All the news shows there’s a slowdown in the residential sector, but speaking to industry leaders—retail, distribution and manufacturing—tells me that getting serious about strategy might make it okay.
“The next three to four months are going to be softer than what we’d like them to be, but if you ask me, I think the backdrop for flooring is still good,” said AHF President and CEO Brian Carson.
In his recent interview with Floor Trends after the Armstrong acquisition, Carson explained why: “Home equity values are strong, interest rates shouldn’t worry us. They're up a lot from pandemic levels, but we need to remember that they dropped considerably during the pandemic. The interest rates now versus what they were on any historical basis, or even six or seven years ago, really are not that hot. It’s something that we're going to have to learn to live with.”
Part of his optimism has to do with the pent-up demand that still exists in the housing market. Interest rates have gone up and people have sticker shock on gas, but there is still a structural deficit of single-family homes in America versus the last 40 years.
“I think we’re going to see a little more strain on the system, but with all the new features and benefits and new merchandising program, we are lining up to do very well compared to our competitors,” said Ed Cross, owner Ed’s Flooring America with two stores in New Hampshire.
“Even though things are slowing down right now, and with all the home building that went on after COVID, we really haven't made a dent in the deficit of homes,” he said.
“Business this year is quite good. We didn’t see any downturn this summer, and we’re focused on some bigger project work right now which is going really well,” said Sam Stevens, operations manager, Dalton Carpet One.
Not everyone agrees.
“We are in for a challenge,” said Matthew Salzman, CEO, Louisville Tile Distributors. “I believe that somewhere in the second half of ‘23, these interest rates and the inflation and supply chain are going to have cycled through, that there'll be a problem.”
He said imports and supply chain issues will begin to unclog, but there will still be long delays in getting product.
“I think that the industry as a whole, and the economy as a whole, are going to face some serious pauses,” Salzman said. “You can't print this kind of money without having inflation at a government level.”
For Louisville Tile, however, he has nothing but optimism.“We have a sales culture that we've now encapsulated,” Salzman said. “We will fight through a bad economy by taking market share, because we have them in an activity-based mode and they're out there with, we taught them, a ABP—always be prospecting—and ABC—always be closing.”