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Marketing mastery: ideal business, ideal lifestyle

January 20/27, 2014; Volume 27/Number 19

Screen Shot 2014-07-23 at 3.58.28 PMBy Jim Armstrong

(Third of three parts)

About two-thirds of my coaching for flooring retailers focuses on marketing and making more money. The other third focuses on helping dealers engineer their businesses so they can have the time and freedom to enjoy the fruits of their labor. After all, what’s the point of investing the enormous amount of time, energy and money required to build a flooring dealership if you remain enslaved to your business, never able to enjoy life outside of work hours?

In my last column, I gave you an assignment to take a calendar somewhere you could sit undisturbed and build your ideal week. In this installment I’m going to give you some tips on engineering your business so that it funds and facilitates your plan.

Let’s look at a workweek for a fictional dealer named Floyd. Floyd works 10 hours per day, Monday through Saturday. He wants to take Wednesday afternoons and all day Saturday off so he can improve his golf game. In order for this to happen, his business will need to become system-dependent (rather than owner-dependent), at least initially, when he is out. By system-dependent I mean the business continues to operate correctly even when Floyd isn’t there to personally oversee things. There are some basic steps he should take to make that happen.

First, what tasks does Floyd have on Wednesday afternoons and Saturday? Let’s say one is working the sales floor.

Second, he needs to delegate. What personnel does he need to add so he doesn’t have to sell on Wednesday afternoons and Saturdays? Obviously, a salesperson.

Third, does Floyd’s budget allow for the extra expense of hiring a salesperson? If so, he’s golden. If not, then he needs to implement a marketing plan to grow his revenue so he can afford the additional expense. It’s critical that Floyd create a written financial benchmark for when the new hire comes along. For example, if he needs to generate an extra $20,000 in monthly revenue to pay for the new hire, then he should write this down, along with marketing strategies that will get him there, and a deadline to make it happen.

Fourth, he needs to put a written system in place for the tasks he is delegating and train his replacement.

In essence, Floyd must make his business system-dependent rather than owner-dependent  when he is away. He can then expand this systemization to other areas of his business until it’s 100% system-dependent.

Floyd is now able to take Wednesday afternoons and Saturdays off to improve his golf game.

There’s more you’ll need to learn about systemizing, but in the limited space here I wanted to give you a picture of the process. I’ve seen this system work many times, and the results are truly life changing. Dealers who once were slaves to their stores are now working less, taking time off for travel, leisure or whatever is important to them. They enjoy life again, the stress is largely gone, and they get to spend more time with their families. Their dealerships continue to run like well-oiled machines while they are away.

And that’s what “ideal business, ideal lifestyle” is all about.

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Women in flooring: Rosana Chaidez – Passion helps achieve goals

January 20/27, 2014; Volume 27/Number 19

By Jenna Lippin

Screen Shot 2014-08-14 at 4.28.11 PM(Editor’s note: This is the first in a series of articles highlighting some of the women in the floor covering industry who are not only making a difference, but raising its level of professionalism.)

Rosana Chaidez has developed a strong reputation as vice president of sales & marketing and procurement for Haines, the largest floor covering distributor serving the Southeast and Mid-Atlantic. Hard work and dedication brought her to the top ranks, making her an inspiration to all women who are aiming to hold their ground in a male-dominated industry.

Joining the industry in 1986 with distributor FlorStar Sales in Chicago, Chaidez was charged with internal operations, including customer service, supply chain functions and information technology. In 2002 she joined Haines as chief information officer, and she has continued to ascend the corporate ladder. She was eventually appointed to oversee the supply chain, and then in 2008 became general manager of the Wheeler division in Florida shortly after its acquisition by Haines. She then was promoted to vice president of sales, marketing and procurement.

“Haines has a great reputation in the industry,” Chaidez said. “I saw Haines as a great company for me and my family because, at the time, Haines was going through a transition period where the [family of the original ownership] that was left running the business was retiring—Mort Creech and Lee Marston, who ran Haines for over 40 years. Bob Thompson, who I always admired, was the first non-family CEO, and he hired me in 2002 to be part of the executive committee. Soon a team was established and being part of that group was exciting. Bruce Zwicker was part of the new team that was formed, hired as Thompson’s successor as he retired in 2005. Zwicker continues to lead Haines as president and CEO. Learning is a way of life if you are part of Bruce’s team. He believes in investing in people at Haines.

“I thought it was a great opportunity to grow. I wanted to continue to learn and to get my master’s degree.” Chaidez did, in fact, earn her MBA from the University of Maryland while working for Haines.

Under Chaidez’s leadership, Haines improved the management of its inventory. With her assistance, the distributor established a strong supply chain with suppliers and has improved the overall performance of that investment. She was also instrumental in Haines’ acquisition of the Wheeler division, and the growth it has experienced through today. While the process of acquiring another entity is a seemingly daunting task, Chaidez took it as an opportunity to learn, grow and enjoy her work.

“My first exposure to sales was as the general manager for [Wheeler], and I thought it was a lot of fun,” she said. “What I thought was most fun was integrating with Haines and growing the business during the downturn. With Wheeler there was no overlap with an existing footprint. We had to maintain business and establish ourselves with a strong product portfolio, building strong relationships with suppliers by growing the business, which we have by double digits over the last two years. We are now recognized as a strong distributor in Florida by our customers and our suppliers.”

In addition to the significant progress she has made at and for Haines, Chaidez serves on the boards of the National Wood Flooring Association (NWFA), North American Association of Floor Covering Distributors (NAFCD) and Diversity Leadership Institute in Columbia, Md., a non-profit organization dedicated to aiding educational and healthcare efforts in less fortunate communities.

A resident of Annapolis, Md., Chaidez works with the Diversity Leadership Institute to help those in the community while remaining connected to her roots. She moved to Chicago with her family in 1979 when she was just 12 years old after finishing elementary school in her native Mexico. The support she received during that difficult transition is something she wants to provide to others through her work with the Institute.

“I work with this group to better understand how I can help and influence the Hispanic/Latin community here in the Washington, D.C., area,” she said. “I have the opportunity to influence Hispanics to continue to grow and aim for more, including higher education. This organization is focused on educating Hispanics coming to the U.S., and not only understanding the systems here but embracing them. It is my small contribution to giving back what others gave me whenScreen Shot 2014-08-14 at 4.31.14 PM I came to this country.”

As treasurer of NAFCD, Chaidez has been instrumental in making changes for the group and its members, most recently in offering technological tools that help both customers and suppliers. “I was basicallyrecommended [to NAFCD] by Bruce [Zwicker], and it has been a great experience working with other leaders in the industry. I feel very well established in the industry, but being part of NAFCD just gives you that much more exposure. The industry as a whole has been known as a sophisticated one and I believe it is transforming little by little to be more sophisticated and more interested in technological tools.”

While new to NWFA, serving on the board for about a year and a half, Chaidez believes she has been fortunate enough to help the organization make great progress, particularly in its financial stability. “Part of that is working with distribution and manufacturing, basically being involved at all the different levels of the floor covering industry, all the channels that are instrumental to success. While NWFA primarily focuses on hardwood, it works closely with all areas of the industry.”

With all of her success and multiple areas of involvement in flooring and beyond, one can’t help but ask Chaidez for some words of wisdom. She has almost 30 years of leadership under her belt, never worried about falling under the shadows of her male counterparts.

“The characteristics to succeed are the same, whether male or female,” Chaidez explained. “It takes a lot of hard work, preparation, dedication, commitment and passion. If you enjoy what you do, it shows. Be enthusiastic and motivate others. A motivated individual is likely to succeed because he or she is willing to put forth the time and effort to get the skills and knowledge required to do a good job. My advice to women in the industry is to set career goals and be committed to achieving them. Make adjustments along the way to keep learning and developing because the learning never stops. Listen to those who are trying to help you and stay true to yourself. Women must embrace the idea of being a minority in this industry; this is not a negative factor.”

While she avoided having her gender be a factor in her success, Chaidez did have to make some decisions when it came to her family. As a high-ranking executive who travels frequently, she and her husband decided he would stay home to raise their two daughters, now 18 and 16.

The biggest challenge Chaidez sees women encountering? Communication. She encourages saying things clearly and concisely, and being able to admit fault and learn from errors. “There is a frustration of being misunderstood in a male-dominated industry. You have to spend time preparing your message, responding in a way that does not sound defensive but factual and skillful. It’s a lot easier to defend than admit fault, but there is nothing wrong with saying, ‘I was wrong, please forgive me.’ I find that to be more difficult with women; tell others what you have achieved instead of getting defensive about what you tried to do. When you fall, get up and be graceful about it. It will make you stronger.”

Chaidez has much of which to be proud, and today her biggest accomplishment, she said, is her feeling of comfort and belonging at Haines and in the industry as a whole. Coming from another country and being a member of the lesser-represented gender in her field has not hindered her progress. “I’m feeling well established not only with Haines but with all the friends I’ve made, including suppliers, customers and peers. I’m most proud of the fact I’ve enjoyed every step to the position I hold today. I can humbly say that without God’s blessing in my life I would have no success.”

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Financial: Starting 2014 the right way

January 20/27, 2014; Volume 27/Number 19

Screen Shot 2014-08-14 at 3.39.07 PMBy Bart Basi

So far, the consensus is that the economy will be relatively stable in 2014. With an average of 140,000 jobs being created each month last year and most economic indicators showing positives, this year should be better than last. Too often, businesspeople wait until late in the year to do their strategic planning. While there are some actions that can be taken at that point, those who work proactively throughout the year implementing business and tax strategies perform far better than those who put off planning to the last minute. There is plenty of business and tax planning that should be executed throughout the year.

According to the latest Beige Book report, the overall United States economy is continuing modest or moderate growth. Given this, businesses should work hard to increase revenue and look to hire additional staff. As of late, there has been a trend toward businesses hiring temporary staff ahead of full-time employees. While many businesses have never explored this option, it is worth developing a relationship with temporary labor organizations. It is expected that business will continue to build and stabilize during 2014, so now is the appropriate time to ramp up labor and inventories.

Investments

Companies tend to instinctively cut investments when business is slow. Ordinarily, purchasing less in leaner times would be appropriate. However, given Internal Revenue Code Section 179, there is still an incentive to make additional investments. So far in 2014, the deduction has fallen to $25,000 and Congress has not reenacted the higher amounts. Given the importance of advanced depreciation, it is likely the limit will once again be increased to $250,000-$500,000. We will have to monitor legislation to stay updated.

Financing

The past economic downturn also brought lower financing rates that are currently remaining in the recovery. Financing of buildings and equipment may be eligible for lower refinancing rates. Check with your bank to see if your loans can be refinanced. Just be sure to check the fees and costs before committing.

Estate planning

Many businesspeople have complex estates, and the average net worth of a businessperson is substantially higher than an employee. The 2014 estate tax exemption is $5,340,000. It is best to begin estate planning early so issues can be resolved throughout the year and the can have time to be implemented. Please review your total estate value and start the process of a complete estate planning process now.

Succession planning

For those who own businesses, business succession planning is an additional item that needs to be addressed. Business succession planning is not as simple as drafting a will, but, when done properly, it provides a smooth transition for the succeeding generation. The process includes the valuation of the business and the creation of legal documents, such as a buy/sell agreement, which is the most important legal document a business owner can have. When succession planning is not done or completed improperly, it usually means the loss of the business and therefore the loss of your lifetime of hard work. Don’t procrastinate; start the process now!

Too often people approach financial, tax, and business planning as an afterthought of running the operations of their businesses. Running a business without a plan to exit and retire is similar to driving a vehicle with no destination in mind. Proper planning and implementation of an exit, succession and tax strategy allows you to keep more of your hard earned wealth and offers a better retirement when the time comes. If you are not sure where or how to start, please contact the experts at the Center for Financial, Legal & Tax Planning, to assist you in your exit, succession and tax planning strategies.

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Tech talk: What will your computer system look like tomorrow?

January 20/27, 2014; Volume 27/Number 19

Screen Shot 2014-08-14 at 2.39.49 PMBy Mitchell Dancik

Your phone is probably at the cutting edge of consumer technology, but your business computer system is probably obsolete. Don’t worry (yet), because everyone else’s system is probably obsolete as well. We are at the start of a new cycle of business software, in which all the rules have changed.

It used to be that companies like IBM or Microsoft decided what your business software would look like and run on. Now the consumer is in control. With a little push from Google and Apple, the consumer demands that every piece of software and every website can be accessed the way the Millennial generation expects. It needs to work on their phones, their tablet or at the very least on their web browsers.

There is still a distinction between business software and consumer software, but not in terms of look and feel. Tomorrow’s employees will likely come to work with their own devices, further blurring the line between when and where you are working versus web surfing. So, what will your computer system look like tomorrow?

1. Your computer software and data will be off-site in a cloud. Secure according to the Millennials, but provoking paranoia for the rest of us. Let’s learn to deal with it, because it’s so much easier to support, back up and use systems that are managed by professional hosting companies with endless storage and bandwidth. You’ll never know or care what type of server you are on, and you can store samples in the old computer room.

2. Your software will look great, but make sure it still knows flooring. If it works on your phone but it doesn’t know a roll from a cut or a rebate from a trip fund, you’ll have wasted your investment.

3. Tomorrow’s software will be more focused on your customer than on your internal business. If your software is developed correctly, it will still balance the books and control the inventory, but the focus will be on delivering information directly to your customer and solving customer issues. Distributors and manufacturers already provide robust online services, but many flooring retailers will need to do a better job providing online data to their customers and salespeople.

4. Your systems will have to connect to everyone in the supply chain. No retailer (whether you’re Home Depot or a small, single-store operation) can afford to rekey or reprocess data that exists at their suppliers. Support the Floor Covering B2B Association (fcb2b.org) and make sure you are connected to every supply chain partner you have. Today’s technology allows you to see inventory up and down the supply chain, all from within your own computer system. FcB2B has done the hard work of making B2B technology compatable with flooring.

5. Your next computer system may be free. If you combine the advent of software as a service (SaaS) with the fact that all suppliers want to directly reach their consumers, you have a natural recipe for software that is provided by the supplier to the retailer. You will see this in other industries first, but one day it will relieve the burden of system management from many small- and medium-sized flooring retailers.

The changes listed above will challenge some and provide opportunity for others. Larger retailers can take advantage of their ability to purchase and deploy expensive software. On the other hand, standardization, SaaS and advances in B2B all help to level the playing field and allow small retailers to offer services that rival their larger competitors. As a software developer, the challenge of ever-changing technology affects my company as much as any retailer. My advice for tomorrow is to keep your systems at least as up to date as your samples.

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Are multiple price hikes impacting sales?

January 20/27, 2014; Volume 27/Number 19

By Louis Iannaco

Screen Shot 2014-08-14 at 12.38.13 PMWith one price increase after another being instituted on hardwood flooring over the last 18 months, one has to wonder the accumulative affect on sales. While the consensus among hardwood flooring executives, from both the manufacturing and distribution side, is that a number of elements are impacting the segment’s sales, it may be surprising that price hikes are lower on the totem pole than other factors.

Most observers believe supply has been affected by the decrease in operational mom-and-pop sawmills. The reduction of these mills constitute the “root of the issue,” noted Patrick Barnds, Armstrong’s vice president of product management. And, with the lumber industry having been hit particularly hard by the recession, it continues to be challenged by capacity issues.

“When demand was low, many loggers and sawmills went out of business,” Barnds explained. “Getting those businesses back up will take time.” These lumber capacity issues have led to significant raw material price increases for manufacturers. “A lot of this is good, old-fashioned supply and demand.”

Additional reasons for the increases, executives noted, include fewer loggers, alternative uses for logs and increased levels of government regulations.

Executives also agreed that the ongoing popularity of hardwood seems, for the most part, to be trumping the price increases as consumers continue to buy solid hardwood flooring or look for alternatives, such as engineered hardwood. As Jeff Garber, vice president and general manager of Ohio Valley Flooring (OVF) in Cincinnati, noted, the price increases “haven’t slowed demand [for wood] at all.”

Barnds also believes that even with the increase in costs, hardwood still provides value to the homeowner. Putting it in perspective, on a $5,000 project a homeowner may be taking on an increase of $600. “Significant? Yes,” he said, “but probably not enough to stop her from putting wood into her home and enjoying it for the rest of her life.”

There is no doubt the number of increases taking place in such a short time span has been unusual for the industry. At Mullican Flooring, Brian Greenwell, vice president of sales and marketing, noted how 2013 was “extraordinary” in that the wood industry had three to four price increases and could have justified more due to continued price escalation for raw materials.

“The severe shortage of lumber has led to these price increases,” he explained, “and manufacturers continue to attempt to keep up with demand. Thus far, the increases have not impacted sales because consumer demand remains strong.”

Company executives also agreed that the domestic price increases have not necessarily made products from China more attractive to dealers. As Garber noted, the higher prices from domestic producers have helped OVF’s low-end Chinese hand-scraped imports, “but the domestic producers don’t really supply this price point of product, so I don’t believe they’ve had a negative impact.”

Dan Natkin, Mannington’s director of laminate and hardwood business, believes the price increases have only allowed the company to marginally keep up with raw material inflation. Meanwhile, the segment’s popularity continues to flourish and remains one of the few flooring types that most consumers aspire to have in their homes. “For the most part, the price increases have not affected sales as the category continues to grow.”

Some people, like Charlie Kerfoot, hardwood product manager for CMH Space Flooring Products in Wadesboro, N.C., believe the recent price increases have encouraged consumers and retailers to look at alternatives such as engineered flooring instead of solid, LVT or laminates. Because pricing on solid hardwood products has increased much more than on engineered, “our solids are flat [in terms of volume], but dollars are up.”

Engineered products are driving CMH’s wood growth, but the increases have started to slow the advancements in hardwood sales, Kerfoot added. “The big question is how many more [increases] will the market allow before it starts to decline?” Like other executives, he believes the most recent price increases are the result of fewer sawmills and loggers coupled with a wet summer decreasing the harvest, therefore causing less supply.

The increase in new home construction has added to the demand, Kerfoot noted, and that leads to higher lumber and veneer costs, which in turn creates increases in hardwood flooring prices. Because of the Screen Shot 2014-08-14 at 12.46.53 PMupturn in the cost of domestic products, those from China are being considered more closely, he explained, but with recent news of lawsuits for excessive formaldehyde and illegally logged lumber, some buyers “are rightfully hesitant.”

According to Jeff Striegel, president of Elias Wilf in Owings Mills, Md., there are three key factors that have come to the forefront as a result of wood’s price hikes. First, he agreed with Kerfoot that the hikes have continued to drive and even accelerate the use of engineered hardwood. “Even the steadfast builder had to crack and begin to look at engineered versus solid in order to contain pricing.”

Striegel also believes the increases have “clearly” driven alternative product usage. LVT wood visuals are “smoking hot,” he said, and the advent of the 12 mil laminate, along with the realism of finishes, have helped “reposition and reenergize laminate at retail as an alternative product versus wood.” He noted 2013 witnessed the first acceptance of laminate in key builder accounts.

Finally, he believes the increases have brought the wood segment to a more appropriate level in the hierarchy of flooring in terms of cost. While solid wood pricing may have actually gone down over the past decade, “engineered wood has become a tremendous value in terms of wearability and durability,” Striegel noted. “The pricing continued to drop, so it could be bought at almost the same price as laminate flooring.”

Garber is another who still believes that despite all the increases, hardwood is highly valued among consumers and retailers. “And since all domestic suppliers have had to implement increases, the consumers have absorbed them and it appears the value of a hardwood floor is still desirable. We’ve had good growth from all our wood lines. The increases have not affected sales growth.”

The fast rise in demand, he added, along with the long lead times for cutting and drying lumber are major factors, as well. “It is a supply and demand issue on steroids,” Garber said.

“We’re still budgeting for an increase (in 2014) and hope to restore some of the profitability with better product mix. When supply catches up with demand, I’m sure we will see some price relief.”

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Lisbiz strategies: Surfaces – Providing for your 'sales funnel'

January 20/27, 2014; Volume 27/Number 19

Screen Shot 2014-07-23 at 2.36.26 PMBy Lisbeth Calandrino

Do you remember the “sales funnel” that we used to talk about? We recruited clients at the top, worked our store magic and turned them into sales. We didn’t realize how simple life was then. All we had to do was run an advertisement in the local paper or on television, and they would come. If we were looking for B2B business, we stopped at a construction site and there was work. Frankly, it was simple; there were fewer competitors, and the rules—just find them. We also knew the competitors, and we knew how to fight.

Many of you don’t know how to fight anymore. Your competitors have gotten smarter, and if you’re not “wired in” through social media you don’t know what they’re doing. About three years ago Ad Age ran an article about Home Depot and how its store managers were required to be on social media two hours a day.

Surprising? They were ahead of the game. Home Depot didn’t hire an outside agency to connect with customers; it realized the value of intimacy, and who knew the customers better than the associates?

These days it’s hard to tell if your sales funnel works. Although consumers are sitting on the couch watching television, they are probably working on their iPads, texting to their friends or even playing Scrabble with people across the continent. If you have a TV ad, it’s barely noticeable. Besides, unless you’ve found a way to track your advertising, you won’t know what they’ve seen. I remember when I was in business, asking customers if they had seen my television ad. Oftentimes I hadn’t even run an ad, I was just curious as to what they might say. Sure enough, two out of five had seen the ad I hadn’t run! So, we can’t trust the consumer to remember what happened yesterday; what’s new?

As you head off to Surfaces hunting for new product, remember: If you don’t have a customer, product won’t really matter. I believe if you don’t have an online marketing strategy you won’t be able to get the product to the right customer, or any customer for that matter. Twenty years ago (which seemed like last week), manufacturers were never called on for advertising materials or expected to help retailers recruit customers. These days, I believe manufacturers have to be more than product providers. They must be able to provide strategies to help their customers connect with potential clients.

This starts by having a strong online presence, which can drive customers to businesses and provide a solid platform for viewing products. The customer shouldn’t have to hunt past page one of a Google search. (No one goes to page two in a search, unless they’re hunting for a dead body.)

As you’re looking for new and different products, ask about your supplier’s online strategy, including their social media. Will they be driving customers to their site and offering ideas on how to use the products? Do they have a strong Facebook, Pinterest and Houzz presence that you can join? Can they help you with your social media strategy? When it comes to B2B, do they have good LinkedIn connections so you can meet up with the right builders and specifiers?

Remember, the first stop in the sales funnel is online. Having this presence takes lots of capital and understanding of how our “unknown” customer shops. To get her into your funnel you have to have a way to connect online, and most businesses need all the help they can get. As you investigate new products, I suggest you look for strategies that will improve your customer hunt.

As my dad used to say, “If you don’t have a customer, your product won’t matter.” Today, that customer starts online.

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Dealer dilemma: Finding qualified installers today, tomorrow

January 20/27, 2014; Volume 27/Number 19

By Ken Ryan

Screen Shot 2014-08-14 at 10.58.28 AMWhile the years-long recession thinned the ranks of independent flooring retailers, it also rid the industry of many experienced and qualified installers. Now that we are in recovery mode, the flooring world is left with a dilemma—a dwindling supply of quality installers and the uncertainty of where the next generation will come from.

“I say that installation is the DNA of your business; that’s where the fingerprints can be found because the products are largely the same,” said Tom Jennings, vice president of member services, World Floor Covering Association (WFCA), and an expert on installation. “Then you ask yourself, ‘How important is [installation] for me?’ Maybe the industry thinks there is an installer tree out there and installers will simply fall out.”

According to Olga Robertson, president of FCA Network, the lack of good, qualified installers will impact everyone’s business, and that will be more noticeable as business improves. “I don’t know what the answer is, but you would think the flooring industry would be addressing this issue. Since when did it become pejorative to send your son or daughter to a trade school? You can make six figures installing tile and hardwood—even carpet. Kids are coming out of college in debt up to their eyeballs with no jobs in sight. They’re working for $13 to $15 an hour; you can’t move out of your parents’ home on that salary.”

Multiple issues

The challenges facing installation—and for that matter, the entire industry—are multi-layered: 1) many of the good installers left the industry during the recession, never to return; 2) the good ones who remain are getting older and nearing retirement; 3) installation is more complex and specialized than ever before, making proper training crucial (moreover, not every installer is willing to miss a day’s pay for training); and, perhaps the most important, 4) where is the next generation coming from? On that last point, there is no clear remedy.

“It is scary, quite frankly,” Jennings said. “It is a problem I don’t see getting better. We need to somehow take some ownership of a product after it leaves the tail end of a truck. That may be wishful thinking on my part.”

Several dealers said the industry needs to come up with a way to attract the next generation, be it out of high school or the military, with the pitch that there are plenty of jobs available, the money is good, and it’s an honorable way to make a living.

“It is hard work, but so too are a lot of other things,” Jennings continued. “On the other hand, it’s not dangerous. No one fell to their death laying a floor, or froze to death laying a floor. It’s a better industry than we are painting a picture of. We don’t make it memorable.”

Jim Walters, president and co-owner of Macco’s Floor Covering Center with six Wisconsin locations, uses both in-house installers and subcontractors. “It’s really difficult to get a young person to recognize this is a rewarding trade, but it’s not just difficult in floor covering,” he said. “We’ve lost a generation of people who think the trades are somehow not a good route to go.”

Despite the financial potential, the appeal for installation jobs is just not there for Millennials. David Stover, vice president of sales at Grigsby’s Carpets & Tile, Tulsa, Okla., said some of his crews gross $150,000 and up, but he still doesn’t see a desire to get involved from today’s younger generation. “It very well may be a stigma or that kids do not want to work as hard as they used to. It seems like a lot of youths today expect to make $65,000 at their first job and do not think they have to work very hard to attain it. For a younger person who has a good work ethic and doesn’t want to be tied to a desk, it’s not a bad gig.”

Specialization and training

Despite the ongoing challenge of finding and retaining qualified installers, retailers continue to say they cannot lower their standards in any aspect, whether it is the technical demands of the installation or Screen Shot 2014-08-14 at 10.59.42 AMthe personality and professionalism of the installer.

“We try to set the bar higher and stay on top of it in terms of what we ask of our installers,” Walters said. “We have to keep in mind these installers are guests in our customers’ houses, and we need to make sure we’re not sending in the wrong people.”

Stover added, “With the shortage of quality installers, the good ones are constantly booked. Relying on untested tradesmen only leads to more problems. You have to draw the line between hurrying a job to completion to meet a deadline and still retaining the quality you pride yourself on.”

The need for qualified installers comes at a time when installation methods are becoming more technical and fine-tuned. “Today’s carpet is like people—every one of them is different and unique,” said Jim Walker, founder and CEO of Certified Floorcovering Installers (CFI). “The problem is installers don’t take the time to get educated on the nuances of the product because it is a losing proposition for them to be missing a day’s work to be trained. They don’t want to take a day out of their schedule and pay for training.”

Dave Snedecker, division merchandise manager at Nebraska Furniture Mart in Omaha, said finding qualified installers is a constant battle even, for larger dealers. “It is imperative that we support efforts to train and develop interested parties in this field.”

Proper guidance and communicating expectations is critical to ensuring a professional installation, according to Jerry Salge, director of operations, O’Krent’s Abbey Flooring Center, San Antonio. “It is important to establish a trusting and amicable relationship in order to work as a team toward the end result. A respectful teamwork attitude is essential in order to retain quality installers.”

As with others, Salge acknowledged there are fewer individuals today that seem interested in learning the trade and developing the skills necessary to become a quality installer, which has forced dealers to dig deeper. “We rely on the existing installer pool to train their helpers to become mechanics. Retailers that employ subcontractors are mostly unwilling or incapable of instituting a training program for hourly or in-house installers to learn the proper skills without the assistance of a subcontractor.”

My Flooring America co-CEO/owner Kelby Frederick said in the Dallas and Houston markets the problem isn’t finding crews, it’s whether they can pass a screening process that requires a criminal background check, proper insurances and/or documentation to comply with IRS regulations.

He said securing qualified crews often means paying a premium. “We find that allows us a much better talent pool of subcontractors to work with. Our goal is to make our installation services our competitive advantage in the market as we believe customers always remember the quality of the installation experience much more than a cheap price or discount.”

Industry efforts

Last October, the WFCA launched a nationwide flooring installation-training showcase underwritten by the organization and overseen and taught by the CFI. The initiative calls for the WFCA to sponsor six regional training programs and offer installation coursework on every flooring category. CFI instructors provide the training in carpet (in accordance with the upcoming ANSI S600 Carpet Installation Standards), carpet installation inspection (including application, demonstrations and problem solving), ceramic, resilient, laminate and wood.

Jon Pierce, general manager, Pierce Flooring & Design with multiple locations in Montana, said the WFCA-CFI collaboration is a great and important initiative, but the industry collectively must do more, at least in terms of generating new blood in the field.

Pierce suggested subsidizing a trade school or technical college. “We need to recruit through the school system. It’s no different than training a welder or mechanic. We need to recruit and train the younger generations. I know it can work. It takes time, effort and focus to make it happen with manufacturers and associations working together.”

According to Stover, he and fellow dealers have discussed putting on trade clinics, which, with the help of manufacturers, could help promote and sponsor teaching seminars as a way of attracting the next generation.

As of now, Walker said the issue of installation would not become a priority until it prevents sales from occurring. Only then will it become an industry-wide focus.

The consequences of a dwindling pool of qualified installers is already impacting retailers, according to Jennings, who knows of some salespeople who have gotten fed up and left the industry. “Why work hard to qualify and then sell a customer on a beautiful floor for her home, only to have a subcontractor with no ties to the store do a poor job and then not be held accountable? The salespeople promise customers certain results and have very little knowledge about who is laying the floor.”

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How retailers can still profit versus big box competition

January 20/27, 2014; Volume 27/Number 19

By Louis Iannaco

Screen Shot 2014-08-14 at 10.24.55 AMFlooring retailers of the mom-and-pop variety have been battling the big boxes for years, often using their knowledge of consumer tastes and superior customer service to help them hold their own. In terms of selling laminate, which has become more difficult in recent years thanks to an increased focus on competing products as well as more aggressive approaches by the likes of big boxes and Lumber Liquidators, smaller retailers need to use their competitive edge to help garner customers.

Whether it’s using their showroom floors to display products, the ability to stock multiple SKUs or promoting offerings through strategically placed merchandising displays, retailers who continue to successfully sell laminate almost 20 years after it was introduced into the U.S. market always use multiple tools to do so.

Show what you sell

One of the most effective ways retailers can profit from selling laminate flooring involves the amount of showroom space allocated to displaying products. The smart retailer knows once a customer sees the product in action, most of the selling job is already done. Businesses like Carpet World in Bismarck, N.D., attribute much of its success in selling laminate flooring to this type of product placement, as it dedicates about 15% of its showroom to a laminate display area.

“We stock 16 different SKUs that we’ve installed on the floor in 6 x 8-foot areas,” explained manager Brian Dauenhauer. “This is a huge help in letting customers see patterns in large areas. If they don’t see what they are looking for in these spaces, we show them additional displays from major manufacturers that we can special order from.”

Chris Quattlebaum, general manager of Manasota Flooring in Bradenton, Fla., agreed with Dauenhauer, noting the visual element of flooring is critical to selling laminate. Manasota has approximately 1,000 square feet of Mohawk laminate flooring installed in its showroom. Therefore, a customer can immediately see how the product performs and visualize how it will look in her home. In a retail environment that gets a lot of foot traffic, Quattlebaum explained, “The durability and cleanability of the product are on display.”

Retailers need to be confident when installing various laminates on the showroom floor, including areas outside of those that feature laminate displays, noted Bill Ziegler, manager of Charles F. Ziegler & Sons in Hanover, Pa. “Especially in area rug sections, offices, walkways, the showroom entry and anywhere else you find room to use [laminate]. Walk the customers through those areas. When it comes to selling laminate flooring, it is most important to ‘know it and show it.’”

Laminate as a trade-up

Another way retailers can successfully sell laminate involves the manner in which the product is marketed. Some continue to market laminate as a hardwood alternative as laminates have become more Screen Shot 2014-08-14 at 10.26.56 AMrealistic than earlier versions. Others market the category as a value proposition to more expensive, upscale hardwood species. According to Milton Goodwin, Armstrong’s vice president, product management, hardwood and laminate, retailers should be selling laminate as a trade-up from other surfaces, such as vinyl or carpet.

According to Goodwin, retailers should clarify the trade-up story by calling out key attributes that drive value for the customer. “Show them how realistic looks differ across price points. Premium laminates offer the most realistic visuals on the market, often confused with their real wood counterparts. Inexpensive laminates can’t compete in visual clarity, realism or quality. Some producers are moving away from high-quality, premium products. We’ve targeted our laminate to have the best price-value equation of any product.”

Highlighting laminate’s best features and benefits are crucial starting points. For example, the consumer who wants the look of a wood floor without the maintenance issues can look to laminate for the perfect solution. Dan Natkin, Mannington’s director of hardwood and laminate business, believes with the durability, environmental benefits and realism now being achieved in upper-end laminates, “you have a product that is, in many ways, superior to a real wood floor.”

Focus on the high end

Natkin implores retailers to educate the consumer about laminate’s benefits and to emphasize the realism achieved in the upper-end range of products. These techniques can help make money in a category many have written off.

In terms of selling against big box stores, Ziegler is a proponent of avoiding competition at the low end, as was noted by several business owners. His store rarely shows anything less than $2 per square foot, with the exception of three to four pallets from $1.29 to $1.99. Ziegler & Sons does offer laminate in the $2.79 to $3.99 price range, so it can be compared to the “same (special order) laminate in the home centers,” he explained. “If they special order it, they’ll consistently be 35% to 40% higher than our price. Retailers can easily and profitably beat their prices. Check their special order prices online; it’s easy to see.”

The bulk of Zeigler & Sons’ volume is in the $3.99 to $5.99 per square foot price range, selling 85% of its laminate at $3.50 or higher. Combine that with a high-end underlayment pad and “you’ve taken home centers out of the game early,” Zeigler noted. “Customers see the value and want to buy from independent dealers.”

Product expertise, top service

Product knowledge and customer service also play significant roles in how flooring retailers can outdo their big box counterparts; it is crucial for sales associates to be well versed in the benefits of each manufacturer’s products. “The [manufacturers’] reps do a great job sharing information with our sales team about their products,” Dauenhauer said. “We also offer full installation service, provided by a subcontractor, for all the products we sell.” Carpet World installs nine out of 10 sales and tends to sell more of the high-end laminate visuals while making about a 40% margin.

Echoing Dauenhauer’s sentiment, Ziegler said a sales associate’s product knowledge and attitude is everything. All representatives must be confident they’re showing consumers the right products for their individual needs. “We do this by consistently training and retraining owners and salespeople alike.”

When it comes to product knowledge, the consensus is that consumers most often look to flooring retailers as the experts who can find solutions and provide answers. Customers don’t necessarily visit an independent flooring store for the lowest price in town, Zeigler concluded. What is most important to the consumer is finding a “durable product to beautify her home and obtaining knowledge from a true flooring professional. Price may be on the list, but it’s not the most important part of the sale.”

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FCA Network: It's about support, expertise and having fun

Volume 27/Number 19; January 20/27, 2014

By Jenna Lippin

One of the industry’s great debates focuses on whether a retailer is best served by remaining independent or joining a group. And if the latter, is a manufacturer, distributor or retail group the best option?

Many dealers have found success as part of a retail group, some of the most notable being Carpet One and Flooring America. But there are smaller retail groups whose members have benefitted from the solutions provided by the “strength in numbers” philosophy that they could never have achieved on their own.

One such group is FCA Network, billed as the only retail group actually run by retailers. FCA Network is an offshoot of Floor Covering Associates, a 38-year-old, $40 million retailer based in Shorewood, Ill. The group launched in 1998 with the goal of assisting independent retailers expand opportunities with helpful marketing, merchandising and sales initiatives.

Screen Shot 2014-07-30 at 4.45.03 PMOlga Robertson, FCA Network’s president, seeks to help retailers maximize profit by assisting in showroom organization, communicating with manufacturers and offering on-call assistance.

As both an industry and Floor Covering Associates veteran, Robertson is able to speak to the value the group offers its members. “What’s really unique about us is we are also a successful retailer in Chicago that does a lot of business in various market segments, and we share our expertise with other retailers. That’s really our unique selling proposition.”

While Robertson is well aware FCA Network, with 60 storefronts, is not the largest retail group, she clearly believes “we are the best.” Why? While private labels and branding help, one of the most significant benefits FCA brings its members is being right by their sides when it comes to daily operations. “We are in the trenches dealing with customer complaints, expediting orders, etc.”

There is hard evidence of FCA’s benefits and success. “We believe we are the best buyer in the industry, which translates in numbers,” Robertson said. “[Members] can compete with the home centers and they can maintain their margins. If a customer comes in and she has been to a home center, we’re able to either buy that same product or at least identify it. Because we have a library of products, we know how to shop them.” With training provided by the network, salespeople are able to identify products so they can “steal the deal” from a home center.

Another major appeal to retailers is FCA’s showroom design. The group will have its team create and lay out a store’s display floor to help optimize selling power. “Every showroom is a custom showroom—we don’t do anything cookie cutter,” Robertson noted. “We do a floor plan, lay it out for [the retailer], ship the displays and finalize the set up. I don’t think there’s another buying group that coordinates the setup, lays it all out and then does product and sales training for a day.”

While many groups are emphasizing SEO and social media usage, Robertson is integrating Internet-based marketing with those methods that have traditionally worked for retailers. “The best way to get more customers is to have existing customers recommend your services, and the cheapest form of advertising is asking for more business—’referral marketing’ is what we’ve coined it. We all know the importance of [SEO], but I think belonging to the community and getting involved in different organizations will get you more business.”

That being said, FCA does provide resources to help members with their own websites and SEO, but not at the cost of losing their individual identities. “We give [members] the ability to download things fromScreen Shot 2014-07-30 at 4.45.18 PM our website, like promotional tools such as coupons they can put on their own sites.”

In terms of membership, Robertson said the group is more interested in attracting select, quality members as opposed to a large volume of retailers. “We added five really terrific dealers last year. I’d love to be able to add one [retailer] per month—that’s my goal; one good, quality person. For us it’s not a numbers game; our overhead is covered by company-owned stores. If it’s a good fit, and we can establish a long-term partnership, then we add a member. My goal is to get the membership up to 100 quality retailers. We are certainly on our way to reaching that goal by 2016.”

A strong presence at Surfaces will hopefully help achieve this goal. FCA is the sponsor of the International Surface Event app, which was a significant investment. Robertson hopes to meet quality retailers at the show; just two or three new members “will be worth the investment.”

Prospective vendors are part of the plan as well. “It’s a multi-purpose market for me,” she said. “We might be able to work out a program with another new vendor for 2014. Because of our size we have to really focus on the vendors that can service our members and bring the best value. I don’t want to dilute the buying power and just add a vendor to add a vendor; it has to make sense.” Last year FCA added Godfrey Hirst, Kraus and Stanton to its roster.

‘Have fun, make money’

Bob Gaither, owner of Quality Carpet & Flooring in Akron, Ohio, has been with FCA since 1998. At first, he didn’t exactly embrace all that the group has to offer. Because he wasn’t watching his margins, he lost a significant amount of money by 2000 and was ready to make a change. “I went to [FCA’s] spring convention and really started to embrace everything. They sent someone to work on my showroom. I concentrated on residential replacement, and that’s where I started to turn the corner. I had been in the business my whole life, and once I finally got with the program I immediately started to see benefits. When things slowed down from 2006 through 2008, I picked up—they were some of the best years. I used to sit in the back row at [FCA conferences], now I sit in the front and take notes. I’m a loyal dealer and listen to what they say.”

And, thanks to FCA, listening paid off. “Last year I was up 15%,” Gaither said. “If I didn’t join FCA I would probably be out of business. You get tired of working your butt off and not making money; it’s a whole lot more fun when you are making money.”

On the other end of the membership spectrum is Don Hull, co-owner of Impressive Floors in Oak Park, Mich., one of FCA’s newest members having joined last June. After being courted by other buying groups, Hull decided on FCA. “We wanted to join a buying group so we could get a little better buying power and better pricing.” he said. “It’s nice to have someone else’s expertise because we were originally in the ceiling business and basement remodeling.” After specializing in VCT and commercial flooring, Impressive Floors now features residential product. “We’ve seen a spike in business, no doubt. Olga helped us design our website and gave us some advice on certain things there.”

FCA’s goal for 2014? Fun. “We have to figure out a way to make this business fun again,” Robertson concluded. “It used to be back in the day, and we try in every way we can to bring that back. Our motto is ‘Have fun, make more money, have more fun.’”

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Further proof of industry upswing

Volume 27/Number 19; January 20/27, 2014

By Jenna Lippin

Screen Shot 2014-07-30 at 4.06.26 PMDallas—What started as a regional event for select manufacturers, the Dallas winter market, often referred to as Super Fest or Mega Market due to the number of companies showing their wares for two days, has become an “unofficial” annual event for retailers not only from Texas but also as far as Oklahoma, Arkansas, even Colorado. The market, which takes place in a number of hotel ballrooms within 10 minutes of DFW Airport, serves as an opportunity for manufacturers to show their latest and greatest to dealers who may not be attending Surfaces as they seek to piggyback on the volume of retailers who are in town primarily for the Shaw and Mohawk regionals.

The positive sentiment that resonated throughout 2013 seems to be continuing into 2014, the Dallas market serving as further proof. Many companies reported more traffic and more orders taken during the first day of the event than over the entire two-day span last year.

Beaulieu

The carpet mill continues to garner positive response to its Bliss LVF line launched last year. According to Ralph Boe, co-CEO, the program, which has expanded from 24 to 36 SKUs, was extremely well-received at the Dallas market.

Beaulieu’s LVF, which is made from virgin PVC and features a scratch-resistant finish, is complete with both commercial and residential offerings with wearlayers ranging from 3.5 mil to 22 mil. Plank and tile visuals are offered in both click and gluedown installation methods.

“What we’ve tried to do is come up with different looks and colors than what is commonly out there,” Boe said. “We’ve really thought this whole thing through with patterns, construction and locking systems. On top of that, we have matching transition moldings for every SKU here. Within six months, we’ve placed about 500 displays.”

On the soft side, Bliss has been enhanced with a line called Perfection, consisting of all piece-dyed nylon with an 8 DPF. “We said, ‘You know what? [Indulgence] is soft enough; let’s make sure we have Screen Shot 2014-07-30 at 4.08.47 PMsomething we have confidence in that’s going to perform and we don’t have to put as much twist into to make a durable product,” Boe explained. “Let it have a little more value.”

Perfection includes eight products, all at a value-oriented price point, in 45- and 60-ounce weights and 28 colors.

Dream Weaver/Engineered Floors

Engineered Floors and its Dream Weaver brand continue to grab market share as it simply expands its manufacturing footprint in Dalton. The traffic the manufacturer saw at its Dallas showcase was further evidence of its success.

“We’ve had probably over 100 appointments, and all with major dealers,” said Gary Hollowell, senior vice president of marketing. “We really don’t saturate the market out here, so it’s been good.”

For 2014, Dream Weaver has taken an aggressive posture on soft, repositioning pricing on preexisting lines and launching six products with more sophisticated looks in space-dye fleck, berber fleck, subtle barber poles and one blended option.

“We redesigned the cost structure of how we manufacture the products and we shrunk the delta of our home run line between traditional yarn and soft yarn to make the products more appealing,” Hollowell explained.

Screen Shot 2014-07-30 at 4.09.02 PMKarndean

Emil Mellow, vice president of marketing, echoed the sentiments of other companies who were exhibiting in Dallas: “The traffic was excellent; even better than last year. We had appointments with key retailers.”

The manufacturer highlighted its refreshed Knight Tile line, which now features six new wood planks and four new tiles. “The wood planks provide fresh colors and character, as well as a wider 6-inch plank, which, when combined with our design strips and borders, creates a truly unique floor,” Mellow said. “There are also new colors within the tile selections and a distinctive 12 x 18 offering.”

Also new for 2014 is LooseLay Series Two, with four new tiles and six new planks “which will fit into a very compact and interactive display,” Mellow added.

Karndean is celebrating its 40th anniversary and will be announcing promotions and programs throughout the year. For example, in the 40 Floors for 40 Causes campaign, the company will donate 40 free floors to charitable causes, 15 of which will be located in the U.S. Other initiatives include the sponsorship of continuing education credits (CEUs) for the architectural and design Screen Shot 2014-07-30 at 4.16.27 PMcommunity.