Focus 100 Retail - November 2010

By Darius Helm and Kemp Harr

Following last year’s extremely tough residential flooring market, 2010 started with positive momentum, and there was good reason to believe things were moving in the right direction, albeit slowly, mirroring signs of a strengthening economy. But following the expiration of the home buyer tax credit at the end of April and in the wake of continuing difficulties with credit and high unemployment, the residential flooring market dipped again over the summer, and now it looks like the traditionally robust fourth quarter will also fall short of expectations.

While early predictions were for gains of a couple of points in the residential flooring industry, now it’s looking more like the industry will be a couple of points down by year end. 

Last August marked the four year anniversary of the turn in the housing market, but back then the unemployment rate was less than 5%. Now it’s hovering around 9.6%, representing 14.8 million people, which means that at least seven million more people are out of work now than four years ago. And more than six million people have been out of work for at least half a year.

The home buyer tax credit had a significant impact on the residential builder market this year, but the consensus among industry experts is that real growth won’t come until employment numbers improve.

On a positive note, mortgage rates have never been more attractive. By mid October, 30-year fixed-rate mortgages averaged 4.19%, according to a recent Freddie Mac survey, the lowest on record, while the 15-year fixed-rate fell to 3.62%.

It’s worth noting that pent-up demand remains a factor, whether that demand is realized suddenly or gradually. Rental apartments are in need of refurbishing, as are millions of homes, and when the economic fever finally breaks, that demand will boost the residential flooring business. However, those who have fought hardest to stay visible and attract customers during these lean years—particularly those who have built a web presence that engages consumers and lures them into their stores—will benefit at the expense of those who have done little more than turn up their collars and wait for conditions to improve. So there’s a good chance that the upswing will generate a new round of retailer closings.

Despite a sharp slump in 2009, the commercial market has fared better than the residential market. First, the commercial slowdown followed behind the residential slowdown by a year or so, and now signs are that it’s picking up at a faster rate, and next year (barring unforeseen circumstances) commercial business should show healthy gains.

For the complete Top 100 Retail story, see the November 2010 issue of Floor Focus Magazine.

Copyright 2010 Floor Focus 



Other Archived Articles

New York Area Manufacturing Surges in July   Full Article
New York, NY, July 15, 2014 -- A New York-area manufacturing index rose to its highest level in more than four years this month.

Retail Sales Rise in June   Full Article
Washington, DC, July 15, 2014 -- Retail sales rose in June despite slower auto sales, according to the Commerce Department.

FIANA, CFI Planning Joint Event in September   Full Article
Vancouver, WA, July 15, 2014 -- The Floor Installation Association of North America and the Certified Floorcovering Installers are planning a joint convention in New Orleans Sept. 4-6.

Beaulieu International Group To Build Plant in Georgia   Full Article
Cartersville, GA, July 15, 2014 -- Beaulieu International Group said it will invest $200 million to build a campus-style manufacturing facility in Cartersville.

Volkswagen Chooses Chattanooga for New SUV   Full Article
Chattanooga, TN, July 14, 2014 -- Volkswagen said it will invest $600 million to build a new seven-passenger SUV at its factory in Chattanooga.

Median Age, Credit Scores For High-End Borrowers Fall   Full Article
New York, NY, July 14, 2014 -- The median age of borrowers seeking high balance mortgages has declined steadily over the last three years, according to private lender LoanDepot.

Meritage Homes To Acquire Atlanta Builder Legendary   Full Article
Scottsdale, AZ, July 14, 2014 -- Meritage Homes said it will acquire the Atlanta-based homebuilder Legendary Communities for approximately $130 million.

Previous Record Low Rates Hurting Home Sales   Full Article
New York, NY, July 11, 2014 -- Low interest rates are keeping some people from selling their homes, which is limiting supply and putting a damper on the housing recovery.

Metroflor's Aspecta Wins Award   Full Article
Norwalk, CT, July 11 -- Metroflor said that its new LVT contract brand, Aspecta, was acknowledged by the Product Innovations 2014 awards bestowed by Buildings magazine to a group of 30 finalists exclusive to NeoCon exhibitors.

Buchanan Hardwoods Gets NWFA Certification   Full Article
St. Louis, MO, July 11, 2014 -- The National Wood Flooring Association said that Buchanan Hardwoods, of Aliceville, Alabama, has earned the NWFA/NOFMA Mill Certification for its Elite Flooring.

Business Economists See Improving Economy   Full Article
Washington, DC, July 11, 2014 -- Business economists have lowered their expectations for second quarter growth but don't believe a recession will occur anytime soon.

Initial Jobless Claims Beat Expectations   Full Article
Washington, DC, July 10, 2014 -- Initial claims for unemployment benefits fell 3.5% to 304,000 for the week ending July 5, according to the Labor Department.

McGrane Named Executive VP at Max Windsor   Full Article
Adairsville, GA, July 10, 2014 -- Joshua McGrane ?has been named executive vice president? of ?Max Windsor USA.

Tile of Spain Seeking Design Contest Entries   Full Article
Madrid, Spain, July 10, 2014 -- The 13th Tile of Spain Awards of Architecture and Interior Design is seeking entries.

Lumber Liquidators Lowers Forecast, Stock Plunges   Full Article
New York, NY, July 10, 2014 -- Shares of Lumber Liquidators fell as much as 15% in after-hours trading on Wednesday after the company lowered guidance for the full year 2014.

Soniclean Partners With Shaw on Soft Carpet Vacuum   Full Article
New York, NY, July 10, 2014 -- Soniclean said it has partnered with Shaw Industries to address the growing demand for a vacuum cleaner capable of cleaning soft style carpeting.

Teragren Names Vice President of Sales   Full Article
Bainbridge Island, WA, July 10, 2014 -- Teragren has named Mark Jordan vice president of sales.

Dixie Group Added to Russell Stock Indexes   Full Article
Chattanooga, TN, July 10, 2014 -- The Dixie Group said it was added to the Russell 3000 Index and Russell 2000 Index when Russell Investments reconstituted its comprehensive set of U.S. and global equity indexes on June 27.

Congoleum Closing New Jersey Warehouse   Full Article
Hamilton Township, NJ, July 10, 2014 -- The Congoleum flooring warehouse here will cease operations later this year.

CRI Posts Model Specification for Commercial Carpet   Full Article
Dalton, GA, July 9, 2014 -- The Carpet and Rug Institute said its Model Specification for Commercial Carpet is now available online at Carpet-Rug.org.