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NRF prioritizes service for partners at NEFM

April 2/9, 2018: Volume 33, Issue 21

By Steven Feldman & Mara Bollettieri

Uncasville, Conn.—Winter turned to spring on March 19 as things were heating up at NRF Distributors’ New England Flooring Market (NEFM). With 110 vendors showcasing their latest wares to an estimated 320 customers, Terry Gray, vice president of marketing, was anticipating the one-day event to generate $3 million in business. Every vendor offered some type of special to encourage retailers to make the trip to NEFM and spend.

“This is their local Surfaces,” Gray told FCNews. By her count, only 10 retailers who signed up for the NEFM attended Surfaces. “Instead of flying to Vegas and spending all that money, they can spend a night here and buy new displays and meet executives of the brands they sell.”

The NEFM concept began nearly 40 years ago, when it was held in NRF’s Augusta, Maine-based warehouse. The market eventually outgrew the venue and has been held in casinos for the last 10 years, attracting customers from Maine to Pennsylvania. NRF now hosts three markets a year for its customers—two in Connecticut and one in New York.

One initiative the distributor was focusing on at this event was its newly launched social media platform, NRF Social, which aims to help retail customers build their Facebook and Twitter presence. Michael Gallicchio, social media manager of NRF Social, explained how the program familiarizes itself with the retailer and adapts to his or her specific community and product line. This allows the program to produce a library of personalized content. “What we try to do is engage the community through social media in the name of the retailer and target people who are showing the tendency toward home improvement services. Once we do that, more than likely when people go to buy flooring, they’re going to be thinking about the local retailers first.”

The program costs anywhere from $99-$149 a month depending on the level of service. Ninety-nine bucks a month includes posting content and pictures; for $149 a month, retailers receive content plus paid Facebook ads. Gallicchio emphasized how putting money behind Facebook advertising can be extremely beneficial to a retailer’s business. “For hardly any money, comparatively speaking to what existed 20 years ago—when people spent thousands of dollars in ads—you can deliver a branded message with pictures, specs and product knowledge that will help people make decisions on the fly.”

Around 30 to 40 stores have signed on to NRF Social since its launch in October, and at least a dozen more were added at the show, Gallicchio shared. “NRF had the foresight to not guess what consumers do. We studied it.” The platform allows retailers to maximize their time on the floor with customers while the social media experts handle the advertising.

NRF’s social media team held a four-month pilot program, where it tested numerous types of messaging and online advertising through social media platforms. The data collected from this study revealed what consumers best respond to, so a local retailer can hyper-locally target consumers in his or her community.

NRF has also launched a campaign promoting the “shop local” movement with service, honesty, options and pricing providing the basis for the acronym SHOP. NRF has adorned the back door of its 68 trucks with the signage and is also providing POP material in the form of stickers to retailers. “The idea is to get people to buy specialty flooring products from their local retailer,” Gray said. “It’s a way to drive more traffic into stores. We are driving the fact local stores do it better.”

NRF is also using its trucks to promote its vendors. For example, 28 trucks sport the Tarkett logo and a large room scene visual plastered on the side. “We’ve been doing that since 1988,” Gray said. “We don’t know of any other distributor doing that. It’s the best advertising you can get. That will last 12 years; the trailer will die before the label comes off.”

Gray noted that NRF was up about 6% in 2017 and, like just about everyone, is riding the crest of the LVT/WPC/SPC wave. Beauflor and Raskin are new vendors joining Tarkett, which NRF has handled for five years. “Actually, the last two or three years have been great,” Gray said.

That is not to say NRF is strictly growing because of hard surface. Gray pointed out that carpet is still a big part of the distributor’s overall sales. “Carpet remains 30% of our business. I have carpet in stock all the time.”

Service with a smile 

Service has been, and always will be, something Gray believes is an NRF hallmark. “Truck drivers deliver to every single store twice a week—roll goods, boxed goods, palletized goods. Generally speaking, customers never have to wait more than a week for anything. We even have 400 customers who have given the truck drivers keys to their stores, so they can deliver early in the morning. Sometimes we even start the coffee maker.”

Delivery of product begins long before NRF drivers show up on a retailer’s doorstep. In many cases, product comes from overseas, which requires astute management to ensure proper inventory. “If you are buying containers from China, you must factor in how many weeks and months it takes to get product,” Gray noted. “You need 15 to 18 weeks inventory if it’s coming on a container. You have to have a purchasing system for all the different items. You have to factor in all the nuances of each product lines.”

Retailers attending the NEFM attested to NRF’s focus on service. Jeff Hosking, owner of Payless Floors, North Attleborough, Mass., shared the advantages of using the distributor for his local business. “The pricing is better when you buy it in bulk, and they’re great people to deal with. We’ve worked with them now for a lot of years, and we’ve found them to be very honest when we have an issue. They back up what they say. They help us sell our customers with product knowledge and offer training.”

When asked what separates NRF from other distributors, Hosking did not hesitate to respond. “They’re more attentive. The service is 100% better than most of the other distributors.”

Even retailers who are new to the game are impressed with the service NRF provides. Eileen Nash and her husband, Dylan O’Malley-Joyce, recently opened The Floor Works in Bethlehem, N.H. She shared how they recently had a problem with some of their flooring and NRF resolved the issue. “The manufacturer blamed the installer, so NRF got us an inspector. It turned out to be a flooring defect, and NRF had everything fixed [just] like that.”

As an added bonus, NRF has a printing department and another that handles sampling for wood and ceramic. NRF also offers its customers products to sell on a private-label basis. “We always thought it was important for customers to have their own lines,” Gray said. “Everyone can go on their phones and say, ‘I can buy it cheaper.’ But private-label products can’t be shopped.”

Manufacturers also attest to the value NRF provides. “They’re just efficient,” said Stephan Guindon, executive director, NA, Venture Carpet. “The reputation they’ve built in the marketplace is something I haven’t seen in other areas of the country.”

If reputation is No. 1, then product knowledge is a close second. Bruce Hammer, vice president of sales at Ribadao Wood Boutique, was one who commended the distributor’s familiarity of his products. “They have an extremely knowledgeable sales staff that can talk in depth about the unique species we offer.”

Raskin Industries is a relatively new supplier, only four months into the relationship. “I would say they dominate New England more than any other distributor dominates their own marketplace,” said Ted Rocha, vice president of sales. He likened his partnership with NRF to being a part of an extended family. “They have great support from areas that are very difficult to get to.”

Mike Lewandowski, general manager of American Olean, is also pleased with NRF as a distributor partner. “They support all our new launches and every effort we do in the market.”

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Wood: State of the industry—Builder business, remodel sector propel category

April 2/9, 2018: Volume 33, Issue 21

By Reginald Tucker

 

Preliminary anecdotal information shows the hardwood flooring category grew between 3% and 4% in 2017, placing the estimated value of the category just north of $2.31 billion at the first point of distribution. That growth, manufacturer executives say, puts the category on par with the estimated growth of the industry as a whole but slightly above the total gross domestic product for the year.

In terms of volume, that growth estimate equates to roughly 930 million square feet, lifting the hardwood flooring category ever closer to the 1 billion-square-foot threshold.

Ask a roomful of hardwood flooring manufacturer executives to identify the root cause of this growth, and many will point to the strength of key end-use sectors here in the U.S. market.

“Single-family construction and residential replacement continue to be the core drivers of demand for hardwood,” said Dan Natkin, vice president, wood and laminates, Mannington.

Natalie Cady, hardwood category manager, Shaw Floors, agrees, citing consumption trends and demographic shifts. “Residential is driving the market, and for Shaw that means both single family and residential re-do. And as our single-family business grows, it has that wonderful trickle-down effect.”

By that, Cady means more people are able to get into a new home while sellers have been able to get better market value on their existing properties. As for the former, she is finding that many people strongly aspire to real hardwood and wood lookalikes. She also sees a direct correlation to influential purchasing segments. “Millennials want wood, and they are the No. 1 consumer right now. At the same time, the empty nesters are downsizing and finding they can afford hardwood flooring.”

But that doesn’t imply that it’s going to be smooth sailing. “For us, the driving factor is still the housing market,” said Wade Bondrowski, director of sales, U.S., Mercier Wood Flooring. “Although this segment is trending up, we are still below normal levels.”

Other executives are seeing hardwood growth across virtually all end-use sectors, including commercial specified and Main Street applications. “We think it is all of the above,” said Michael Bell, vice president, hardwood, Armstrong Flooring. “A more stable economic environment continues to steer the hardwood segment on a course of steady growth, with increases in demand in both the new construction and remodeling markets. We also see hardwood opportunities in the commercial marketplace.”

But that doesn’t mean all segments within the hardwood flooring category are growing at the same pace. When it comes to solid vs. engineered, for example—or even between subcategories within the engineered flooring offering—activity can be quite mixed. “While the wood category grew by low single digits in 2017, the growth rates were different between solid and engineered, with solids declining in overall volume and engineered growing by mid-single digits,” Mannington’s Natkin said.

It’s not that the solid segment of the hardwood flooring business is no longer an in-demand category. Truth be told, it still is preferred by many customers, home builders and designers in markets like the Northeast and Pacific Northwest. Rather, experts say, the rapid development and evolution of products that fall under the category of engineered floors is opening up opportunities even in hardcore solid markets.

“There’s never been more changes taking place in the wood flooring segment than what we’re seeing before our eyes right now,” Tom Lape, president, Mohawk Residential, told FCNews. “The biggest trend we’re seeing in the wood flooring segment today is a blurring of the lines within the product categories. For example, we’re clearly seeing many customers, dealers and consumers moving away from solid at a rate that has been running unabated for five years running and continues to accelerate. We see the engineered category evolving right in front of our eyes from what was historically a 5-ply construction format to an HDF product solution.”

Mohawk is so convinced that engineered wood flooring products based on an HDF core are quickly overtaking conventional, multi-ply hardwood flooring options that it is banking on wholesale consumer and end-user acceptance of the emerging format.

“When you see high-end custom builders and high-end production builders in the Northeast and Pacific Northwest coming off solid, it is eye-opening,” Lape said. “That’s not to say that people living out in the Hamptons are buying engineered. Solids are not going away, but where there is a reasonable trade off of in terms of cost, value, etc., I think you’re seeing the market accelerate the move to engineered.”

And all this plays to Mohawk’s strengths, according to Lape. “We try to focus on our game, which is leveraging our position as a true, integrated and vertical HDF engineered wood producer. Making all our own HDF internally gives us an advantage in terms of consistency and uniformity of the product. Second, we produce all those products here in North America, which gives us an advantage in terms of supply chain and reliability.”

For others, the continued migration from solid to engineered doesn’t necessarily spell the end of a category. While engineered floors offer opportunity for design innovation combined with installation flexibility, solids still have their place.

As Armstrong’s Bell explained: “The dynamics are different in solid vs. engineered. In engineered, we see much of the growth occurring on the bookends of the market with significant increases in the opening price point/value engineered products and the best/premium sliced- and sawn-face engineered products. Solid is similarly seeing increased activity on the best/premium side of the market.”

Innovation, Bell added, continues to happen across both structures. “While there is significant activity in engineered floors, we also see that solid wood flooring remains the go-to product in certain parts of the country and for key consumer segments.”

While it is generally accepted that consumer tastes differ by region and/or climate, some point to inherent limitations of solid products as an impediment to acceptance beyond the core solid markets. “With the demand and overall trend moving toward longer and wider, there are limitations you have with solids that are not there with engineered,” Shaw Floors’ Cady said, citing the tendency of solid floors to expand and contract more easily than engineered. “Having the ability to go longer/wider will help people move more toward engineered. Plus, with single-family home construction on the rise, that represents an increase in concrete slab construction—and that lends itself to engineered. At the end of the day, we believe the solid market—which includes both finished and unfinished product—is steady, not actually shrinking.”

With consumers continuing to ride the longer/wider wave, suppliers remain committed to giving them more of what they’re looking for. “The good story is the industry is not sitting still; we’re giving consumers more of what they want—wider and longer,” Mohawk’s Lape explained. “We’re selling planks up to 80 inches long and 9 inches wide, and we’re making better-performing products for contractors, retailers as well as consumers.”

While all this continues to play out, suppliers continue to fortify—and diversify—their product mix to ensure they have all the bases covered.

Over the past 18 months, for example, Quebec-based Wickham Hardwood introduced several new engineered offerings designed to complement its solid hardwood collections. According to Paul Rezuke, vice president residential sales, U.S., the breakdown seems to follow along geographic lines. “As part of our engineered strategy, we targeted two platforms based on a ½- and a ¾-inch format. We initially envisioned that the ½-inch product would be most suited for the U.S. market and the ¾-inch line for our Canadian business partners. What we are seeing is the demand in the U.S. market for a thicker platform appears to be on the rise. With this demand, we are projecting a significant demand for ¾-inch platform engineered products in our U.S. footprint.”

Tracking design trends

The shift in product preference within the hardwood flooring segment is not limited to the product’s core construction. Industry observers are also keeping a close eye on changing consumer tastes relative to color, species, surface texture and even board length and width. For many suppliers, staying ahead of consumer trends and anticipating what’s going to be the next big thing is akin to shooting after a moving target.

“The key is making sure we stay out in front in terms of styling and design,” Shaw Floors’ Cady said. “We’re still seeing the move toward longer, wider planks, but we are also seeing a move toward more traditional visuals. Instead of going into the European wide-oak visuals, we’re going back to basics by focusing on the natural characteristics of hardwood—meaning showcasing less texture and lighter colors so consumers can see the actual wood, not covering it up with dark stains.”

At the other end of the spectrum, some suppliers are seeing a mild resurgence in demand not for domestic species—which had been rising in popularity—but for exotic looks. With anecdotal information and consumer purchasing trends showing shoppers gravitating more toward home-grown species such as walnut, hickory and birch, to name a few, others—including companies like Ribadao Wood Boutique—say there’s still a viable market for imported product.

“We’re still very bullish on exotics, although it’s just one line that we offer,” Bruce Hammer, vice president of sales, said. “It’s true the U.S. market is nowhere near what it was for exotics about 10 years ago, but that doesn’t mean there’s no opportunity for us. We consider our products to be more ‘boutique’ offerings. It’s still a viable product line for us to be offering.”

Ongoing challenges

Hardwood flooring has long been linked to its ability to contribute to rising home values, and it remains—as suppliers argue—the product that many homeowners covet. But aggressive competition from competing “wood-look” visuals available with LVT, WPC, laminate and, now, ceramic is a cause for concern.

“The growth of wood-look products such as WPC is an issue,” Mannington’s Natkin said. “While cannibalization is minimal for the consumer who really desires hardwood, there is conversion for consumers who are not sure what product is right for them.”

Armstrong’s Bell is in agreement, adding that—with the exception of tile— most of these products cost less than real hardwood. Also at play, he said, is the fact that the quality of the visuals and textures has evolved so much that many consumers feel comfortable using these faux wood products instead of the real thing. “However, there is nothing that can truly compete with genuine hardwood from either a look or value equation. It is a great long-term investment and can actually become a strong resale argument, exceeding the initial installation cost of the floors. And, it’s organic, natural and renewable, and, of course, since it is natural, has less pattern repeat.”

Traditional, hardwood-only suppliers seem to be taking it in stride. As Wickham’s Rezuke explained, “Currently, WPC appears to be the category of the month. We’ve experienced this in the past with both laminate and LVT.  Our position remains that there will be new products that will present challenges. But in the long run, hardwood will always maintain a significant market share in the flooring industry.”

Those companies that supply the full range of competing hard surface materials believe all products can successfully coexist. But that doesn’t mean equal market share for all product segments.

“It’s an ongoing conversation with all flooring suppliers and it comes down to having products to fulfill consumer needs and wants, Shaw Floors’ Cady said.

But wood’s classification as a natural product also subjects the category to price fluctuations due to rising raw material costs. “We are seeing some upward pressure in raw material pricing,” Mannington’s Natkin said. “Certain regions are more dramatic than others.”

Armstrong, one of the suppliers to pass on increases to its customers earlier this month, also attributes the hikes to rising natural gas and electricity prices—all of which impact costs to power the plants. Bell doesn’t see any let-up in sight. “We expect this cost pressure to continue throughout 2018.”

Despite these challenges, suppliers are optimistic about the category’s prospects in 2018. “We predict the overall hardwood category will have a moderate growth rate of 3%-5% this year,” said Brad Williams, vice president of sales and marketing for Boa-Franc, maker of the Mirage brand. “We feel our greatest opportunity continues to be within our existing network. We will continue try to understand our customers’ needs and focus on creating opportunities for them.”

Don Finkell, president and CEO, American OEM, is confident the category will grow by at least 6% this year, surpassing the rate of growth achieved in 2017. The prospects look even better from an internal standpoint, he noted. “I expect our company to more than double that growth rate at about 12% to 15%. “We are adding new products for our existing distributors, building on our private-label programs and developing coverage of our new Hearthwood brand. Plus, we will be adding more domestically made products to our Hemisphere brand.”

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Ribadao seeks to stand out with differentiated offerings

March 19/26, 2018: Volume 33, Issue 20

By Reginald Tucker

 

In a sea of European oak, wide-plank/long length sameness, Ribadao Wood Boutique is looking to set itself apart from the pack. The key, according to the company, lies in targeting the mid-to-high-end tier of the market with visuals, profiles and product formats consumers and commercial end users won’t find among the bevy of commodity offerings currently flooding the market.

Utilizing its expertise in raw materials sourcing (the company has long maintained manufacturing and finishing facilities in Portugal), Ribadao focuses on various exotic species from South America and Africa as well as wide-plank European oaks planks. Once a private-label supplier to major importers as well as manufacturers based in the U.S., the company is focusing on driving awareness of its own brand by leveraging its manufacturing capabilities and history.

“The company has been producing hardwood flooring for a long time—just not under its own brand,” said Bruce Hammer, vice president of sales, Ribadao Wood Boutique. “The company was founded in 1976 by the father of current president and CEO Pedro Tavares. His dad began trading African lumber and commodities and then started making flooring and other products. The company quickly became a global leader in the production of exotic flooring, lumber and decking, supplying several OEM and private-label programs to some of the leading brands and U.S. manufacturers in the industry. Now it’s looking at being a branded manufacturer in America.”

Ribadao’s go-to-market strategy in the U.S. market will entail, essentially, a dual-distribution approach, according to Hammer (formerly of Elof Hansson), who teamed up with Tavares several years ago while they were developing new collections for the American market. “We are going with distribution in certain markets, and we will go it alone in other territories,” he explained. “We have a mixed bag of products that bring value and selection to our customer base.”

But don’t expect to find your run-of-the-mill, entry-level hardwood flooring options among those offerings. “We’re still very bullish on exotics, although it’s just one line that we offer,” Hammer explained. “It’s true the U.S. market is nowhere near what it was for exotics about 10 years ago, but that doesn’t mean there’s no opportunity for us.”

The company’s signature offerings include the Exotics Skins line and its Rio collection. Ribadao is also working on an engineered exotics line and—in a limited number of SKUs—engineered birch. Outside of exotics, Ribadao also offers European oak wide planks, some as broad as 10 inches wide in a ¾-inch format with a 4mm wear layer. “There are a lot of companies out there today offering 7½-inch European oak planks, but there’s a limited number of suppliers that can do the wider widths and longer lengths,” Hammer explained.

Priced for profit

For retailers, Ribadao strives to offer products that will command a higher price point at retail and, more importantly, higher margins for dealers. Take the company’s Exotics collection, for example. Considered a “medium- to high- priced” offering, the line opens at roughly $5 per square foot for certain grades and moves all the way up to $14 for some species.

Outside of retail, Ribadao has also been successful marketing to the commercial sector. According to Hammer, 30,000 square feet of the company’s products were installed at the 9/11 Memorial Museum in New York City, and the company also has a contract to supply Chanel stores globally.

“High-profile installations are a feather in our cap,” Hammer said. “But we also know that to get good turns out of inventory we have to have products sold through retail that’s not just an A&D spec.”