Surfaces 2008: You can't afford to miss it (So don't!)

An eager crowd of showgoers awaits the opening Surfaces '07.

Surfaces 2008 is more crucial to the health of the industry than any event in recent memory. It is one event industry executives and salespeople can’t afford to miss. Why is this upcoming show so important? Because many in our industry are struggling. Although the overall economy may be strong, the home building industry has been among the poorest performing areas. Unfortunately, it is also the one that has the most influence on the demand for flooring of all types.

Further complicating matters is the pall lingering from the sub-prime mortgage mess. The wave of foreclosures and the drop in demand for homes has become an unneeded and certainly unwanted cog thrown into an otherwise vibrant economy. Big box retailers seem to be suffering the most. Many have seen sales dip by as much as 30%. While we shed no tears for them, even our most sophisticated flooring retailers and retail groups are experiencing double-digit drops in sales volume. The picture gets even worse in certain areas of the nation. What’s more, there is a wide consensus that we won’t see things turn around until well into 2008.

But let’s be clear. The downturn in business is not universal and certainly not permanent. I recently saw evidence of this firsthand when discussing possible topics for a presentation at the Washington State Floorcovering Association. The executive director cautioned me not to assume everyone is struggling. In general, she said her members are saying their business is healthy. Even so, they accepted my topic: Five Actions to Improve Business Immediately! More that 70 dealers attended the session. The mood was upbeat as many exulted over their record year. More evidence is readily apparent in southeast Virginia where I live. There is a frenzy of new building going on. Developments full of “spec” housing are sprouting everywhere. I hear there are pockets elsewhere in the country that are seeing similar activity.

The last time I personally experienced a similar nationwide downturn was during the late ‘70s and early ‘80s when the inflation rate was 14% and interest rates soared to 22%. In that type of environment there is bound to be zero growth. It was summed up by a buzzword that surfaced at the time: “Stagflation.” Compare those numbers with current interest rates, miniscule inflation and low unemployment. It may come as small comfort to those of you in some poor performing regions of the nation, but I can assure you things have been much worse. I predict we will one day look back on this as an “emotional recession.” And even while the residential market is slumping, contract and “Main Street” commercial is healthy. Remodeling work remains strong.

For those retailers who rely on builders for at least half their business, maybe this is the perfect time to wean yourself away from a sector that is notoriously slow to pay and forces you to work on low margins. Replace them with higher margin business including smaller builders, remodelers and Main Street contract. Even when building was strong, we looked for ways to woo the builder’s customers and thereby eliminate the middleman.

Whatever your situation, now is a great time to take action. A few years back I wrote and spoke to retailers about “Unleashing Your Potential.” It was based on my observation that most flooring businesses leave 90% of their potential on the table. If your business is down 20%, that leaves 70% ripe for the picking. Many readers may question the 90% figure, but they typically listen to at least a few suggestions. Not long ago I described in detail how a one-day private sale at Carpet Town in West Allis, Wis., brought in $200,000 (see May 2007 NFT, page 24). This just about any of you could do if you exhibit the courage, work ethic and determination shown by Wendy Werner, the retail salesperson who engineered the event. Who among you would pass up a change to bring in an extra $200 grand?

Years ago, Milliken did a study and determined that a small town of 35,000 people needed about 225,000 yards of flooring. At today’s pricing that translates into approximately $6 million worth of business. If such a small town offers that kind of promise, consider the business potential where you operate. I know of a rookie salesman in St. Paul, Minn., who after just one week of training wrote $45,000 of business his first week in the showroom. There is a retailer in Honolulu I know who doubled her sales permanently from $45,000 a month to $90,000 a month after two days of training.

The point is there is business out there for the taking, but you have to know how to corral it. For example, are you familiar with the “proven consumer buying periods?” Retailers who know how to time their promotion can bring in up to 5% of their annual volume with a powerful one-day or weekend event. (If you’d like more info on this, feel free to contact me directly.)

Maximizing your potential in flooring sales is exactly why Surfaces is so huge to our industry and it’s why the meeting early next year will be crucial. Show organizer Carol Wilkins and her hard-working staff have scheduled an impressive slate of speakers for the forthcoming show. Sales pros, technical wizards, people who are expert at motivating and training, people from in and outside the industry; they will be there at Surfaces with a common goal: Help dealers achieve (and maintain) immediate increases in business. Carol and her staff are well aware of the challenges in our industry these days and the schedule reflects that. My session, for example, will outline several actions any retailer can take to improve their business in spite of conditions. (It is scheduled for Thursday at 8 a.m.). The workshops begin Tues. Jan. 29 and run through Feb. 1.

And let’s not forget the most prominent part of Surfaces: More than 500,000 sq. ft. of exhibit space. This year in particular it will be filled with suppliers eager to do business. Remember, manufacturers are also feeling the sting of sluggish business conditions. This is a chance to secure the best deals. Bring your toughest negotiating stance and enjoy the ride.

While the climb has become a bit steeper in our business these days there is a distinct difference between now and the late ‘70s and early ‘80s when dire economic conditions were more severe. Gas prices may be high today, but back then there were shortages and lines of cars waiting for a turn at the pump. Today’s conditions are far different. There is more money in consumer’s hands than ever. Many are just leery about spending it. Creative methods must be employed to put consumers at ease and convince them this may just be the best time in history to purchase flooring. Building your remodeling is key to navigating to higher ground.

Still the fact is when business dips, retailers tend to pull back. I submit that instead of retreating you should advance. When I was running a store and late ’70s recession soured business, I concluded the only people who still had money were the rich. So instead of promoting bargain-priced flooring, we aggressively promoted upper end products. The strategy worked. Other retailers advertised their low end lines. But folks who might buy cheap were broke. We experienced no downturn. We saw strong increases. The difference now is that people, generally speaking, are not broke. They are, however, exceedingly cautious. But whether they are rich or not-so-rich, even those insecure about the economy appreciate real value these days.

Surfaces will help you take a creative approach to advertising, merchandising and marketing. Even those in this business for decades are likely to learn new approaches because there are a multitude of ways to do this. Retailers working the show floor will be in position to land the best possible deal from suppliers. When they return home, they can make the case to shoppers that now is an ideal time to invest in their homes.

No, this is not the time to pull back. Take action! Increase your advertising. Get aggressive about promotions. Drum up publicity in the local press. Reach out to new avenues such as Main Street commercial.

And of course, if you have not already done so, make your reservations for Las Vegas now. Register for as many sessions as possible. (Visit www.surfaces.com for more information.) And that applies also to distributors and suppliers. They too should plan to attend as many sessions on retail as possible. One naïve distributor complained to me once that my session wasn’t for him because it was tailored to retailers. I politely reminded him that sales skills are the same whether you run a Fortune 500 company or a lemonade strand. And beyond that, isn’t it a good idea for distributors and suppliers to learn as much as they can about their customer’s business, which is retail? This is the secret of success.

No doubt there are retailers who have seen sales decline and have decided to sit out the next Surfaces as a way to trim expenses. I respectfully submit that is a terrible mistake. There has been a gigantic effort to make this the best show ever. Luckily, as this is only November, there is still time to readjust your priorities and make plans and go. The business you save may be your own.