Let’s face it. Times are tough
right now in the flooring industry. But it is important to bear in mind that
the industry is cyclical. There will be bad times as well as good. We’ve been
through this before and we’ll have to endure it again. Unlike the early ‘80s,
this has nothing to do with the economy. It doesn’t even have much to do with
our flooring industry. Rather, much of it lies with the building industry, which,
unfortunately, many flooring retailers are dependent upon.
While teaching at a recent Floor
To Ceiling education session at their headquarters in Burnsville, Minn., I was
surprised to see the owner of one of their top store owners in attendance. Very
rarely do owners bother to attend, even though Floor To Ceiling has one of the
best training facilities in the industry. But there is good reason for an owner
to be in attendance. When I owned a flooring store, it was beyond the pale for
me to send my people to any class if I was unfamiliar with the content.
Having lived in Vermont where most
homes still heat with woodstoves, this headline has special meaning to me. When
it’s 30 below with the wind howling and you’re in a non-insulated farmhouse
built in 1840, there is no modern heating system that will keep you warm. But
the heat from an old-fashioned stove strategically placed in our seven-room,
two-story farmhouse can be too much if you don’t keep it under control. Unlike
the places where most of our readers live, wood stoves are a way of life in
these parts.
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.
When I opened my first retail flooring store in
1963, the furthest thing from my mind was a disaster that could cripple my
business. Like most of us, I took the basic protective steps: fire
extinguishers, smoke alarms, propane stored in a safe place… Doors were locked,
access to offices and files was limited and we allowed no crossover of
functions such as salespeople allowed to place orders. Each day night deposits
were made to the bank.
I love family businesses. As a young man I opened my
first flooring store at age 23 and as the children came along, it seemed
natural for them to be working at one of the stores. All four of them became
productive citizens, but none stuck with the business-tough boss! Working in
the business taught them valuable lessons on how to compete in the free market
and the rewards of hard work, persistence and honesty in the greatest society
on Earth. They were involved right up until I sold my stores in 1986.
Ask most retailers “What is your closing
percentage?” and they’ll probably tell you “Four out of five!” Sounds great.
But based on observation, experience and actual head counts, I have found that
even for good retailers, it is actually closer to one out of every five
prospects. This means that if the average sale is $1,200 and you do about $1
million in sales each year that works out to about $3,333 a day. But your
actual sales opportunities add up to almost $50,000 a day. Think about
that: Nearly $47,000 a day is walking
out of your store and you might as well be holding the door open for it to
leave. This translates into 15 people per day coming into your store. That’s
1.5 customers per hour in a 10-hour day-not even a busy day.
These are strange and trying times for America.
Uncertainty and lack of consumer confidence have resulted in many floor
covering retailers experiencing sales results that are consistent with a
recession instead of the thriving economy that we actually have. Although
construction is down in many areas, remodeling activity is steady and many
businesses report they are sitting on cash they don’t know what to do with. Upper
income people are making more money than in any time in history and would love
to spend it, but grim news is making them gun-shy. I am in touch with retailers
around the nation and a lot of what they report is unsettling. Even some of the
largest flooring retailers are reporting dismal sales-and not just in rustbelt
states like Michigan and Ohio.
While
attending the Alliance Flooring (CarpetsPlus Colortile and Carpetland, USA.)
convention in Atlanta in February, I sat in on a general session built around
the theme “Best Practices.” Usually these discussions feature someone telling
us “I chop up my used pad and sell it”
to “I use trailers outside an installation so we can load up at night and my
advertising goes on the sides.” All good ideas and rewarding for the retailer,
but this was one presentation that had me glued to every word.
Throughout
my career I have been fortunate enough to work with every major merchandising
group in the industry. The relationships go back as far as 20 years and I am
proud to say my books, CDs and DVD programs are often used to educate their
members. Five different companies in
this industry have contracted with me to write their company sales book. A like
number has hired me to create their own in-store DVD sales education program or
are using my existing programs. Some have even taken my materials as a basis
for their own creations-not a problem, since my mission is education.
