In this rapidly changing industry, the need to be aware of the trends has never been more important. To help you get a better handle on things, NFT picked the brains of numerous retailers, contractors and distributors. In a special study, we asked them to share what they consider to be the significant trends.
The study included direct interviews plus a mailed survey to a large number of retailers and contractors. Its purpose was to get a picture of the percentage of business they do in each floor covering category, which category has shown the greatest growth and which will produce the most growth during the next 18 months.
Here is the percentage retailers sell of each floor covering category: carpet, 36 percent; ceramic/stone, 19 percent; wood, 16 percent; resilient/rubber, 13 percent; laminate floors, 6 percent; cushion, 6 percent; and rugs, 3 percent. When asked which category has given them the greatest growth, 34 percent said ceramic/stone; 26 percent, wood; 18 percent, laminate floors; 12 percent, carpet; 5 percent, resilient/rubber; and 4 percent said rugs. The next step was to determine which category will produce the greatest growth over the next 18 months. The result: ceramic/stone was identified by 32 percent of the respondents, wood by 25 percent, carpet by 18 percent, laminate floors by 12 percent, rugs by 6 percent, and resilient/rubber by 5 percent.
Direct interview commentsWhy Retailers Sell/Promote a Particular Brand/Manufacturer.It is significant that in reaching the decision to sell/promote a particular brand/manufacturer, regardless of the type of product, price does not head the list. The two top reasons (by a wide margin) are design and styling, followed by quality. Price finished in fourth position.
Retailers/contractors agree that this is a fashion industry, and it is design and styling -- coupled with quality -- that triggers consumers, designers, specifiers, and end-users. They hold the common view that residential and commercial accounts want quality floors and installations, value for their dollars, complete service, sincere guidance, and a wide selection.
Retailer Alignments. Retailers, in growing numbers, are establishing alignments -- buying groups, franchises and partnering programs with manufacturers and distributors. Ron Leach, Rafael Floor Coverings, San Rafael, Calif., points out that, “Alignment in one form or other (i.e. Carpet One’s, manufacturer groups like Shaw Alliance or DuPont Stainmaster Showrooms, etc.) is squeezing in on non-aligned dealers to at least stand with someone.”
Commenting on alignments, Kent Goodman, Space Flooring and Supplies of Atlanta, says, “Certainly the proliferation of the retail buying groups is a mega trend. The services they offer, combined with year-end rebates, works.”
Jeff Cowan, House of Carpets, Modesto, Calif., poses an interesting scenario. “At some point soon, the big two mills will face a serious conflict with some of their best customers as they continue to roll out their franchise/captive retail programs,” he says. “How will the major retail marketing groups like doing business with their major competitors?”
Ray Colombo and Bob Wagner, L. Fishman & Son of Baltimore, find that the, “buying groups seem to be getting stronger to the detriment of the independent dealer. Increasingly, they are delivering value as they become better at negotiating with the preferred vendors and developing good marketing programs for their members.”
Technology: A Major Influence on the Industry. Technology continues to improve floor covering products both visually and in performance -- from the tops to bottoms, fronts to backs, and everything in between. Breakthroughs in technology are considered by most to be high on the list of major trends.
Carpet Mills’ & Distributors’ Expanded Product Offerings. The trend by manufacturers to expand into ceramics, hardwood, laminate floors, and installation supplies continues. Jim Gould, Misco-Shawnee, Earth City, Mo., underscores this with, “the fact is that manufacturers (Shaw, Mohawk, Armstrong, Mannington) have recognized that they must sell multiple product categories, which challenges traditional distribution.”
Distributors Continue to Expand Products. Full-line distributors are becoming significant factors in ceramics. Ray Colombo and Bob Wagner say this expansion is also taking place among installation supplies distributors, as more and more of them are taking on such products as laminate floors, wood, cork, ceramic, commercial sheet goods, and commercial tiles.
Our study group continues to give high marks to distributors. Randy Grachek, Hanks Specialties, New Brighton, Minn., feels that, “dealers are working with distributors more and distributors are important to them. They can keep their money longer and get their products when they need them.”
Consolidation at All Levels. Mergers and acquisitions continue to be the rule, not the exception, among manufacturers, retailers, contractors, and distributors. Jeff Cowan adds, “At some point, the consolidation will attract outside interests as others see opportunities to provide niche products that the big boys just don’t want to mess with.”
With few exceptions, most agree with Charlie Brown, Victor Kemp Co., San Diego, who says, “Continued consolidation of manufacturers, distributors and retailers, either by merger or bankruptcy, is a trend that will continue.”
Cost of Doing Business. For many, a disturbing trend is rising business costs. Ron Leach cites the cost of doing business, especially insurance, as “one of the next major hurdles we small independent retailers have to overcome. Worker’s Comp is up 70 percent to 100 percent in one year in California. Don’t overlook liability and auto insurance. Plus, throw in mold and asbestos. These will be major costs and detractors for small business management to hurdle.”
Product Trend Observations. As we noted earlier, high marks are given to technology breakthroughs. Mike Ferreira, B.T. Mancini Inc., Milpitas, Calif., gives high marks to advances in backing systems. “Most systems,” he explains, “have a 15-year to lifetime warranty for delamination and edge raveling. And backings with moisture barriers are becoming very popular with hospitals and assisted-living and healthcare facilities.
“Modular producers,” he adds “are coming out with products in the $10.50- to $13-per-yard price range. Gives the end-user an opportunity to use them installed for under $25 per yard.”
Jim Gould categorizes glueless, or “click,” installation of laminate floors and wood as a definite trend. Ron Leach finds that, in both wood and laminate, “the race is on by manufacturers to convert their production over to the system.” He adds, “Customers show no sales resistance to not having the edges glued when we explain how it works and show that a major-name manufacturer makes it and backs it up.”
Betty Sturdevant, Street & Associates Floor Coverings, Salt Lake City, found while attending a recent Parade of Homes promotion that, “every home had ceramic tile/stone, wood or carpet. The carpet in most of the homes was definitely influenced by the commercial market and had much more patterned design than I have seen before. The wood floors were either standard or an engineered-wood product. Stone is definitely in for countertops. Most of them were either granite or solid surface.”
General Outlook. Confidence continues to remain high for many reasons. Jeff Cowan says, “The nesting trend that was already evident prior to 9-11, and got a real boost after that date, will continue due to a super-active real estate sector, low interest rates, refinancing, equity loans, etc. All of which benefits floor coverings.”
Hoy Lanning Jr., CMH Flooring Products, Wadesboro, N.C., supports this view. “I think the consumers are spending more time at home where they feel safe,” he explains, “and they want their environment to be beautiful.”
“Consumers seem to prefer name brands, so branding to me is an important trend,” Kent Goodman notes. “In part, this is the result of a bad experience they previously had.” With very few exceptions, the study group firmly believes that the thriving housing market will continue to benefit the floor covering industry.
Installation Comments. Jeff Cowan raises this question (one shared by many): “When is some serious R&D money going to be spent on making floor covering products easier to install and easy to remove and dispose of? The high-tech floors (especially in commercial) are increasingly harder to remove and, at some point, will cost more to remove and dispose of than installing new.”
Ray Colombo and Bob Wagner firmly believe that the “professionalizing” of installers continues. “We see fewer and fewer ‘bums’ posing as installers coming into our place. The CFI has done a great job. Of course there will always be production sellers who believe that they need $1 per yard installers, which is of course the quality level they will get.”
And from Kent Goodman comes this thought: “Our industry must treat installers with respect. They need to make a livable wage for their hard work. They need to be trained regularly. The installers are an integral part of the retailer’s team and should be accountable for both their contributions and mistakes.”