2019 Retail Outlook
What’s in store for 2019? Brian Beaulieu, CEO of ITR Economics, has some good news. “The next two years look good,” he said. “Be confident, plan on it, budget for it, expect more from your people and yourselves.” While his forecast shows a couple of years of solid growth before things begin to slow down, even then, Beaulieu says there will still be growth—just at a slower rate.
To get a read on what’s in store this coming year for specialty flooring retail, we reached out to leaders at the major buying groups: Keith Spano, president of Flooring America/Flooring Canada; Cathey Gundlach Links, vice president merchandising flooring America/Flooring Canada; and Mike Cherico, vice president, Floors & More.
FT: What’s your business outlook for the independent flooring retailer for 2019?
Spano: 2018 was a fantastic year with the vast majority of our members enjoying growth levels far exceeding the industry. We’re cautiously optimistic, expecting much of the same for 2019. Consumer sentiment around home decor and remodels remains strong. Everyone wants a new kitchen or bathroom regardless of when they last remodeled, and we’ve continued to diversify our product offering and sell the entire project to capture a larger share of the spend and increase our tickets and profitability. There are certainly some reasons for caution such as Chinese tariffs and a slowing housing market tied to rising interest rates, however, we expect the overall trajectory of our members’ business to remain strong through providing the consumer with expertise and an experience she can’t get anywhere else.
Cherico: I expect the industry to continue in a positive direction. Don’t over analyze the tariffs and the increases in a lot of the products from China because, albeit from a product side the prices are going to go up, we’re just going to have to accept that increase. At this time, the U.S. manufacturers do not have the capacity to replace.
It’s going to be a year of refinement from a digital and social media standpoint. In the last several years, people have tried different things, and I think you’re going to see people are going to be more consistent and staying with programs longer. Right now, they’re in and out so quickly of digital and social, they don’t really give it a chance to work. We’re an industry of instant gratification. Instant results. Let’s run an ad, let’s run some urgency. Let’s get some sales.
FT: Where is your growth coming from?
Cherico: The reason we’ve been growing so rapidly is there’s a market out there of people who’ve never joined Carpet One, Flooring America, Abbey — nor did they join Shaw or Mohawk programs. Now they are realizing it’s very difficult to compete with them, and there are private brands and services that they are not privy to.
The other reason is that the generation that is retiring learned the hard way. They learned by making the mistakes themselves. Some of them were on their knees as installers at one time and they’ve gotten their retail MBA through hard work and mistakes. Their child went to college, got their degree, and now is coming into the business with some business sense, but they don’t have floorcovering sense. Those kinds of people are used to learning through structured programs like ours. Plus, it’s a different world today. It’s a lot more of analytics, it’s a lot more data driven, whereas the previous generation was more feel and intuitive. That’s where our group comes in. We’re able to bring all this education, services, programs, private brands, pricing, rebates and digital marketing to this generation.
FT: What product categories are showing the most promise?
Links: Consumers continue to be driven to flooring based on performance and style. Flooring America and Flooring Canada will be introducing a waterproof hardwood in 2019 thanks to new technological advances that will enable hardwood to now be considered for moisture-prone areas of the home. Technology and innovation are taking the luxury vinyl, ceramic, hardwood and carpet floor category to a new level of design—with versatility—to make every room of the house including the kitchen and bathroom a beautiful reflection of today’s consumer’s style.
Cherico: We’re adding more private-brand products. We have some super price points—suppliers have been great to us—and I’m really excited about the digital and social media work we are doing next year. People are finally understanding that this is content driven. There are also a lot of dealers who want to get into the kitchen and bath business, and we’re already in it. We have an alignment with Kraftmaid, which was launched in the last convention, and it’s been a big hit. For floorcovering, you have a narrow audience, but now you have loyal customers, and why send them somewhere else when they are doing a complete project?