One area of solid agreement involves technology. B2B communications that require less and less human intervention are inevitable. Installer training will include digital photography to record every step. Paperwork, if any, will be scanned directly into computer files. The consensus: Changes resulting from online buying and selling and the growing reliance on business management tools will profoundly affect every level of the business.
Those participating in our forecast also agree that globalization will be of critical importance to virtually everyone in flooring-even more so than today. Over the next few years there will be sharp growth in the volume of products and materials produced overseas and shipped to American shores. And many will be shipped here by domestic manufacturers and distributors.
Overall, the distributors and retailers we spoke to were somewhat divided as to what to expect in 2010. They did agree that the next decade is closing in on us fast and that success will belong to those who weigh their options and chart their course wisely. Some predictions may seem surprising. All merit serious consideration.
We invite your comments. You can e-mail them to email@example.com or by mail to National Floor Trends magazine.
"Dealers will be challenged to sell higher-end products."On the wholesale side, there will be more consolidations and at least one distributor will become national. There will be a much greater Interaction between dealers and suppliers via the internet, including placing orders, filing claims by retailers and announcing promotions/special buys by suppliers. Distributors will have to offer many added services to help offset the sheer size of Shaw and Mohawk.
Mal Wilk, Amigo's Flooring Monster
Woodland Hills, Calif.
On the retail side, the dealers who have beautiful showrooms and offer extraordinary service will grow and prosper as will those at the other end of the spectrum: Large warehouse stores with large product offerings and huge inventories. The dealers in the middle who offer so-so service and have cluttered showrooms will diminish in number and importance.
There will be a wider disparity between commodity products and high style, higher priced products (which produce more profitability). As a result, dealers will be challenged to sell the higher-end products. They will have to rely heavily on sales training to be successful doing so.
"Technology will continue to change the ways and means of conducting our businesses."The industry will continue to be highly vibrant with new innovations and restyled products to meet changing consumer needs. There will be new entrants while a few who are participating now will no longer be around. This is all very safe to say.
Dennis Cook, Gilford Flooring
The model for distribution will also change with Internet based sales and marketing playing a larger role - yes, more so than the big box stores. The consumer will have already reviewed and narrowed flooring choices before entering a retail establishment. I do believe, however, that the wholesale distributor will also thrive because of its logistics and relationships marketing, especially with the specialty retailer.
Technology will continue to change the ways and means of conducting our business within the industry. For these reasons, participants in the industry can be reactive or proactive. Make your choice, and determine whether your company will remain and even thrive in 2010.
"The basis for technology in 2010 is already in place; the difference is that many things in limited use today will be prevalent in 2010." It will be commonplace for residential flooring selections to be made online and the sale all but completed without the consumer setting foot in the store. The dealer's online format will be more comprehensive and intuitive, allowing for click-through selections that will provide a basis for an estimate. The bricks and mortar visit will just be for confirmation. Just like today, the variables will be quality of installation and customer service.
Dave Stafford, Commercial Carpets of America
Residential and commercial [order processing] will be paperless. Orders will be directly entered into the dealer's accounting system as they are placed. Purchase orders, shipping notices and invoicing will all take place through B2B. Bulging filing cabinets will be a thing of the past; any paper records will be scanned with high-speed scanners and attached to the client's order for historical reference and warranty claims.
Installers will be trained to use digital cameras to instantly transmit images of job problems and/or change order approval. Camera and computer training will become an integral part of installer certification. Both dealers and installers will be working on language skills and communication; consumers and business clients will not be tolerant of those who don't understand or read English.
The basis for technology in 2010 is already in place; the difference is that many things in limited use today will be prevalent in 2010.
"The larger distributors will probably add more products from overseas"Manufacturers will continue to become more global in sales, sourcing and/or production of products. Factories in the United States and Europe will continue to either outsource or invest in the Far East, India and South America to capitalize on those growing markets and lower labor costs.
L. A. Train, Swiff-Train Co.
Corpus Christi, Texas
It would not surprise us if all industry sectors invested in new plants and/or joint ventures in China, Thailand, Vietnam, Malaysia, Indonesia, India and Brazil. Some manufacturers will continue to add products they currently don't produce themselves. More manufacturers from Europe and the Far East will enter the USA market.
Some distributors will try to expand nationally, although it may be difficult without acquiring [other] distributors. Even then it wouldn't be easy because most manufacturers avoid tying up too much geography in a few accounts. The stronger distributors will continue to expand on a more regional basis with continued success.
Retail buying groups that are unable to providing good value to their retail partners will shrink, be absorbed, or disappear altogether as they will lose membership and/or the support from the manufacturers. Independent Retailers will continue to prosper although their growth will probably be less than we have seen in the past 15 years. Retail/DIY type stores will offer more services as they try to transition to full service companies. They will continue to gain market share, but not more than another 2 percent to 3 percent. Another way for them to expand is to continue to buy major retailers with large followings in their respective markets.
"The winning retailers will be the ones who keep up on the latest techniques of installation and customer satisfaction." I don't think the industry will change that much. What will change is how we do business.
Marty Murdoch, M.E. Sabosik & Associates
Point Pleasant, N.J.
- Contractors will need to pick their customers carefully. There is a lot of work being done, but the name of the game is still to get paid in a timely manner. If a subcontractor doesn't choose wisely, he will find himself waiting for his money longer that he can afford.
- The big boxes will hurt the highway stores that cannot differentiate themselves from the masses. The one thing the big guys are having trouble with seems to be serving the wants and needs of Mr. and Mrs. Consumer. The retailer, who can play to those needs, will be alright. Otherwise they could be in trouble. Another way to differentiate yourself is to play up the quality card. Have the best installers, then advertise the fact you are not the cheapest, but you are the best. If you lose a customer because of a lower price, chances are you wouldn't have been able to make him or her happy without taking a big cut in your margin.
- The winner in the long run will be the one who can keep up on the latest techniques of installation and customer satisfaction. Don't just be a "me too" player. If that is all you are then your only chance to play is on price. We all know where that will get you.
"More and more flooring will be modular."2010 seems further in the future than it actually is considering that it seems not that long ago that we celebrated the new millennium in 2000. I can sum up the ongoing and accelerated changes I see for 2010 three C's.
Ron Leach, Rafael Floor Coverings
San Rafael, Calif.
- Click - I believe more and more flooring - hardwood, cork, ceramic, laminate, linoleum and even carpet and vinyl - will be modular and mostly use a click installation system. Better, more realistic looks with easier, less expensive installation will be the norm.
- China - More of our products will come from China. They haven't made a dent yet in carpet but that will probably be coming. I don't think we realize even now how much product is being shipped in.
- .Com - Fueled by the first two "Cs, Internet sales will continue to grow. This will cause a deeper rift between the retailer who shows and verbally sells the product and the manufacturer and/or distributor who, in effect, gets the sale, albeit by default, while offering little or no protection for their retailer base. The manufacturers and distributors will have to find a solution to this growing problem. I believe they can, or more pressure will come from the buying groups (the "amassed" merchants), the mass merchants and independent retailers.
"Many retailers will be selling products and referring the labor."I believe that in 2010 50 percent of the carpet samples will be polyesters and polypropylenes, not one of which will have mat and crush warranties. However they will promise not to stain. The point being that the carpet manufacturers will have taken the path of least resistance to the consumer, but not to the dealers whom they could protect with a label recommending "for light traffic areas only."
Ronnie Katz, Harry Katz Carpet One
Ceramic tile manufacturers will be selling direct by the carton to the entire trade out of local distribution locations in competition with domestic producers. The Surfaces show will be 50 percent ceramic tile, and it will help if you speak a second language (i.e., Spanish and/or Italian).
Some of the resilient producers will drop by the wayside. Laminates will dominate all other resilient categories. Thanks to technology the installation will either be click or the latest method, direct glue-down of 1/8" laminates. Most of the laminate products will be made in the Orient, which will have undercut all domestic producers.
Many retail outlets will be selling product and referring the labor. Labeling will be from manufacturers that don't sell direct.
"All carpet adhesives will continue to get more environmentally friendly by eliminating all VOCs."From an installation materials/techniques perspective we see minor changes and improvements in the way flooring is installed over the coming five years. Currently we see a new seaming system which employs a microwave type of iron as unique and beneficial to the process of seaming carpet. We believe that all carpet adhesives will continue to get more environmentally friendly by eliminating all VOCs and ingredients labeled as potentially harmful.
Ray Colombo. L. Fishman & Son
Because engineered wood floors require highly reliable adhesives we also see more of this type of adhesive coming to market as manufacturers attempt to capture this very important and growing segment of the industry.
Supplies distributors will take a more active role in distributing ceramic installation supplies. After all, this is a growth area of flooring. This business has been left to the ceramic tile distributors up to now. But, as we look to grow our core business we need to be in that segment in a bigger way.
As a comment about the industry in general: we see still more consolidation, and an attempt to have national consolidation among the manufacturing, distributing and retailing segments of the industry.
Finally we don't see any real quantum leaps in technology or process as to the way flooring is brought to market and how it gets installed.
"All orders for floor coverings will be done electronically."My ten predictions for 2010:
Bill Kerns, Kerns Carpets
- There will be greater access to international markets than ever before.
- There will be more competition on the carpet side from domestic and international producers.
- Shaw and Mohawk will eventually purchase a vinyl manufacturer.
- Mohawk will enter into an agreement to purchase a fiber company.
- All orders for carpet and hard surface will be done electronically.
- Due to supply and demand issues around the world, 3/4" wood will no longer be available for purchase.
- Home Depot and Lowe's will open more standalone flooring stores and downsize their flooring departments in their big box locations.
- New techniques will be developed to aid in the installation of vinyl and carpeting.
- Consolidation will be a buzz word in the retail business. And,
- Kerns Carpets will celebrate its 75th anniversary.
"The next to enter the contract arena will be the Big Boxes whose strategy will be based on price. Business is not all about price; it has much more to do with service and long term relationships."We will see history repeat itself in the commercial market. Several years ago, Shaw, DuPont and Interface entered the contractor market. Only a handful of those dealers remain. The next to enter this arena will be the Big Box stores whose strategy will be based on price. Newcomers don't realize that the flooring business is not all about price; it has much more to do with service, and most important long-term relationships. We'll see this lesson repeated during the coming years. And, the independent contractors will again prove their value to the industry.
Phil Ashley, Bonitz Flooring Group
Facility managers have begun to select products based on long term cost implications rather than the initial installed price. So in commercial, we'll see more low maintenance resilient products (i.e. no finish required). We will also see a change in carpet manufacturing and marketing in an effort to overcome the perception of heath related issues with carpet. For the same reason additional effort will be placed on proper carpet maintenance techniques.
Moisture will still be here. We can only hope the continuing combined efforts by the flooring, concrete and testing industries will break through to the specification writers and revolutionize the way this problem is addressed. We must initiate a proactive effort to address moisture on all projects, and educate the architectural and general contractor community to become part of the solution!
"Retailers will have to be more knowledgeable than ever to determine who their vendors will be."One thing is for certain: in 2010 externally our industry will not look like it does today. There will be more consolidation of manufacturers, distributors, and possibly retail buying groups. In the retailer's showroom there will be more hard surface displays featuring environmental-friendly products but sourced from fewer manufacturers and distributors. In some areas of the country there will still be a vinyl display but probably only one and it will feature fiberglass products. There will be both large and small displays of wood and laminate products. These products will be sourced from the U.S.A., the Far East and Europe but marketed by American brokers, distributors, and manufacturers. Ceramic products will also be multi-sourced.
Melinda McChesney, Johnson Wholesale Floors
The retailer will have to be more knowledgeable than ever to determine who his vendors will be. He will be looking for the supplier who is the most dependable and reliable in terms of availability, consistency of product and a warranty that stands behind complaints. The supplier who fails to be reliable and consistent in service will lose market share. Therefore, internally the industry will continue to thrive on service-oriented relationships that make successful companies continue to grow and prosper.
"The Internet will finally become a viable vehicle for the sale of installed floor coverings." After the consolidation in the carpet manufacturing sector we will finally see increased competition from Asia/Pacific Rim countries and Latin America in the production of tufted carpet for the mass market.
Jeff Cowan, House of Carpets
Vertical integration will continue as carpet manufacturers acquire and/or start companies in tile, resilient, hardwood, laminate, rugs, specialty flooring and sundries.
The Internet will finally become a viable vehicle for the sale of installed floor coverings. Sales of soft surface flooring will stabilize at 50 percent of the market. Environmental mandates, shortages of and high costs of raw materials and shortages of skilled labor will be major challenges for the industry. Technology breakthroughs will bring to the marketplace truly cost effective recycling of used flooring. Research will also hopefully result in simplified installation methods with more modular based products to address the shortage of a skilled labor force.
"Producers will concentrate on products with the greatest amount of value to the consumer and return the greatest amount of profit for all involved."Difficult as it might be to believe, the current fluctuations in energy supply will continue to have a dramatic effect that will reach into 2010. The emergence of China as a low cost producer will continue, which will increase its demand for energy. This will make raw materials scarce and increase costs for floor covering manufacturers throughout the world.
Tim Thompson, Cronin Company
With this in mind, producers will concentrate on products with the greatest value to the consumer and consequently return the greatest amount of profit for all involved in the industry.
The emphasis must be on design, style, function, durability and other value systems rather than price. Products created around these principles will be extremely important and valuable for everyone in the process; manufacturer, distributor, retailer and ultimately, the consumer. In short, if the industry is to have a limited amount of resources, let us produce and sell the products which return the most value to the entire industry.
It is important that the entire industry participate in the process, from manufacturing to installation. The individuals responsible for the final stage of the process, the installers, must be trained on the proper techniques and use only the appropriate materials. This is the only way that the true value can be translated to the consumer.
"Labor will be a continuing problem. The successful company will find a way to train its personnel and motivate them to do the quality and quantity of work necessary."In an effort to improve the lives of our children, we have encouraged them to go to college so they can get better jobs and make more money. It is now part of our culture that one has to have a college degree to succeed. Unfortunately, this has led our society to look down upon the person who works with his hands. Yet many of our installers make more than $70,000 per year.
Brooks Mancini, BT Mancini Co.
There are concerns that could impact the industry in 2010. For one, we no longer have fathers and sons working in the industry. Another concern is those who have difficulty communicating in English. Therefore, training is a problem. Work ethic is another area of concern. The values of our children are different than what we had. Regardless of the reasons, the younger people of today don't want to work as hard as we do or our fathers did.
For the above reasons, I believe that labor will be a continuing problem in 2010. The successful company will find a way to train its personnel and to motivate them to do the quality and quantity of work necessary.