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Distributors' perspective: Turning threats into opportunities

November 6/13, 2017: Volume 32, Issue 11

By Torrey Jaeckle

 

Screen Shot 2017-11-13 at 10.00.53 AMA recent article in the Wall Street Journal highlighted the tenuous plight of American retailers this year. Major retailers are closing stores at a record pace, as announced store closings this year are double what they were over the same period in 2016. It is estimated that retailers will close almost 9,000 locations this year, surpassing the number of closings during the 2008 recession.

The flooring industry is not immune to the shakeout. According to the most recent Census Bureau data, the period of 2007 to 2014 saw a 26% drop in the number of flooring retail establishments across the nation, resulting in a 34% decrease in employment at those businesses.

While the cause of all this turmoil is multifaceted, two factors are oft mentioned as the culprits: Overbuilding and the rise of online shopping. Overbuilding of retail storefronts has made the retail landscape intensely competitive, leading to a surge of downward pricing pressure. Likewise, online shopping has had its own effect on pricing, due to the ease with which it facilitates price shopping.

The article goes on to state, “Many retailers were slow to seize on the significance of these changes.” And therein lies the problem for retailers in the industry. What can we learn from this? Furthermore, how can we use it to not only avoid a similar fate, but also ensure ongoing profitable growth instead?

First, stay on your toes. The changes happening now in our industry are tremendous. It is critical industry participants, including flooring retailers, stay on top of these changes and develop solid plans for their businesses. The good news: If you’re reading this article you’re already ahead of the curve. Keeping up with the flooring trade journals is one method of staying tuned to what’s going on. Relationship building along with active participation in groups such as NAFCD are also critical. Reach out to your local distributor. As the “middleman” in the industry, we are the only entities with long-term relationships with both retailers and manufacturers.

Second, avoid overbuilding. LVT may be the hottest product right now, but that doesn’t mean you should convert half your showroom to LVT displays. Don’t overreact to any one product or market development. Make the necessary changes in your business, but be flexible so you are quick to react to changes in the industry. Things are moving at a faster pace than ever before, and you don’t want to be caught flat-footed with a showroom that reflects what was popular last year.

Third, take the right approach to online shopping. While there will always be a certain amount of flooring sold over the Internet, I’ve always felt the threat to our industry is much lower than the risk to most other consumer sectors.

However, it’s important to realize more consumers are educating themselves via the Internet, and they are qualifying retailers based on their website experience before choosing which ones to visit. If you want to win at the brick-and-mortar game, it is imperative you crush the online arena first.

Finally, there are a lot of retail sales associates looking for work. Find the best, recruit them and invest in training them on your products and services. It’s much easier to train a quality salesperson on product knowledge than it is to teach selling skills.

 

Torrey Jaeckle is vice president of Jaeckle Distributors, a Madison, Wis.- based wholesaler specializing in flooring and countertop surfacing products. In his current capacity, Jaeckle oversees pricing and ecommerce initiatives, and he also manages the data portions and business reporting aspects of the company’s ERP system.

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Wood: Wide-width surge fuels sales upgrade opportunities

October 9/16, 2017: Volume 32, Issue 9

By Reginald Tucker

 

Screen Shot 2017-10-17 at 10.08.26 AMThe growing popularity of wide-width/long-length planks reflects consumer demand for hardwood floors that add depth and character to living spaces, design experts say. What this means for retailers is many of these wider/longer products—which, by their very nature, entail greater use of the raw material—retail in the high-middle to upper end of the register. This has the dual effect of driving more consumers into retail stores in search of these trendy products while giving floor covering dealers an opportunity to improve their margins.

“By and large, the market has moved to longer, wider product—that’s where most of the growth has been in engineered hardwood,” said David Holt, senior vice president, builder and multi-family, Mohawk Industries. “That’s primarily what we’re making out of our Melbourne plant. With our capabilities, we’re able to do different things to the wood, from colorization to fuming to surface texturing.”

The recent investments Mohawk has made across its hardwood manufacturing operations aim to address emerging consumer demands for stylish, trendy products, including collections featuring longer/wider boards. Mohawk’s research shows more consumers are seeking floors with larger dimensions to conform with a broader interior design trend toward open floor plans. Another benefit of this trend is it opens the door to premium products that further differentiate Mohawk from commodity wood flooring producers.

“The wider/longer boards are really growing in popularity,” said Lew Grass, owner, All About Flooring, Taylors, S.C., which sells the Mohawk brand. “I really like the distressed looks in Mohawk hardwood, be it the hand-scraped or the wirebrushed look; those are the things that decorators are drawn to.”

Suppliers across the board are rolling out products that key on the wider/longer trend. Shaw Floors, for instance, recently added a number of new products in its signature Epic Plus collection of wide, long-length planks featuring its Stabilitek core, which is built for high performance and lasting durability. The company’s Epic Plus Extreme Nature line boasts the longest, widest hardwood planks made in the U.S. Each plank is designed in a large-scale format: 9¼ inches long by 82½ inches wide by ½ inches thick.

In the exclusive Extreme Nature collection, Shaw offers three species in four textures, including Landmark Maple, Landmark Walnut, Landmark Hickory and Landmark Hickory Scraped. “Consumers are searching for a hardwood floor that will bring continuity to their large, open interiors,” said Drew Hash, vice president, hard surface product and category management.

Mohawk and Shaw are not the only companies betting big on wider and longer. Mirage recently launched new board lengths up to 82 inches. The new lengths represent an average increase of 25% for Mirage Engineered 5-inch and 6½-inch widths.

“The trend toward longer boards continues,” said Brad Williams, vice president of sales and marketing at Boa-Franc, maker of the Mirage brand. “Increasing our board lengths—up to 82 inches now—supports that trend.”

Other prominent brands, including Mannington, are building on their existing product lines with wider, longer products. Case in point is the company’s new Norweigian oak product, a 61⁄3-inch-wide, engineered, wire-brushed, dual-stained floor featuring a matte finish. “The trend toward wider plank visuals lends itself to engineered given the enhanced stability of the product,” said Dan Natkin, vice president, wood and laminate.

Other noteworthy wide- plank offerings include: Uniboard’s 75⁄8-inch-wide floor from its Heritage collection, which, according to Daniel Seguin, senior director, business development, “features colors and styles designed for the U.S. consumer.”

Screen Shot 2017-10-17 at 10.08.34 AMOther examples: Johnson Hardwood’s signature Alehouse   and English Pub offerings, both available in a 7 1⁄2-inch-wide format. “Wider widths are definitely gaining in popularity,” said Bill Schollmeyer, CEO.

Then there are brand new products such as Mullican Flooring’s Wexford, a Euro-sawn offering in a 7 5⁄8-inch-wide format, and Ribadao’s Agus, a whopping 10-inch-wide, 95-inch-long product featuring a wire-brushed face and two-tone colorations. Another head turner is Mercier’s Fjord, which comes in a variety of widths and lengths to suit the consumer’s personal style. Available in both engineered and solid formats, the line is marked by gray hues combined with brown undertones and the natural golden color of white oak.

The wide range of wide-width floors on the market gives retailers virtually endless options from which to choose. When combined with unique species, surface treatments and colorations, those choices increase exponentially. Such is the case with the Covelo Canyon collection, a 6-inch-wide product, from Hemisphere Imports. “Most products in this range come in at about $6.99 per square foot, so we’re right in that sweet spot,” said Tom Karol, president. “With this product, we’re giving retailers something that offers above-average margins.”

Armstrong also offers retailers a variety of trendy products that fit the wide-width bill. Among them: Woodland Relics, Artisan Collective and Rustic Restorations. “We strive to bring our customers products that offer great design and performance,” said Christopher Moore, wood product manager.

Ultra high-end opportunities
Naturally, wide-width hardwood flooring products lend themselves to trade-up opportunities far beyond the high-middle of the market into the upper-end stratosphere. It’s comfortable territory for companies such as DuChâteau, which eschews the lower end of the market. The San Diego-based producer of wide-plank, oil-finished European oak products has its eye keenly on upscale, high-profit offerings in the $13-$25 range.

“We’re committed to quality design and aesthetics,” said Mitch Tagle, DuChâteau’s CEO and co-founder. “The DuChâteau brand focuses on European wood flooring with a hard wax oil finish. The brand has a European aesthetic—starting with the name, of course. It’s a look that’s exclusive to DuChâteau.

“We’re not the cheapest out there, and we don’t want to get into that category. We have the brand recognition, and people appreciate the quality of our products because of that.”

HF Design is another company specializing in distressed European oak products targeting that upper echelon. Like DuChâteau, Provenza, et. al, HF prides itself on staying out of the entry-level fray.

“The value we bring to our partners is based on turnkey marketing and merchandising combined with fresh new styles in hardwood flooring to help retailers stay ahead of the trend curve,” said Alex Shaoulpour, president. “We make sure we always use the finest quality materials while being fashion-forward and eco-friendly.”

Another supplier specializing in the stylish wide-width European oak look is USFloors, with its popular Castle Combe line. According to Jamann Stepp, director of marketing and product management, the product is gaining traction in the new home construction market, especially the mid to upper end.

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Main Street market paved with opportunities

June 5/12, 2017: Volume 31, Issue 26

By Ken Ryan

 

Screen Shot 2017-06-09 at 10.56.33 AMU.S. Census Bureau data showed businesses with fewer than 20 workers made up 89.6% of American businesses in 2012. Factor in 23 million non-employee (sole proprietor) businesses, and the share of U.S. enterprises with 20 workers or less workers is a staggering 97.9%.

In short, small business means Main Street business. As the economy improves and consumer confidence rises, flooring executives are seeing more opportunities for manufacturers and retailers to seize.

“Over the last five years Main Street has rapidly evolved with product preferences ever shifting toward modular solutions in carpet tile and resilient,” said Quentin Quathamer, commercial brand and marketing manager for Philadelphia Commercial, a Shaw division. “Improved aesthetics and product design—combined with ease of maintenance and selective replacement that extends product life cycles—has made this market even more dynamic than ever.”

The consensus is the flooring industry is more vested in Main Street because of largely untapped profit opportunities. Some dealers say Main Street opportunities can be as easy as having a two-minute conversation with your dentist looking to tile his waiting room. “The retailers we have partnered with realize the opportunity in higher profits and quicker pay—unlike typical bid projects,” said Keith Wiethe, channel manager–Main Street business, Mannington. “Main Street offers another channel that maybe a retailer hasn’t explored, and it affords him the opportunity to cross-germinate into another channel diversifying his reach.”

As part of its retail support program for Main Street, Armstrong Flooring developed Elevate to help specialty flooring retailers grow and capitalize on the burgeoning Main Street business. “In conjunction with our distributor partners we are aggressively engaging the specialty flooring retailer in Main Street,” said Lisa Kronmuller, channel marketing manager.

Chris Post, director of sales operations for Mohawk, said the steadily improving economy will start driving more growth into Main Street channels. “As residential soft floor covering has softened in the marketplace, more dealers are looking for other profitable categories to grow their business. Increased earning potential with larger average selling price and more units ordered per job as compared to residential products makes Main Street commercial a great opportunity.”

Screen Shot 2017-06-09 at 10.58.10 AMTo help its dealers succeed in Main Street, Mohawk introduced multiple resilient sheet and LVT products along with new carpet tiles—product types that represent the fastest growing segment of the market.

Flooring dealers said succeeding in Main Street commercial requires networking on the local level through local civic organizations such as the Chamber of Commerce. It also requires being proactive in getting to know local business owners/decision makers. “Then it comes down to having samples with great pricing readily available when the customer calls,” said Carlton Billingsley, president/owner of Floors and More, in Benton, Ark. “Knowing the availability of products for quick shipping, and the ability to have installation technicians available for nights/weekend work is key since this work is typically done when the business is closed.”

What’s new
Flooring companies have ratcheted up their R&D efforts to take advantage of the market opportunities Main Street provides. Mannington is updating its Main Street merchandising in 2017 with new products including a commercial rigid core product with FloorArmor. Wiethe said the company is also introducing a performance-driven product that will allow retailers to upsell typical VCT customers.

Since entering the Main Street space, Engineered Floors’ Pentz Commercial brand has grown by leaps and bounds, the company said, with strong response seen in its nylon modular and broadloom offerings.

New this year from Engineered Floors is an APEX SDP commercial polyester fiber system that features a high-performance PET engineered specifically for commercial-grade performance.

Carpet tile and resilient products have led the way in Main Street commercial, and some companies are combining the two. Philadelphia Commercial rolled out its specified resilient line to its sales force this spring. “Furthermore, the introduction of our newest Design Smart collection featuring our StrataWorx backing has opened up a whole new realm of possibilities for carpet tile,” Quathamer said. “It’s an exciting time to be in this business segment.”

Foss Manufacturing, known for its innovative on-woven fabrics and specialty synthetic fibers, introduced an all-in-one Smart Transformations carpet tile display offering a large selection of Main Street products with an interactive presentation of the Foss exclusive Peel & Stick technology. The display also has a demo of Foss’ goof-proof installation system and a complete set of architect folders.

“We’ve seen an uptick in Main Street businesses buying carpet tiles as a fast, easy and cost-effective way to improve and update the look and feel of their storefronts,” said Brian Warren, senior vice president of sales and marketing for Foss. “Main Street businesses that have been sitting on money are seeing more customers come in and finally feel comfortable investing back into their spaces.”