first mistakes along the road that we can learn from. They can tell us what worked, what didn’t work and how to get there. It’s really an educational process for us all. With more hard surfaces being sold, we’re getting less frequency of that return customer. So we have to diversify the products we offer.”

Ambassador Floor Co. in St. Louis is another NFA member that currently sells only flooring. “In the past we’ve done other things; the recession knocked some of them down,” said Kelly Taylor, president. “But it’s time to take another look at it. As you talk to the rest of the group, I was surprised at the success some are having with window treatments.”

Nebraska Furniture Mart is, of course, involved in all categories as the retailer sells everything from furnishings to electronics. “We’re just on the cutting edge of the cabinet business, but we’ve done countertops for several years now,” Snedeker explained. “It’s a very big category for us.”

Paint is one relatively new category that might be of interest to NFA members. “We’ve talked about paint in the past,” Snedeker noted. “We have one member who’s very good at it. That’s the winning part of this group; if somebody is already doing it and doing it well, you can visit his store and see whether or not you can do it.”

Metroflor joins vendor ranks

With the demise of companies like Beaulieu and Royalty, the meeting marked the debut of Metroflor as a core vendor. “Metroflor does a decent business with a lot of our members,” Snedeker said. “They have a pretty solid line. They do good business in multifamily, and that’s where a lot of the business is going right now.”

Metroflor also has the ability to service everyone in the group. “That’s one thing we have to look at; people have to be able to cross the border into Canada and also be able to service the [entire] U.S. market,” Snedeker explained.

Metroflor had previously been a specialty vendor for a number of years, exhibiting at the afternoon showcase on Surfaces eve. “It’s almost like a vetting process,” DeGraaf said. “How did they perform and rate as a specialty vendor? If many of us believe a company is disorganized, they are not going to move up to the next level.”

Speaking of the Specialty Vendor Showcase, Cali Bamboo and Xintory were two companies that scored well with members. Cali Bamboo manufactures green building materials made primarily of bamboo and offered something unique to the group. Company president Doug Jackson has a good relationship with the group from his Tuftex days, Newton said.

Xintory is billed as the flooring industry’s first online marketplace to buy and sell drops, seconds and overstocked inventory. “I can see the concept being very valuable whether you want to get rid of something or find something,” DeGraaf said.

Installation issues

The one challenge NFA members continue to face is the same for all flooring retailers across the board: installation. The one variable is how NFA members attack the issue.

Nebraska Furniture Mart, for example, collaborated with the local community college for a training course. “We just graduated our first class; there were six who took the class and four of them are going to start with us,” Snedeker said. The class is taught by Nebraska Furniture Mart’s installation manager along with some installation experts employed by the retailer.

Flooring 101 is finding installation to be more of a challenge on the soft surface side, especially with the more intricate patterns. “We have a lot of good crews for hard surface,” Newton said. “You have to pay a lot more money. The challenge on the soft surface side is the jobs are smaller. You’re looking at 50-, 70-, 80-yard jobs now because carpet has gone to the bedrooms and the rest of the house is hard surface. A crew can’t make a living on 70 yards, so they end up doing two jobs in a day. The challenge now is servicing the customer between scheduling. So, we see a lot of challenges both on getting it installed correctly and making enough money for them.”

 

 

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My Take: Installation—It’s time for the call to action

October 23/30, 2017: Volume 32, Issue 10

By Steven Feldman

 

Screen Shot 2016-07-15 at 3.46.11 PMWe forever talk about the shortage of installers, to the point of often dubbing this the “installation crisis,” but how many of us are doing anything about it? I mean, many retailers throughout the country are finding innovative ways to recruit, train and retain mechanics, but unless you’ve spent the last decade burying your head in the sand like an ostrich, you would agree this situation will only get worse. At the recent National Floorcovering Association (NFA) meeting in Newport, R.I., someone told me the average age of a floor covering installer is 57. If that is true, the situation is more pressing than we think.

Talking to Dean Thompson, president of the Resilient Floor Covering Institute, a few days ago at the group’s fall meeting, he feels there is an immediate need for extensive research to be undertaken so we can all gain an accurate handle on the landscape—number of installers out there, average age, attrition rate, number of new people breaking into the field, etc., layered on top of industry growth forecasts. Once the picture is framed, it might be easier for the industry to come together to develop a plan.

The discussion has always centered around where the responsibility falls. Sure, the installer works for the retailer, or the independent installer is commissioned by the retailer. But a dearth of qualified installers impacts everyone across the chain, including the manufacturers. Without qualified mechanics their products cannot be installed properly.

Stay tuned for more on this in upcoming issues of FCNews. But for now, let’s talk about what some retailers are doing. For instance, Deb DeGraaf, DeGraaf Interiors, Grand Rapids, Mich., is looking to develop an internship program for installers. She is attempting to get with the local high schools and recruit new installers because of the need to develop a program to get people interested. Many high school seniors don’t want to go to college and sit at a desk. They want to learn a trade. And we need people to learn our trade.

That’s just one part. There are also veterans in her area who have the GI bill to use, but those funds currently can’t be used for training for anything in our industry. So DeGraaf wants to bring some attention to that and figure out how they can allocate those funds toward our industry. She feels if a program can be developed where young vets who come back from serving our country can be recruited, placed in the field with one of their seasoned installers and get them into a training program, maybe through WFCA or CFI, it would be a good start.

Others are also being proactive. Jim Walters, Macco’s Floor Covering Center, told me the company has had some success in attracting young people into the trade, but it’s been more on the hard surface side. Carpet is still a challenge, he said, because he believes hard surface is better perceived as a trade. Like DeGraaf, the retailer is reaching out to the high schools, but Walters is finding more success in the rural communities as opposed to the cities. He has no idea why. He said it seems like the young people in the rural communities have a great work ethic, surmising that perhaps growing up on a farm, they may have had more experience working with their hands. Whatever the case, he said the wage scale has gone up to the point where it’s a good career for that person who has that skill set to work with their hands.

This is an issue that will not simply go away. It’s time for us all to step up.

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National Floorcovering Alliance: Spirited discussions on thorny issues set the tone

October 23/30, 2017: Volume 32, Issue 10

By Steven Feldman

 

Screen Shot 2017-10-27 at 12.01.40 PMNewport, R.I.—The National Floorcovering Alliance (NFA) is 42 retailers and 256 storefronts strong, representing a collective $1.1 billion in annual sales. But the issues these dealers face every day are no different than every other flooring retailer; in fact, it can be argued that their sheer size creates an even greater depth of challenge than most.

The key topics discussed at the group’s fall meeting were diverse, ranging from ways to find quality installers and sales associates to dealing with manufacturers who want to eliminate discounts for paying invoices within a certain time frame and dealers who encroach upon fellow members’ territories—legal by bylaw but challenging the spirit of the group.

Dave Snedeker, division merchandise manager, Nebraska Furniture Mart and president of the NFA, called this one of the best meetings in a long time. “I feel we heard the voice of everyone—just a lot of participation.”

Participation is often fueled by issues that can affect the bottom line, and that was unequivocally the case when Shaw and Mohawk announced they were doing away with “terms”—percentage discounts for paying bills within a certain time frame (see related story on this page). Eventually the NFA and the two major mills reached an accord, but not before members weighed in vociferously.

“For a lot of people terms are a sacred cow,” Snedeker stated. “You have little control over price increases, but terms is a part of the business we believe is earned for being a good steward of your financial responsibilities. It’s not necessarily part of the price; it’s about paying your bills on time. So to have that taken away would be a negative for a lot of stores.” (There is no group terms rate as NFA members negotiate their own deals, just as they do on pricing. However, the power of the NFA is such that this one voice speaks at exceptionally high decibel levels.)

Screen Shot 2017-10-27 at 12.01.33 PM“[The elimination of term discounts] would seem to penalize the better customers who pay their bills,” said Phil Koufidakis, president of Phoenix-based Baker Bros. “They would seem to be taking away an incentive for people to pay their bills on time. I don’t know why the mills are doing it. They never communicated that to the group nor myself.”

Sam Roberts, president of Roberts Carpets and Fine Floors in Houston, said terms are very important in the specialty dealer community. “I think most quality specialty retailers are opposed to the removal of terms, specifically going to zero discounts in their terms, and I think the vendors need to think very carefully about what’s in everyone’s best interests.”

While the terms issue may have been resolved, another controversial subject lingered. That involved one member’s recent new store opening. But it was not your typical expansion. That’s because the store encroached upon another member’s turf, something not illegal by bylaw but a questionable decision in the eyes of some.

“Expansion into the territory of another member is not disallowed,” Snedeker stressed. “The NFA’s position is there are no bylaws that preclude it. In the case of a prospective member, anyone can protect their turf, but once they are established it gets a lot grayer.”

While not necessarily a common practice, it is certainly not unprecedented. For instance: Nebraska Furniture Mart expanded into Dallas, where Carpet Exchange is a member; and Star Lumber expanded into Oklahoma City, where Akin Bros. does business.

The prevailing issue is that one of the major benefits of NFA membership is the sharing of information and best practices. The fear is two competing members may be uncomfortable giving away secrets of their stores, which can be detrimental to the group at large.

Screen Shot 2017-10-27 at 12.01.20 PMMembers are divided on the matter. “I did it, so I understand the issue,” said Roger Voge, division president, Star Flooring, Wichita, Kan. “I let the NFA board know I was coming to Oklahoma. I was working on an acquisition and had a non-disclosure, so I couldn’t call the competitor in town. At a certain point you need to go to another market for growth. I understand this could hurt the sharing of information within the group, but a lot more of that occurs in informal settings.”

Stuart Perque, president, Perque Flooring, New Orleans, has a different take. “I’m not too comfortable with that unless it is discussed prior. We were the eighth member of the NFA. There was pretty much a gentleman’s agreement when we were 10 people in the room that we would not expand into another member’s territory without bringing it up first.”

Steve Brannen, COO, Carpet King, Minneapolis, may not be opposed to the idea of expansion into another member’s area, but he agrees with Perque in that communication is key. “If you are up front with people and tell them what you are going to do, that’s OK. When you do it stealth it’s not the right thing to do. This group is based on openness and sharing.”

Koufidakis, a former NFA president, sees it as an issue between the two members. “The group has no bylaws about people expanding into other areas. Obviously we can’t control how members expand their business, and we do from time to time run into that expansion. That’s for the members in question to deal with on a direct basis more so than the group getting in the middle.”

Roberts, another former president, agreed. “Once you are a member of the NFA, there is nothing in the NFA bylaws that precludes any dealer from expanding into any market they choose to expand into. The only time we can pay attention to geographic-protected areas is when somebody joins the group. My thoughts are if somebody wants to expand, they are totally welcome to do that wherever they want. And as far as the impact of sharing best practices with competitors in the room, is it potentially an issue? Yes. Is it potentially a major issue? No.”

Desperately seeking salespeople
Replacing an aging sales staff is somewhat surprisingly a key issue for many NFA members. And they all go about it in different ways. For example, networking is the secret to success for ICC Floors in Indianapolis, but not at the management level. “We get some young people and then the word spreads amongst their group of friends,” Cam Haughty, president, explained. “The first one came through a Daltile rep a couple of years ago, and then we tapped into his network. They are big on social media, and they talk about our good work environment and that we pay pretty well.”

Screen Shot 2017-10-27 at 12.01.10 PMCarpet King’s Brannen told FCNews finding good salespeople is a perennial problem. But he has a unique way of accumulating good ones. “Ads don’t really produce. It’s more about interactions with people in other industries. If you find someone who offers good service you have to approach them.”

An aging salesforce is a big issue at Perque’s. “I’m finding the older people are just staying around for the health insurance,” Perque said. “We’ve been trying to find new salespeople for the last two years. We are bringing in people who have never been in the flooring industry. We can’t find anyone who wants to go on 100% commission, so we do the training, put them on a salary and then evaluate them after a year. It’s a very expensive venture, but we can’t seem to find anyone who wants to work full commission.

“We found one interior designer, and one was a schoolteacher. I find those who go on full commission, after four or five years they are going to make a good income. But it’s a process, and very few people want to go through a four- or five-year process.”

Baker Bros. has had four or five people retire this year. “We are finding them predominately through job postings,” Koufidakis said. “We have expanded the range of people we look for. We don’t worry about just looking for ‘flooring people.’ We look for really good people who fit the company and our culture. That’s the big issue for us—fit. We can teach them the rest.”

 

In other NFA news…

  • NFA members as a whole are up about 5%-7% in 2017. “Hurricanes have hurt overall numbers for a few dealers,” Snedeker said.
  • There were two fewer suppliers at the vendor-member round-robin meeting with Royalty shutting its doors since the last meeting and Beaulieu choosing not to come. “The board is looking at all the options about what we will do going forward,” Snedeker said. “We can bring in new core vendors, or we can keep it at 24. We have a couple of people interested in taking a spot if we choose to go that way.”
  • Snedeker is excited about the NFA’s Specialty Vendor Showcase, held the day before Surfaces in Las Vegas. The 2018 version promises to be the biggest yet with nearly 60 vendors lined up, up from a record 42 in 2017. “It’s a great opportunity to see different things you might not spend a lot of time seeing at Surfaces. The list is very strong this year.”
  • Carpet Den Interiors in Nashville could potentially be the 43rd member of the NFA pending unanimous member approval. The $30 million retailer has been in business almost 40 years, has 55 full-time employees and more than 100 installation crews. The stocking dealer is a Stainmaster Flooring Center and has a nice blend of builder, residential and commercial business.
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Laminate: Certified installer programs give dealers an edge

July 31/Aug. 7: Volume 31, Issue 4

By Reginald Tucker

 

Screen Shot 2017-08-07 at 11.49.08 AMThe upside to laminate flooring’s popularity in the U.S. over the past 20 years is more consumers have become very familiar with the product—from how it’s constructed to the way it is primarily installed. The “downside,” however, is that high comfort level has encouraged more renters and homeowners to install the product themselves, cutting into a profit center for specialty retailers.

Thanks to certified installation training programs, however, retailers have an opportunity to recoup some of that business lost to the DIY customer base. The logic being, homeowners might have a greater sense of security and confidence knowing the person installing their laminate floors has been trained and certified in a particular area.

Armstrong Floors, which offers comprehensive certified training programs for virtually all of the categories in which it operates—laminate included—still believes there’s a need for professionally trained laminate floor layers. To that end, the company offers a combined laminate/hardwood training program conducted over the course of three days. There’s also a one-day laminate certification event held at its installation school in Lancaster, Pa. The company also has distributor trainer partners that are qualified to administer the same certification and training programs.

“Our certification is standardized, whether it’s conducted in conjunction with our distribution network or here at our installation school,” said Todd Weldon, who heads Armstrong’s installation school and personally conducts many of the training classes held at the company’s headquarters. “Basically we begin with an estimating and layout project where we have the participants calculate the material they will need as well as waste. We do that for the material as well as for transitions and for trim. We grade them on how successfully they do that, and we check to see they have the proper amount of expansion.”

Beyond the mechanical skills, participants are also evaluated according to a written test. (Trainees need to earn at least 80 out of 100 points to get certified.) Once they pass, Armstrong provides installers with a laminated card showing they are certified.

That certification is valid for three years; an open book test is required for re-certification.

Screen Shot 2017-08-07 at 11.49.02 AMRenate Keares, sales training manager, Armstrong Flooring, cites the benefits for retailers and their installation crews, as well as consumers. “If an installation fails due to a certified installer’s error, Armstrong will supply materials up to $1,000 for that installation. The labor, obviously, would be the responsibility of the retailer/installer.”

The benefits don’t end there. Dealers who certify their installers are noted as such on the section of Armstrong’s website that lists dealer locations. “The sponsoring dealer gets flagged on our website for that certification, so there’s a benefit for the retailer for sponsoring dealers as well as the installer,” Keares explained. “The Armstrong website is the most trafficked flooring site, so the benefit to the retailer is their site comes up first if they have certified installers. They literally rise to the top.”

Dealers who have completed Armstrong’s certification—not just for laminate but the family of hard surface products—can attest to the positive impact on the business. Kevin Carnes, vice president, McSwain Carpets & Floors, Cincinnati, is one of them.

“Going through the certification process changes the installer’s thought process,” he explained. “When you send a hardwood guy to a laminate certification, he finds he can now do rigid core. That expertise extends to other categories, which is better for the installer and the retailer.”

McSwain Carpets coordinated with a local Armstrong distributor to conduct the installation and certification training program for its crews. The exercise, according to the company, reinforced the importance of ongoing instruction. “I wasn’t born in the flooring industry—just like many young people coming into the industry,” Carnes noted. “That’s why continued education is crucial.”

While Carnes believes consumers may give more weight and consideration to retailers who hire certified installers, there’s more work involved. “Customers definitely use the web in their research. It drives the consumers toward the retailers who have the certification, but it doesn’t necessarily seal the deal.”

Screen Shot 2017-08-07 at 11.49.15 AMOther prominent retailers who have arranged for their installation crews to get certified on Armstrong’s various hard surface products—including laminate—vouch for the influence structured training has on the consumer. At Phoenix-based Baker Bros., for instance, routine installation training for employees and subcontractors alike is the norm. “All the installers we use are Armstrong certified,” said Phil Koufidakis, president and owner. “We also have a field technician who spot checks all the jobs our installers perform. They are our last line of defense, so it’s important to get it right.”

Armstrong is not the only manufacturer that offers comprehensive, structured training programs for its installers. Mohawk, Shaw and Quick-Step, to name a few, also work with their retail partners to provide instruction on a host of products—not just laminate but across the hard surface spectrum.

During a recent National Floorcovering Alliance (NFA) meeting, Quick-Step held a special session to encourage its retail partners to make installation a stronger part of their business. “As an industry leader in technology, Quick-Step sets our retailers and installers up for success by featuring superior installation systems in all products,” said Jon England, vice president of independent distribution, Mohawk laminate and hardwood, North America. “As retailers work with their subcontractors to make installation a stronger part of their overall total flooring purchase, the retailers can rest assured the quality of the installation systems in Quick-Step products gives installers everything they need to achieve a floor that’s stunning.”

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NFA members tackle the issues in unison

April 10/17, 2017: Volume 31, Issue 22

By Steven Feldman

Screen Shot 2017-04-24 at 9.42.07 AMLake Tahoe, Calif.—When the 42 members of the National Floorcovering Alliance (NFA) convene three times each year, the sharing of ideas, listening to relevant speakers and furthering intimate relationships with vendors are the focal points. The spring gathering, held here earlier this month, was no exception.

Digital marketing is on every retailer’s mind these days, and to that end discussions encompassed platforms like Google and Yelp. In fact, Darren Braunstein, Worldwide Wholesale, Edison, N.J., facilitated a speaker from Google who provided members with ideas on how to capitalize on the search engine.

The big takeaway was the advent of mobile devices. “We learned more people who are searching for flooring are actually using their mobile device rather than their desktop,” said Ian Newton, Flooring 101, Ventura County, Calif., with Larry Flick, The Floor Store, Northern California, adding, “And that trend is growing rapidly. With everything going mobile, all of us have to make that move ourselves.”

Ryan Bechtold, Contract Furnishings Mart, Pacific Northwest, found the presentation enlightening. “It not only reconfirmed that people were going online, but how people are going online.”

Aside from digital marketing, a good amount of time was spent on the challenges faced not only by NFA members but all retailers in general. First and foremost is the labor shortage—both on the floor (sales) and in the field (installation). But members are finding creative ways to overcome the challenge.

NFA president Dave Snedeker, Nebraska Furniture Mart, Omaha, said the company has a training program starting at a community college this fall. Jim Walters, Macco’s Flooring Center, Green Bay, Wis., is starting even earlier. “We have had some success reaching out to surrounding communities where there are some smaller high schools. We are trying to reach young people who may not be going off to college and may want to learn the trade.”

Kelly Taylor, Ambassador Flooring, St. Louis, has been using a recruiter to head hunt for leads the last couple of years, while The Floor Store’s Flick actually relies on his own installers. “We have been putting some programs together so we not only retain our own installers, but hopefully they have such a great experience that the word goes out to fellow installers who have not been working for us and we grab them from competitors.”

All in all, NFA members report positivity in the marketplace, particularly since the election last November. “The overall sentiment within the group is that things are pretty good,” Bechtold said. “Usually in politics, the post-election cycle may throw things off, but it seems like people are less concerned [this time].”

Zac Akin, Akin Bros, which operates Floor World and Budget Floor Store in Oklahoma City, noted, “In a state that has gone red for the last eight elections, consumer confidence has increased in my market. Good, bad or indifferent, unrelated [to the Trump presidency] or not, everyone seems to be positive.”

Except maybe in The Floor Store’s neck of the woods. “It’s hurting us because Silicon Valley has gotten so much money from the Democrats for so long that people are very nervous,” Flick said. “I remember at Surfaces everyone was saying business is good, consumer confidence is up, attitudes are great, but it’s just the opposite in San Francisco.”

Vendors step up
The all-day member-vendor “round-robin” meetings, where each member gets approximately 20 minutes with each core vendor, was again a beneficial experience all around. While most suppliers step up their game at each meeting, NFA members cited Armstrong, MSI, USFloors and Tarkett as four companies that came to the table in a big way.

“Armstrong put together a great package on a stocking opportunity they gave us,” Flooring 101’s Newton said. “The merchandising and pricing across all categories was impressive.”

Others cited MSI for “great product at a great price. They get out in front of trends,” Taylor said. “Manny [Llerena] gets people excited and on board.”

Snedeker called his meeting with USFloors “time well spent” as Piet Dossche spent much of the time explaining the differences between WPC and rigid core.

And Tarkett came to the table with a new product that intrigued the group. “This show was one of the best NFA shows we participated in in the three years I’ve been responsible for the NFA,” said Randall Sheehe, director of strategic accounts. “We launched a brand new program under our new technology in luxury vinyl floors called Transcend Sureset. Transcend is a new technology—not a click, not a glue down or loose lay. It has a unique, proprietary backing that we developed and just introduced to the NFA at this convention. It was very well received.”

Tarkett has been making big strides with the NFA. “In the past two years we have had double-digit growth with the NFA,” Sheehe said. “And it all starts with relationships. We work with each individual member as well as the NFA board to bring solutions that meet members’ needs. We collaborate with new products, new technologies and new ways of marketing those products that will help them grow their business.”

In other NFA news…

  • Many members are expanding into categories such as walls, countertops and cabinets as they seek new profit centers.
  • The group is vetting one potential new member, who may attend the fall meeting in Newport, R.I.
  • The board is reviewing a potential change or two to the Specialty Vendor Showcase held the day before Surfaces in Las Vegas.
  • A couple of suppliers are standing in line to become core vendors should an opening occur, Snedeker said.
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NFA vendor showcase: Dealers embrace new partnerships

January 30/February 6, 2017: Volume 31, Number 17

By Ken Ryan

Screen Shot 2017-02-03 at 3.31.37 PMLas Vegas—The National Floorcovering Alliance’s (NFA) specialty member event, held here on the Tuesday before Surfaces, provides a rare moment where suppliers get to spend quality time with some of the most influential flooring dealers in the business while showcasing their wares.

“This is a great event because I get to see vendors here that I won’t see anywhere else,” said Phillip Raby Sr., co-owner of The Raby Co. in Albuquerque, N.M. “The NFA is the greatest retail group in the world.”

According to NFA, more than 40 specialty vendors were in attendance. This includes Metroflor, a new vendor partner. Russ Rogg, president and CEO, said he is familiar with the NFA from his days at Wilsonart, a former NFA vendor. “I’m excited to get back in the fold with this group. NFA is small in numbers but big in scale and historically they are a good group with which to do business.”

The NFA vendor show is not necessarily a buying show as it is a collaborative effort. “It’s more about relationships than product and understanding what [retailers’] needs are,” Rogg said.

Metroflor used the opportunity to showcase its Engage Genesis lineup, which features an expansive array of waterproof designs encompassing four wear layers. Key attributes to Engage Genesis are its Isocore technology, which the company touts as the new standard for quality in multi-layer flooring, and UltraFresh, a microbial growth inhibiter.

Metroflor wasn’t the only vendor turning heads at the show. Inhaus drew the attention of retailers with its new Sono line, an innovative offering created to break new ground in the waterproof category. Sono is being positioned as fundamentally different than WPC because it is a homogenous product made in a one-step process featuring Inhaus’ patented Ceramin technology. The core of Sono is made of ceramic powder and polyolefin, adding to its distinctiveness.

“You have a solid construction made out of ceramic,” Daniel Lang, vice president of sales and marketing, Inhaus, explained. “The overwhelming thing is the look—it just fits.”

The unique construction of Sono had some dealers scratching their heads. Dick Wallet of The Floor Store in Richmond, Calif., said he has been in flooring retail for 45 years and couldn’t quite figure out the make of the product. “It looked like wood; it’s hard to believe it is ceramic,” he said.

It’s new products and programs such as these that continue to compel NFA dealers to attend. Dave Snedeker, NFA president and division merchandise manager-flooring, Nebraska Furniture Mart, can attest. “We had over 40 specialty vendors in attendance and well over 200 NFA members. We are very pleased with the turnout, and the feedback from everyone was that it was the best one yet. We found a couple of new items here that we believe will be a great addition to our lineup and potentially a big seller for us.”

One of those items is cabinets. NFA welcomed U.S. Cabinet Depot to the fold, representing its first non-flooring vendor. Nearly 50% of flooring dealers carry non-flooring products, and that trend is expected to continue.

Raby will serve as the NFA’s category captain for cabinets. He estimated that NFA members collectively could do $50-$60 million in business in countertops and $40 million in cabinets. “I know we can grow our business with countertops and cabinets,” he said.

Snedeker wouldn’t put a number on it, but he does see opportunity for the group. “Retailers today need to think about this because the flooring market is changing. A lot more hard surface is being sold and less carpet. Flooring stores need to be on top of this and keep up with the trends.”

The flooring liaison for U.S. Cabinet Depot is Kathy Tilley, director of business development. She joined the company in the fall after several years with the FEI Group, also known as Floor Expo. Her task is to grow the cabinet business through the retail flooring channel. “There is an inventory commitment here like no one else can do,” she said.

 

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NFA celebrates 25th anniversary in grand style

October10/17, 2016: Volume 31, Number 9

By Steven Feldman

img_1693Palm Beach, Aruba—Against a backdrop that some say is only rivaled by paradise, the 42 retailers that comprise the National Floorcovering Alliance gathered here recently for their semi-annual summit to celebrate its silver anniversary. And the next 25 years will begin the way the first 25 ended: with Dave Snedeker, division merchandise manager, Nebraska Furniture Mart (NFM), as president after being elected to a second term. Should Snedeker serve his entire two-year term, he would become the first NFA president to serve four years since Gary Cissell, who coincidentally served in the same capacity at NFM as Snedeker.

As for the rest of the board, Jim Walters, Macco’s Floor Covering Center, Green Bay, Wis., was elected vice president; Ian Newton, Flooring 101, Ventura County, Calif., was elected treasurer, while Kelly Taylor, Ambassador Flooring, St. Louis, remains secretary. Ryan Bechtold, Contract Furnishings Mart, Portland, Ore., and Zac Akin, Akin Bros., Oklahoma City, will serve their last of three years as board members at large.

When asked what this board’s goals are for the next two years, Walters told FCNews the idea is to build on the accomplishments of previous boards in terms of vendor programs that bring value to the group: “More exclusive products and programs that can give us an edge in our respective marketplaces.”

He has also been impressed with the heightened level of member activity. “People are bringing things to the table. The goal for the next two years is to get even more of the membership engaged.”

Snedeker said his goal for the next two years is to continue to gain a better understanding of what the members need to better their businesses. “For example, [this year] we asked what type of speakers members would want at the next meeting. Many said they wanted to hear about the millennials. Ironically, we already had that planned for this meeting with a presentation from Armstrong that addressed the three customer groups: baby boomers, Generation X and millennials.”

Some key takeaways from that presentation:

Millennials as a group will demand serious attention going forward. Born between 1982 and 2003, they just started to enter flooring market. This group will be the key shopper of the future. How soon? By the end of 2017, they will surpass Generation X in terms of buying power. By 2025, their combined income will represent 46.6% of this country’s buying power.

A couple of things retailers must understand about how millennials shop and buy:

  1. This is the first generation to grow up with the Internet. They are online 24/7. They are always connected, always sharing. They take charge of the shopping experience and see retailers as service providers. They demand an integrated, seamless experience regardless of the channel. They transition effortlessly between online and in-store.
  1. Millennials shop digitally but buy locally in brick-and-mortar stores. They want knowledge and advice from trusted retailers. So the challenge centers around how to get them in retail stores. Social media is where they are going for referrals and reviews that bring them into the store. So retailers must use social media to start and maintain the conversation. It starts with relevance—providing the right information to make a decision.

Jeff Macco, Macco’s Floor Covering Center, Green Bay, Wis., thought the presentation was the highlight of the meeting. “Millennials may not be as critical to us today, but five to 10 years from now that’s going to be our No. 1 customer base. They don’t shop like we’re used to, so we have to adapt and figure out how to reach them and change our marketing to be where those people are looking. I learned that it’s clearly Internet based, so the challenge is how to target our Internet marketing to attract that individual to our stores.”

Other issues that have come up repeatedly are installation and human resources—specifically finding, attracting and retaining talent and increasing their engagement. Two best practices presentations addressed this: Michael Longwill, Airbase Carpet Mart, New Castle, Del., talked about the importance of structured meetings to build employee engagement, while Larry Flick, The Floor Store, Northern California, discussed ways in which he incentivizes installers.

Longwill’s presentation drew rave reviews from fellow members, specifically as it related to the discipline of frequent, short meetings at consistent times with a clear agenda. “You should be constantly getting information and feedback that support your mission and values,” he said. “It’s having open, transparent communication up and down the chain. It’s a culture and value system that you have to advance. And the pace that you do them is the pace the company will grow.”

Longwill said it is important to have “daily huddles” in your store, where everyone gets together and discusses the plan for the day. “It could be 3 minutes; it’s getting everyone aligned on the same goals.”

Michael Cometz, General Floor, Bellmawr, N.J., was impressed. “I thought this was the most fabulous best practices presentation in all the years we have been doing it.”

Flick garnered praise for the way he is approaching installation challenges. Snedeker said Flick showed NFA members how he addressed some reoccurring installation issues by pulling his team of mechanics into the total organization. “Through a series of feedback from customers and job performance, everyone is held accountable for their part of the total finished product,” he explained. “I thought it was innovative and spot on. This was an inspiration for all of us to try to do something different in our own organizations to address the biggest issue retailers face today.”

Philip Raby, The Raby Companies, Albuquerque, N.M., found value in a discussion where the members talked about their favorite suppliers. “It’s amazing to me how well some suppliers did over others. For example, Shaw did extremely well. Some said Mohawk and Dal-Tile. This gives me a good feel for what my NFA partners are doing.”

Ambassador’s Taylor put it in perspective. “This is not a buying group; it is so much more. It may have at one time been a buying group, but today it is about developing partnerships with vendors and the exchange of ideas that benefit each of us. We all have the same struggles, particularly human resources and finding the right people. As a group, we all come together and put our heads together as opposed to being on an island of our own. We can ask each other what has worked in all these different markets.”

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Manufacturers step up to the plate

When dealing with a group of retailers that collectively do more than $1 billion in business a year, suppliers go the extra mile to give NFA members a competitive advantage. This may come through exclusive products, special pricing or first look.

USFloors was a prime example at this meeting. “We presented an exclusive collection consisting of 21 private decors,” said Piet Dossche, CEO. “We listened to what they told us [at the last meeting]. The success of our COREtec program has created price and margin pressure. So now the NFA has a collection that is unique for its membership and they can enjoy full margin protection. It’s under the Lifetime Luxury name; however, it shows the COREtec label and logo on the display because COREtec has become a brand within the industry.”

Cam Haughty, ICC Floors, Indianapolis, liked the exclusivity and the visuals. “We will take that on for sure. I like the fact they are holding that quality and price point in the category. USFloors separates the quality products from all the commodity stuff out there.”

Mohawk Hard Surface was also up to the task of bringing NFA members some exclusivity. According to David Holt, senior vice president, NFA retailers will be first to market with exclusive styling, marketing and merchandising. “We are giving NFA a six-month run on the product.”

Case in point: Mohawk came to the table with new designs in its new SolidTec “rigid vinyl” program, which is its answer to the WPC craze. “WPC is just a way of making rigid vinyl,” said David Holt, senior vice president. “Our solid vinyl has no ‘W’ in it. It’s pure vinyl with a lot of calcium.”

Likewise, Shaw Hard Surface is also bringing some exclusivity to NFA members, according to Welton Davison, director of national accounts. “We are bringing them three things: first look at product before it comes to market in January; compelling pricing, which essentially gives them a significant delta over the rest of the account population; and we are also creating unique constructions of colors, widths and attached backings that would be exclusive to NFA.”

Emser was touting its tile and stone growth and expansion to NFA members. “We are up to 70 locations nationwide, said Bob Baldocchi, CMO and vice president. “We are building a new distribution center in Virginia, which is pretty exciting, especially for the East Coast members. “Custom” is the key word, he said, when it comes to giving members a competitive advantage. “What we offer is really about the programs we put together for them on a national basis annually. What’s unique about how we manage this group is every member has his or her own unique portfolio of what they do; we cater to that. We try to work to their strengths and advantages. We also come to them with unique and special deals as it relates to product and pricing.”

Tarkett focused on a new private-label laminate collection under NFA’s proprietary Lifetime Luxury brand featuring 19 of the company’s best selling, 12 mil products. “We have had tremendous growth with the NFA over the last two years and are building on that momentum,” said Randall Sheehe, director of strategic accounts. “This is the only laminate brand in the industry with the asthma and allergy certification. It’s a reclaimed collection that really ties in with consumer trends.”

Sheehe said Tarkett is also looking to help NFA members through advertising. “We are introducing a Google Ad Words program that will help them get customers into their stores through digital marketing. We know where consumers are starting their search; it’s through their mobile device or tablet. We want to help NFA members tap into that.”

Other companies, such as Beaulieu America, took a more general approach going beyond product specials. “We are talking about the new Beaulieu, how we’ve restructured the company and are bringing in innovative products,” said Paul Dominie, senior vice president, strategic accounts. “Nylon is our corner piece right now—solution dyed, prints and loops. We are offering members some unbelievable prices per ounce right now on filament polyester.”

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National Floorcovering Alliance: Recruiting, training salespeople take center stage

National TV spot also in the works

April 25/May 2, 2016; Volume 30, Number 22

By Steven Feldman
Screen Shot 2016-04-28 at 12.23.13 PMAsheville, N.C.—Recruiting and training good salespeople is one of the most pressing issues for floor covering retailers, and the 43 members of the National Floorcovering Alliance (NFA) are not absolved from the challenge. To that end, the group is entertaining the idea of partnering with an outside firm for help.

“There are no real solutions to this issue,” said Dave Snedeker, NFA president and division merchandise manager, Nebraska Furniture Mart. “A couple of companies have reached out to help us find the right talent and do a better job of training. Hopefully we will have a program to present to members before the next meeting in the fall.”Indeed, recruiting good salespeople—and then training them—has been an issue for NFA members. For DeGraaf Interiors, Grand Rapids, Mich., training is the bigger issue right now as DeGraaf is fortunate in that it attracts salespeople from other retailers in the area. “But it is very difficult with the high demand of work right now to train people from green,” said Deb DeGraaf, co-owner. “The issue is whether you want to bring them in and teach them your culture or would you rather them come in with experience. Due to lack of time for training, having them come in with experience so they can hit the sales floor running is preferred but probably not always best in the long run.”

While she is “absolutely a fan” of an NFA-spearheaded training program, she thinks it may be a challenge to come up with something that works for so many different people in different markets. “But if there is one that could be utilized I think it would be great. I know WFCA is working very hard to bring training for installers.”

Finding good salespeople at Dolphin Carpet and Tile in South Florida is always a struggle, said Cary Cass, general manager. “Trying to go after people who have industry experience is generally like chasing ghosts. We have to get people from outside the industry with strong sales backgrounds who can adapt to an industry that may pay more than where they are now. Luckily we don’t have much turnover.”

While Cass would also welcome a formalized training program, he questioned whether it is achievable. “Each of us does business somewhat differently. From a product side, I imagine suppliers can help us. As for the actual sales aspect, such as how to ask for the order, so much of business today is sold inside the house, and to get those guys on their own inside the house is where the difficulty lies.”

Jimmy Poulos, owner of Flooring 101 in Ventura County, Calif., also finds it difficult to locate experienced floor covering salespeople. “The same old people get circulated around,” he said. So he came up with a better mousetrap. “We hire a lot of women whose job is to assist the salespeople. The smart ones after six or seven months want to go on commission and sell. They learn everything. I say, ‘You make $17 an hour but those guys make $100,000 a year. You have the same opportunity. Let me know when you are ready to jump.’”

Poulos noted one of the cScreen Shot 2016-04-28 at 12.23.41 PMhallenges in attracting people to the industry is its reputation, and that is where an NFA-sponsored recruiting program could help. “We have to convey somehow that the people in our industry can make good money. Kids don’t want to say, ‘I am going to sell carpet.’ It’s like they are selling used cars. A used car salesman can make $200,000 a year but no one wants the job.”

As the market leader, Coles Fine Flooring in San Diego has no problem attracting salespeople. But training them is a separate issue. “Anyone who wants to be the class act wants to work for us, so we get a good choice,” said Steve Coles, president. “But to teach them to sell is another story. We don’t sell by price; we sell by durability, quality, installation, etc. Trying to get people who can do that is hard. I’d love a formalized program, but can it be put together? I don’t know.”

Custom Carpet Centers in Buffalo, N.Y., has a unique philosophy when it comes to recruiting salespeople. “We’ve backed away from pulling existing floor covering salespeople and are trying to find people from other industries—like rent to own—where they are used to working long, horrible hours and have tougher things to do,” said Jay McDonnell, president. “So when they come to retail floor covering sales it’s fewer hours and less stressful.”

Cam Haughey, co-owner of ICC Floors in Indianapolis, likes the idea of a blueprint to help NFA members train new sales associates and “bring new blood into the business.” Luckily, recruiting has not been an issue lately. “We are in a nice little pocket right now where we have found some good, young guys and they are bringing in some of their friends. Aside from that, it’s been word of mouth that’s been working. But for the most part we haven’t had much luck sweeping them from someone else.”

 

NFA members hit the airwaves

The NFA is considering producing a professional, customizable national quality TV spot where economies of scale would allow members to participate for as little as $1,000. While in the infancy stages, the idea would be to co-brand the commercial with a vendor for a specific offer. The names Armstrong and Stainmaster were floated.

Darren Braunstein, Worldwide Wholesale, Edison, N.J., who heads up the marketing committee, explained how the committee has been seeking a marketing initiative that would work for the majority of the group. “A commercial makes sense since much of the group does TV.” Members would own the 30-second spot, which could be edited down to 15 seconds as well as changed for different promotions. It could also air on various social media platforms.

“The concept would be a couple moving into a resale home that needs new floors,” he said. “They would go into the store, make a selection with a professional salesperson and then see the finished product in their new home. The takeaway would be that any consumer going into a NFA member store would be exposed to beautiful selection and great service. Experience and result would be the message.”

DeGraaf is a big proponent. “We can all go out and spend $1,000 and put together a so-called TV commercial but not [on the level] of what you would see on a national spot of larger companies. The synergy of the NFA and ability to do that professionally in our market is an awesome opportunity. I want to instill confidence in consumers to understand its local but I want them to see the professionalism that lies behind that.”

McDonnell, who also serves on the marketing committee, is another member who believes it makes a “a ton of sense. The production quality of the spot has everything to do with how people perceive your business. We can come away with super high-quality stuff that can be divided by 20 or 30 companies and can be used for the next two or three years.”

Cass didn’t think it made sense for Dolphin because it would be branded with some suppliers it really doesn’t do much business with. “But I think they touched on something that can be more developed from a generic side, like a generic laminate spot or generic wood spot. That’s something everyone can benefit from rather than with a particular supplier.”

 

Rating the vendors

One of the highlights of an NFA gathering is the core vendor meeting, which is held in a “speed dating” format in which each of the 26 vendors gets 18 minutes with every member. A new wrinkle at the fall meeting in San Diego was an unofficial exercise where retailers had the opportunity to evaluate each vendor’s presentation. According to Snedeker, it was as much about teaching the vendors to think about their presentations as opposed to giving them a grade—utilizing their time and money most effectively by meeting the needs of membership.

Among those vendors who scored well were Tuftex, MS International, Shaw and USFloors. “They utilized the time they had with us most effectively,” Snedeker said. “Some practice their presentations in advance of the meeting so members are not sitting around. They get right into it and are done before you know it.”

Doug Jackson, vice president, sales and marketing, Tuftex, told FCNews he comes to these meetings prepared to give NFA members what the company believes they want. “My opinion is we have done enough of the groundwork on the front side to understand the fibers they are buying, the products they are buying, the displays they need and what they need from a retail standpoint. We don’t come on an exposition mission.”

For Manny Llerena, director of sales and marketing, MS International, the idea is also about meeting member needs. “First and foremost, we are focused on the trends for 2016 and bringing out products to meet those trends. Second, we focus on making beautiful products more affordable. We show them how they and their stores can take advantage of new trends and the lower costs. Finally, it’s about making it simple. We have booklets so they can follow along with pricing. We can show them a lot of items in a short period of time.”

For Shaw, the two operative words are “organized” and “simplicity.” John Godwin, executive vice president, residential sales and marketing, explained, “We have a plan and narrow it down very concisely. We have three very specific things we want to accomplish. We focus on what’s new, where we are going and the things we believe would have some interest. We want people to walk away and say, ‘I just talked to Shaw and they presented four things to me.’”

USFloors takes a completely different approach, according to Piet Dossche, CEO. “We are here to sell the company, not products. We are here to sell our vision. We have to create an excitement. We want them to say, ‘This is a company I want to be associated with because they have an exciting future ahead of them.’ It’s about who you are, what can you do for them, the future. Product has to be [covered] at a different stage. Our message is that in this composite core category, not only are we the current leader but we will be the leader going forward. We will also give them a private label collection because there is enough critical mass with this group to do that. No one else is doing that in this category for this group.”

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NFA Specialty Vendor Show breaks record

February 1/8; Volume 30/Number 16

By Ken Ryan

Screen Shot 2016-02-08 at 2.44.49 PMLas Vegas—The National Floorcovering Alliance (NFA) welcomed a record 42 vendors to its Specialty Vendor Showcase, which was held on the Monday prior to The International Surface Event [TISE].

The showcase has grown steadily in recent years and has proven to be mutually beneficial for both the suppliers and the NFA. The vendor meeting is ideal for these more specialized suppliers because it is reasonable for them to attend as they’re already at Surfaces. Likewise, for the NFA, the show provides additional leverage with a broader variety of vendors.

Dave Snedeker, division merchandise manager-flooring, Nebraska Furniture Mart and NFA president, said the record number of exhibitors “is a huge deal” to his group. “We want to make sure the people we bring on are going to be good for our members, and I believe that is the case here.”

This year new specialty vendors included EarthWerks, Foss, DriTac and Schönox. “[Being in this group] has opened doors for us,” said Jonathan Train, CEO of EarthWerks, which showed new LVT products, including a 20-mil offering and a WPC product with a waterproof core. “I think consumers can relate to the waterproof core,” Train said. “However, we don’t see WPC impacting glue-down LVT; we see WPC impacting laminate sales. At the end of the day it is still about style and design. We’re trying to be more innovative with colors and we look for variation.”

Schönox unveiled a new self-leveling system that it is positioning as a solution to subfloor preparation issues. “There are a lot of people on this list we want to do business with, and this event is a good opportunity to get in front of them,” said Doug Young, executive vice president of Schönox.

One of those dealers on the list is Jim Mudd, president/owner of Sam Kinnaird’s Flooring with multiple locations in the Louisville, Ky., area. “I was most impressed with the self-leveling system from Schönox—a product that in previous years I would never have gotten to,” Mudd said. “It was easy to use and will help fix a lot of problem subfloors.”

For suppliers looking to deal with the upper echelon of retail, NFA represents the Holy Grail. “The NFA dealers have more collective wisdom of what a vendor needs from a long-term profitability relationship than any other group,” said Peter Spirer, CEO of MaxWoods. “It’s like dealing with a senior person—they can sort out the phonies in the market.”

Ian Newton, general manager of Flooring 101, a four-store chain based in Ventura County, Calif., said the benefits of attending the specialty vendor event are evident. “Companies that don’t have the manpower to go all over the country can come here and for one fee see 43 dealers; that’s a good deal,” he said. In fact, every vendor who attended the 2015 showcase returned for 2016.

Marquis Industries, which joined the NFA specialty vendor group in 2015, was touting its traditional broadloom carpet and hard surfaces lineup. “Our size plays into our favor with the NFA; we’re able to fill more niches,” said Charlie Kelley, vice president of sales and marketing, hard surfaces division. “Not every dealer wants to do business with a big company.”

Several NFA dealers said that while they normally don’t do any buying at the vendor event, occasionally there are some great bargains. “You never know when there may be a great deal out there,” said Penny Carrnino, director of operations, Grigsby’s Carpets & Tile, Tulsa, Okla.

NFA news

When Snedeker took over as president of NFA, he said his primary goal was to increase the participation among members. That objective, he noted, is being realized. “At our meeting [here in Las Vegas] every member who wanted to sound off sounded off,” he said. “That is the way a group should be.”

Sterling Carpet and Flooring in Anaheim, Calif., is the 43rd member of the NFA. Sterling attended the fall meeting as a prospective new member and was subsequently voted in. Sterling took advantage of an opening in the Orange County, Calif., market that was vacated by Carpet Distributors.

One housekeeping note: The NFA spring meeting will commence April 9 in Asheville, N.C.

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NFA: Members weigh in on subcontractor/ employee issue

October 12/19; Volume 30/Number 9

By Steven Feldman

Screen Shot 2015-10-12 at 4.36.18 PMCoronado, Calif.—When the 42 members of the National Floorcovering Alliance met here last month, they were updated on some of the most critical issues facing all floor covering retailers, not the least of which was how the recent Department of Labor (DOL) guidance as to what constitutes an employee vs. independent contractor could affect them.

The DOL directive emphasized that a worker who is “economically dependent” on the employer should be treated as an employee. By contrast, to be regarded as an independent contractor, workers must be in business for themselves. The thought is this guidance will make it harder for flooring dealers to use subcontractors for installation. Dealers often prefer to use independents because contractors aren’t eligible for overtime pay, unemployment insurance or workers’ compensation, and they pay all Social Security taxes compared with employees, who split that cost with employers.

Jeff King, counsel to the World Floor Covering Association (WFCA) and a labor expert, advised NFA members on the new guidance, which he said is essentially a new interpretation of an existing law. “Retailers will have to adjust. Some will have to bring installers in-house and they will have to distance themselves from others. It would be extremely dangerous to have in-house and outside installers under this new interpretation.”

Installers must truly look like they are independent. “They must have some investment in what they do—just having tools is not sufficient. They need to have a tax ID number; they need to show they can make money independently, that they can reject work and not suffer the consequences, as well as work for other retailers.”

The other recent ruling that was discussed was the Department of Labor’s plan to make nearly 5 million more workers eligible for overtime pay. The minimum required salary for exempt employees is expected to increase from the current $23,660 per year to about $50,400 per year. These regulations would change the criteria for the so-called white collar exemptions, which can apply to managers and supervisors.

The administration has expressed its concern that many managers, particularly in the retail and service sectors, work substantially more than 40 hours per week without overtime pay. The increase to the minimum required salary would mean many managers would no longer qualify for the white collar exemptions. Employers would either have to pay overtime after 40 hours (based on an hourly rate of at least the minimum wage) or determine whether another overtime exemption could apply.

NFA dealers had mixed reactions. Jeff Macco, president of Macco’s Floor Covering Center in Green Bay, Wis., told FCNews this regulation will force retailers to be absolutely certain its subcontractors are passing the test. “The biggest challenge we face is the cost of workers comp insurance and other insurances we might have to pay if these individuals are deemed not to be subs and are called employees. It could be devastating. It could change the industry. We will have to re-price our floors; there is no way for us not to. Our subcontractor costs are in the millions of dollars on an annual basis. So if you add in the cost of insurance it would be devastating.”

Macco also believes the new $50,400 threshold for overtime pay is significant. “Again, we have to look at anybody we have who is in that range. Now they have to start punching a time clock. We have to make certain they are only working a 40-hour workweek. It’s not good. Those individuals want to work more because they want to earn more. And now we have to change the way we structure some of our people who are in that category. This is all a good example of government sticking its nose in business.”

Screen Shot 2015-10-12 at 4.36.30 PMJay McDonnell, president of Custom Carpet Center in Buffalo, N.Y., agreed that two things working in tandem are potentially disastrous for businesses. And even compliance does not absolve a business from additional costs. “It’s kind of the Wild Wild West. We’ve been through audits before and have won both from a legal standpoint, but we don’t get reimbursed for the money it costs to litigate the audits.”

McDonnell agreed with King in that a company can no longer have both subcontractor installation crews and employee installation crews. “Those are the ones who will potentially be in trouble. How do you justify one vs. another to the IRS?”

Eric Mongradon, hard surface buyer, RC Willey, noted how corporate ensures the company is doing everything right in the way it handles installers, estimators, installation houses, etc. “The new ruling means we have to force our installers to open up installation houses or work for an installation house where they have an entity or a building instead of just a truck and tools. That will no longer classify them as a subcontractor. The other part of it affects those installers who work for us every day; we can’t do that anymore. If more than 75% of their income is derived from one source, they will be considered an employee by the IRS. We can bring on employees, withhold taxes and offer them benefits, but for what we would pay they wouldn’t work for us.”

Phil Koufidakis, president of Baker Bros in Phoenix, is less concerned about the aforementioned 75%. “I just don’t ask those questions. I don’t know if it’s 75%, 100%, 20%. I can’t ask a guy to open up his books and let me see if I am 75% of his income.”

He also questions the enforcement of the new guidance. “I think the rest of it has yet to unfold. I think it’s a wake-up call to make sure everybody is doing all they can, but I think Congress will get a push back on this whole thing. There is a lot more road in front of us. I just can’t see how they can enforce this the way they are talking. There would be no such thing as a subcontractor.”

Bob Hill, president of Floor Covering Associates in Chicago, was looking for clarification. “In Illinois we have something called the Employee Reclassification Act, which means if you have an installer on your payroll, anyone you hire to do installation work has to be classified as an employee because the government says you are in the business of installing flooring and therefore should be paying these people as employees. We have gotten around that by asking the installers if they would incorporate or become an LLC. Therefore, we need to find out from a federal standpoint if the person is ineligible to be an employee because he has his own corporation.

Specialty Vendor Showcase

Screen Shot 2015-10-12 at 4.36.42 PMOne of the major initiatives the NFA has undertaken in recent years is the growth of its Specialty Vendor Showcase, held the day before The International Surface Event in Las Vegas. The brainchild of Sam Roberts, president of Roberts Carpet and Fine Floors in Houston, some years ago, the showcase has grown to nearly 40 vendors and has proven to be mutually beneficial for both the group and suppliers. Every vendor from 2015 has signed on for 2016 with an additional six joining the fray.

“We only have so many tables at the core vendor meeting, plus we can’t drive enough volume to justify the expense for the vendor,” Roberts said. “Take vacuums cleaners and moldings. Those guys could never justify being a core vendor. But that specialty vendor meeting is perfect for these more specialized suppliers because it is very reasonable for them to attend, and they’re at Surfaces anyway.”

Dave Snedeker, flooring merchandise manager for Nebraska Furniture Mart and president of the NFA, said this was a chance for the vendors that are selling two or three members to get in front of the balance. “From a member standpoint, we see products that may not have national penetration. Every member always picks up one or two vendors at each showcase.”

Roberts called the event “a great resource” for the group. “It does two tremendous things: It gives us additional leverage with a broader variety of vendors, and it also provides a really valuable prelude to Surfaces. So you can see all those guys, find out where your interest lies and go back and visit with them at Surfaces.”

Vendors benefit as well as they get exposure to many of the biggest dealers in the country. “Take a company like USFloors,” Roberts said. “They started out as a specialty vendor. They were small. We played a significant role in their growth. Now they are a core vendor to the NFA and sell to all 42 members.”

In other NFA news…

* With many NFA members understanding the need to diversify, particularly as it relates to cabinets, Phil Raby, president of The Raby Co. in Albuquerque, N.M., hosted a meeting about starting an NFA cabinet committee. “We have been in the cabinet business for three years,” Raby told FCNews. “It’s becoming very successful. We are finding many customers who come in looking for flooring are also looking for cabinets. We have put cabinets in four of our showrooms and have a dedicated cabinet person run it for us. We have cabinet salespeople on the floor. We have a fabrication unit that fabricates tops.”

* Every meeting brings about the discussion on whether one dissenting vote can block a prospective member from joining the NFA. In most cases this would come from a member seeking to protect his territorial rights. According to Snedeker, what the group needs are members who want to participate and share their ideas, not just looking to gain volume. “We want to maintain a climate of free-flowing ideas and not have to worry that we are sharing with direct competitors, so I don’t think we will ever change the ‘one no all no.’”

Roberts is one who takes a contradicting view. “I’m just against that as a matter of principal. We should never be in a position where we allow one person to decide something that may be detrimental to the group. I don’t think it’s democratic. People need to trust the group to do the right thing.”

* Sterling Carpet and Flooring in Anaheim, Calif., attended the fall meeting as a prospective new member. The 53-year-old business had the opportunity to join after Carpet Distributors departed the group, opening up the Orange County area. Co-owner Rich Mandel, who bought the business in 1987 with John Ertz, couldn’t stop raving about his first NFA meeting, as did his son, Dan, who is now running the business. “This has been a wonderful experience for my father and me. This group is full of dynamic people who are so forthright and transparent. We’ve always wanted to be part of it.”

Snedeker referred to Sterling as “a good fit. The vendors they support are all core vendors of ours. They have the right product mix for us. I received more words of encouragement for them than any potential new member from people who they do a ton of business with.”

* For the first time NFA members were asked to rate each vendor’s presentation during the traditional vendor roundtables. The idea is for vendors to bring their A game to the meeting. “We are going to go to some of these companies and let them know how they fared,” Snedeker said. “We may say, ‘Here are some of the things you did that made it more efficient for us.’ Or we may say, ‘Here are some ideas that may help in the future.’ We want to make sure everyone’s time is optimized.” Among the companies that scored well with members were Tuftex, Dixie and MS International.