Thanks to the slowing economy, flooring retailers will continue seeing less traffic in stores during the first half of 2023, but the people who do show up will be ready to buy, according to Jeff Lorberbaum, Mohawk chairman and CEO, who kicked off Mohawk Edge Summit in Nashville, Tennessee, this week.
"Actions have impacted the housing market in our industry much more than the rest of the entire economy," he said. "Higher interest rates have reduced existing home sales. Builders are constructing fewer houses. Homes that were already under construction aren't selling space. This is on top of the consumer having to put up with high inflation that increased the cost of their energy, their food, their healthcare and all the other goods and the services they're purchasing."
Despite sales being down from an all-time high, retailers should anticipate a very good year despite the fact that the industry is slightly softer than it was.
Lorberbaum said almost two in five US homeowners have no mortgage payments today. Many mortgages are at a historically low rate. The current housing market still requires about another 5 million houses to satisfy the demand. Single-family residential construction will expand, lower interest rates will act as a catalyst for older couples to downsize and younger families to buy bigger properties. Half of all American homes today are over 50 years old, and another 20 million of those homes are between 20 and 40 years old. Homeowners will want to upgrade the finishes of these homes to reflect their personal style and to maintain the property value.
"This is the subset of consumers that is ideal for each of you to target," Lorberbaum said. "They either own their homes outright or have very low fixed rate mortgages. They have steady income, mid-high income, they have low debt, a strong credit score. And based on the interest rates, the time and the housing shortage, most of them will be staying in their current home for the foreseeable future. They have multiple options to pay for remodel and they're able to invest more. All they need is to connect with your stores to transform their wish list into great new living spaces."
While unit sales will be down, Lorberbaum encouraged retailers at this year's summit to focus on the retail renaissance—and those who aren't already in the commercial side of the business to consider entering it.
"Some of you may remember from high school history, if you paid attention, that the Renaissance was an exciting time for people, rediscovered the best ideas of the past and made important discoveries about the future," Lorberbaum said. "The Renaissance is having an even greater impact on your customer before she enters the store and a more powerful impression when she arrives in your store. As the best retailers, you're our perfect partners to optimize new sales technologies, introduce innovative products and reenergize the selling process."
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