The construction industry enables the success of every other business through the built environment. This global effort ensures humanity flourishes in every economic, social, and spiritual pursuit. Given the speed and uncertainty of the coming segment and economic cycles, the best option to ensure the prosperity of the commercial flooring industry may prove to be rapid and focused internal change.
Despite the cost of money, inverted yield curves, hard and soft-landing debates, and vocal baby boomers (who are not in the office) complaining that no one is returning to the office, the commercial flooring market continues to show strength. So, what is the future of the commercial flooring industry?
The Starnet staff have the great fortune to interact with most of the stakeholders in our industry each year and themes continue to evolve, punctuated by disruptive industry events. Last year the Starnet staff members pooled insights collected from ongoing interactions with stakeholders and made some assertions. Upon review, the highlights and misses are listed, as well as some new themes to challenge the leaders and entrepreneurs in our industry.
- Flooring contractors become more comfortable with complex multi-surface flooring projects, increasing their risk appetite to expand service to wall, ceiling, and exterior scopes of work. Local relationships will continue to evolve and strengthen as more contractors embrace broader scopes of work, becoming more important to facility executives. End-use clients will continue to embrace sourcing products through contractors combining product, labor and service as transparency and project execution needs overcome traditional priority of risk management.
- Recommitment to continuous education of sales and service professionals to support better informed general contractors and end user clients that prefer single source flooring contractors over large geographies.
- Commercial flooring contractors investing in and implementing new technologies will outpace their competitors and become employers of choice. Key tactics for tackling digitalization and a labor shortage impacting every stakeholder involved will drive recruiting from a broad range of backgrounds and second-chance candidates, upskilling current teams, and collaboratively moving toward digitalization with peer professional stakeholders.
- The baby boomer generation, which has led the industry for an extended period, will pass industry leadership to the Millennials, largely skipping Generation X.
- Mixed finishes (hard, soft, resilient, wood, coatings) will continue to proliferate in every real estate segment – private and public.
- Consolidation accelerates across every level - manufacturers, distributors, and flooring contractors – with unexpected entrants into the flooring industry from other building product types and areas of focus.
- The role of the field sales representative will become more demanding at the manufacturing level as well as the contracting level. Some manufacturers may choose to reduce total head count in sales staff and rely more on channel partners to effectively reach the market.
- Manufacturers will deploy new technologies and equipment to enable more distinct and bespoke brand styling after a few decades of homogenized looks. Increased demand by specifiers and end users for prolific flooring products and styling choices.
- Less “on the knees” work will occur as pump leveling, stand up adhesive options, mechanized removal equipment, and robotic installation technology will continue to reduce the physical demands on the installer’s body.
- Industry affiliations and associations maintain appeal as employees use them as a rally point while moving through their careers with multiple employers. Implementation of vigorous marketing programs, social media exposure, and participation in programs that enable broad industry recognition of flooring contractor project execution will be standard activity.
- Visualization tools will speed decision making, broaden the appeal and interest in changing spaces, and reduce the overall costs to execute projects.
- Mobile devices and on-site technology will increase transparency, requiring less job site visits and making the project management function more efficient.
- Industry aggregators of online sample fulfillment eventually experiment with private brand offerings like the channel evolutions in other industries. This will be a challenge for industry brands to navigate to maintain their market position among A&D firms.
- The industry will move to a proliferation of technology to automate and document nearly every project and the processes of execution to manage risk and provide transparency to all stakeholders. The skilled labor shortage is evident in white-collar and blue-collar roles.
- Practical sustainability considerations in many states with water use restrictions will focus stakeholders on low moisture cleaning technology and carpet as the preferred choice. In what may prove to be a devastating decision for the industry, the CRI may be moving away from recommending low-moisture cleaning technology in a total collapse and submission to insider special interest groups protecting incumbents.
- The relatively low cost of carpet compared to other flooring surfaces will stabilize commercial market share as inflation forces value discussion in more segments. No manufacturing leader has moved to square-foot pricing to mitigate the slide in soft surface commercial market share.
- Focus on compatible systems and informal alliances among manufacturers to support better execution in the field. It seems this is moving away from collaboration to a focus on targeted acquisition and consolidation.
- Various backing systems for soft surface and resilient will be reduced by rapid adoption of constructions that do not require moisture mitigation. Traditional two-part epoxy moisture mitigation likely will disappear as adhesives and/or concrete mixtures evolve. Flooring products will be designed to be less sensitive to site conditions and acclimation. The site conditions and requirements for various flooring products will become more comparable and practical for modern construction methods and timelines, or the products will be avoided entirely. The service providers in the space continue to be wildly profitable solving the inherent weaknesses in products to perform under modern construction norms.
- Installation continues to be more technical, and process disciplined. This will require less brute force and hand skills to overcome product variation, making the industry more accessible to a broader range of labor candidates. Industry manufacturer innovation seems to have stalled across multiple product platforms.
- The tile and stone business will attract more creatively inspired artists laborers as a fulfilling career. Progress is too slow for meaningful impact.
- A conspicuous trend of husband-wife/partner operations will continue to grow in the installation field. This trend will accelerate, enabling access to the other half of the labor force the industry has generally failed to attract – female installers. Progress is too slow for meaningful impact.
Our path forward is increasingly complicated by the real impact of the hybrid office model, artificial intelligence, machine learning, digitalization, and eventually robotics.
Although many would identify with the commercial flooring field labor skill shortage, few would be willing to identify the rampant challenges associated with incomplete and poorly written specifications out of architectural firms. This is another skill and capacity shortage, every bit the challenge for the industry as the lack of competent crews for large format gauged porcelain panel installation or sheet flooring heat welders. While many commercial interior contractors still have a resistance to embracing digital transformation, the growing number of challenges indicates that change needs to happen sooner rather than later. Starting the process is the only way to identify the gaps in other professional stakeholder competencies. Identifying gaps will allow iterative improvements to occur without the entire industry being overwhelmed.
How could it ever be possible to perform clean and accurate estimates if the construction documents, specifications, and drawings are full of errors, omissions, and conflicting detail? If you cannot reliably price a project into the future due to flawed AI pricing bot assumptions, who will survive the transition from analog quotes to AI algorithmic pricing? How will we manage the expectations for endless variations of product in a digital universe with the relatively limited physical variations that can be manufactured in ISO 9000 and ISO 14001 certified production facilities?
Knowing that the skilled labor shortage in knowledge workers and the trades will not be resolved anytime soon, turning to technology is proving to be a solution for a range of challenges. While every industry has its nuances, construction comes with complexity and fragmentation. The decentralized nature of construction means that every project has a vast number of stakeholders. A digital transformation is a cultural transformation, which focuses leadership investment on increasing the bandwidth and career satisfaction of vital associates in every organization. An organized dialogue reviewing common issues allows contractors to redeploy energy to resolution and protect the interests of “life of the building” clients. Once the traditional roles sort all of this out, new stakeholders will emerge to share the responsibility. Construction data scientists, AI enabled pricing analysts, robotics experts, logistics planners, BIM tech support and drone operators will need to be in the collaborative mix.
Ironically, the path to digitalization efficiency will require focused human interactions. Professional networks of experienced associates will continue to collaborate across job descriptions and areas of responsibility. The future is exciting for all our stakeholder leaders and entrepreneurs. In times of complexity and change, the opportunity for differentiation and profitable growth is significant.
See more articles from our December 2023 issue!