Commercial flooring contractor organizations traditionally serve evaluators and implementors in the value chain like the general contractor or construction manager. Because of that norm, our members deal with the fallout of decisions made months or years ahead of the need to deliver services. Markets shift overnight, new technologies emerge daily, and customer expectations evolve rapidly. Because flooring contractors have traditionally followed market norms, such as developing most of their revenue bidding to general contractors, very few get close enough to client decision makers to allow for durable strategies to develop. Process for a price is substituted for strategy, and if the bid requests continue to come in, the process response rules the day. This volatile environment has resulted in thin margins and erratic demand over time.

We are entering a period of tremendous change, and labor scarcity will force new business approaches to secure profitable clients. Now is the time to make choices on strategy in a disciplined manner to avoid entrepreneurial calamity. Strategy – choosing where to win - is the only way to adapt quickly, innovate continuously, and respond decisively to new challenges and opportunities.

The ‘Why’ is Strong and the Team is Committed

Companies aiming for process performance improvements may have tried top-down or bottom-up approaches to transformation with little success. In our membership we have seen challenges with hiring and retaining business development associates, adopting CRM, running marketing programs, or deploying team selling operating structures instead of cradle to grave sales. When the process of responding to bid requests dominates the task lists of employees, mustering the enthusiasm to change is a huge leadership challenge. Most employees know what it’s like to be part of a vibrant team that works toward a common goal, but few companies deliver that environment consistently.

We suggest a team-centric approach to transformation built on strategy to usher in lasting, significant gains for our member businesses. This is especially true when cross-functional teams come together to resolve business challenges uncovered in a SWOT (strength, weakness, opportunity, threat) exercise or in response to a major client relationship disruption. Leaders should be focused on creating a strong sense of belonging, which is rare in a process culture but common in companies with a strategy. A focus on strategy helps to frame up a learning environment for employees, where the ‘why’ drives transformation of performance individually and collectively benefits the organization.

Potential Inspiration for ‘Why’ = Strategy

To inspire team creativity inside a commercial flooring contractor, we suggest our members get outside their process influences. It is difficult to get teams excited about a lower price or managing sequencing issues with a general contractor. That is about survival. Inspiring teams to rally requires more creativity, but grounding the approach in the reality of spending is important. Luckily, the relentless change in the business world provides plenty of reality, backed by billions in capital difficult to ignore. The commercial real estate industry is undergoing significant transformation, influenced by strong trends which will impact our contractor members in a negative way if they miss the signals and do not ready their teams to respond.

Photo: Ziga Plahutar / E+ / via Getty Images

Strategy Inspiration Example One - Rise of the Global Flexible Workspace Market

According to a report by Fortune Business Insights, the global flexible office market size was valued at approximately $30 billion in 2022 and is projected to grow to nearly $100 billion by 2030. This growth trajectory reflects the increasing acceptance and integration of flexible workspaces into the business culture. The market's growth is fueled by the need for businesses to scale operations without long-term financial commitments, the rise of subject matter experts and freelancers, and corporate talent strategies focusing on workplace flexibility. These spaces enhance networking opportunities, community building, and provide updated tech-enabled environments.

This will impact commercial specialty trade contractors and the suppliers they choose to align with on projects. There will be increased demand for quick turnaround projects to support flexible workspaces and rapid setup, reconfiguration, or dismantling to meet the needs of tenants with short-term leases. This means contractors need to be agile in their product recommendations, project timelines and execution. There will also be increased modular and scalable construction methods. Increased demand for modular furniture, movable walls, and tech integration will lead to specialized opportunities in these areas but also require new skills or partnerships. This shift in project types will replace traditional long-term fit-outs. More ephemeral, design-focused spaces will reduce the volume of large-scale, long-duration projects.

Successful strategies to respond to this trend may be to specialize in modular and flexible fit-outs by partnering with manufacturers who offer modular solutions for all surfaces – floors, walls, ceilings - that can be quickly assembled or disassembled. Specialty trade contractors can expand services to include technology integration or closely partnering with tech companies to bundle value. Flooring contractors can also offer maintenance and reconfiguration services as a subscription service model to tap into recurring revenue streams.

Strategy Inspiration Example Two - Design Giants Consolidate Decision Making

The Interior Design Giants list, as published by Interior Design magazine, is an annual ranking of the largest interior design firms based on their interior design fees for the previous year. The list typically includes the top 100 firms in terms of interior design fees. In 2024, the total interior design fees for the Top 100 Giants surpassed $5 billion, which represents a significant portion of the market. It's clear that these firms handle a substantial share of the industry's revenue, with the sector showing a 19% increase over the year. The Design Giants employ a significant amount of design staff, with an increase in staff numbers of 16% since 2019, indicating a recovery and expansion in employment for the top firms. This consolidation has created a challenge for our membership. In the past they were able to access regionally important interior design professionals. It was common to collaborate with them to influence product selection and improve the quality of project outcomes. Today, the design teams are geographically disconnected from the project locations and the designers are nearly impossible to access. Manufacturers have taken advantage of this trend by over deploying into the Design Giant approach. The tactic is to overwhelm the market with specification volume, which works effectively to control all of the implementors downstream. This includes the general contractors and our members who predominantly bid their work.

If our members prefer to approach this challenge with a strategy, they can inspire their teams to great success. Our members can offer interior packages that are scalable and customizable to fit different space needs. The packages can be pre-selected to work together, offering alternatives to the siloed specification approach. Members could also specialize in creating temporary or pop-up workspaces for events or short-term offices, which can be lucrative in urban areas with high real estate turnover, and less attractive to the Design Giants. Offering interior solutions combining installation with ongoing maintenance, tech support, and user experience upgrades could invite clients to consider regular brand updates, space reconfiguration, and wellness enhancements that do not require inspection or permitting. These services could enable non-traditional contract and payment models based on performance metrics like user satisfaction, energy efficiency, or space utilization rates. Our professional flooring contractors can inspire their teams to approach valued clients with pilot programs through real estate firms to test new service models, gaining early adopter status and insights to scale the differentiation. Our member sales leaders can actively seek out and hire from the pool of designers who might not fit into the large design firm’s models, offering them creative freedom and project diversity. This new talent pool could uncover underserved markets or specific design styles that the Design Giants might not prioritize such as practical sustainable materials or designs for specific business culture needs.

Future Proof

By understanding these broad trends in commercial real estate, our commercial flooring contractors can continue to evolve their businesses by taking advantage of strategies developed by their inspired and engaged teams. This is much healthier than running a process-oriented operation responding to bid invitations. Our member leaders that strategically position themselves as commercial specialty trade contractors can navigate these shifts effectively, turning potential challenges into opportunities for growth and differentiation.