Top executives on the manufacturing side of the flooring industry have a two-word message for retailers who have paused to lament the sour market conditions seen over the past year:
Move to build awareness of your business, promote profitable products, streamline your operation, capitalize on the “green” movement, and move to identify channels of distribution best suited to your needs. As you take these and other decisive actions, remember that the challenges you’re confronting are widespread. Your competition is also navigating through a rocky business terrain. When the dust settles and business conditions improve (as they inevitably will) you will be in a better position than ever.
Such is the consensus of top-level manufacturing executives in the flooring industry who agreed to participate in a comprehensive year-end study conducted on behalf of the World Floor Covering Association. The WFCA commissioned Clear Seas Research (a sister company to National Floor Trends) to conduct the study with an eye toward finding ways to strengthen the retail channel. The full results are being made available to WFCA members.
The study addressed a wide range of factors affecting the flooring business, including the economy, energy costs, consumer confidence, product quality and retailer promotions. Although a gloomy housing market has been a major concern in all corners of the flooring industry, those participating in the study said there is a silver lining. Increasingly, the economic climate is translating into a greater focus on overall costs, long-term capital expenditures and product promotions, they agreed. There was wide agreement that the “anticipated challenges in 2008 create unique opportunities for industry professionals as they prepare for the future.”
Participants in the study urged retailers to invest in their business and focus on gaining market share while identifying new products that offer added value. Wise areas to invest in, they said, include profitable marketing programs, market expansion and training. The manufacturer execs agreed that the most influential consumer marketing initiatives in the coming year will be those focused on greater brand awareness and “product-need perceptions.”
Manufacturers also urged retailers to cast a wider net when seeking growth. A dip in the residential market can create an opportunity to focus on commercial and remodeling jobs, they said. And, if the volume of customer traffic is off, executives advised retailers to use the downtime wisely. They can, for example, work to improve employee loyalty while finding ways to trim costs, focus on service and expertise. In short, they are being urged to polish their retail “brand image.”
At the same time, manufacturers said their objective when marketing to the retail channel should focus on achieving brand/product awareness, increasing product knowledge and generating awareness of promotions. They agreed that they should play a role in helping retailers increase market share and profit margins through the use of advertising assistance, training, and cost reduction tips.
New products should be rolled out with some important questions in mind, beginning with: “How does this more effectively address the end-user’s needs?” Manufacturers said other considerations should include the effect on a retailer’s internal costs and inventory management. Also: Does the new item diversify the business and provide greater value?
Asked how a manufacturer should go about cultivating loyalty among their retail customers, respondents identified a number of areas including these:
• A commitment to the retailer built on customer service, mutual trust and quality products that offer reliable performance and innovation.
• Manufacturer sales reps who develop mutually beneficial relationships.
• Brands that are easy to sell due to their high customer awareness, high quality and innovative marketing.
• A quick and easy claims process focused on the end customer.
Two key areas addressed in the study involve new technology (namely e-commerce), and the ever-widening effect of the “Green” movement.
Manufacturers expressed some frustration in the area of technology. They maintain that they have been encouraging greater acceptance through in-store demos, introductory discounts and other incentives. They added, however, that retailers are still resisting due to lack of time or the desire to learn about new technology. While the manufacturers agreed that there be an increased emphasis on e-commerce, they assured that phone ordering will remain an option for the foreseeable future.
They also concurred that the “Green” movement is rapidly accelerating and will become even more of a factor due to USGBC, LEED and other considerations. While the focus, thus far, has been mainly on the commercial side of the industry, the residential segment is headed in the same environmentally friendly direction. Manufacturers said retailers have a responsibility to become educated on Green products in order to explain their value to consumers.
Overall, the manufacturers concluded that consumers are likely to tighten their purse strings in the coming months. As a result, they said, those in the flooring industry need to maintain a profitable environment, increase customer awareness, focus on Green products, and position themselves across other product categories to compete for the limited disposable income consumers have available.
About the Study
This is a snapshot of the results from a qualitative research study conducted on-line in Dec. 2007. Senior executives from 16 major companies participated. Included were six companies involved in soft surface flooring; seven that specialize in hard surfaces and three firms that market installation-related products. The companies participating are among the leading brands in the flooring business. For additional information contact email@example.com