Survey 2011: What the Retailers Think - July 2011

By Darius Helm

 

Despite signs of a strengthening residential flooring market, independent floorcovering retailers report that conditions are relatively unchanged from last year, with store traffic still slow, competition still fierce and margins tighter than ever.

It was 2006 when the housing market started its long decline, and retailers have been scrambling since day one to keep their heads above the water. Now, five years later, retailers have made all the adjustments they can, working out how to do more with less, diversifying product selection, finding new avenues for advertising and driving traffic to their stores, lowering operating costs, and simply working harder. But even though the market has flattened out—and is even edging up, depending on the region—margins have continued to shrink, driven by everything from competition to the inexorable rise of raw materials. 

A significant difference between the flooring retailers of 2006 and the flooring retailers of 2011 is that today’s retailers know their business inside out. They’re shrewder about product selections, marketing campaigns, showroom layouts, price points, the value of service and selling strategies, and they seek out new ways of driving business, like leveraging the power of the Internet and social media. During the boom years, demand for their products was driving their businesses, but now, more than ever, the success of retailers is the result of their own actions and efforts.

WHO THEY ARE
This year, 35% of the respondents to the survey come from the Midwest. Another 25% come from the South, 23% from the West and 17% from the East. Last year, the South and Midwest were around 30% each, and the other two regions were about the same as this year.

Revenues appear to still be shrinking among survey respondents. This year, 26% reported sales of less than $600,000, compared to 21% last year and 9% the year before. Expanding out to those with sales of $2 million or less, that’s 75% of this year’s respondents, 71% of last year’s, and 58% of the 2009 respondents. So it looks like average revenues are continuing to slide.

On the other side, those with sales of over $5 million represented 14% of respondents in both 2009 and 2010, and this year it’s down to 10%, with a 50% drop in those claiming sales of over $15 million.

In terms of how salespeople are compensated, 43% of this year’s retailers report paying straight salaries, compared to 45% last year, while 18% pay straight commission, down from 27% in 2010. The balance pay some sort of combination of salary and commission.

We asked retailers whether their installers are company employees or independent contractors. Last year, 80% reported that they worked with independent contractors (it was 79% in 2009), and that was consistent across all regions, ranging from 86% in the South to 72% in the East and West. This year, 77% reported that their installers are independent contractors, so it’s down a bit. Again, the rate was highest in the South, at 84%, with only 68% in the West and 71% in the East—so the ratios are about the same. Many retailers of a certain size have a core group of installers on staff and turn to independent contractors when additional work comes in. But if that work isn’t coming in, we’d expect it to be reflected in a shift in the survey away from contractors. So we’ll watch next year to see if those numbers continue to trend downward.


For the complete Survey results, see the July 2011 issue of Floor Focus Magazine.

Copyright 2011 Floor Focus 



Other Archived Articles

Wholesale Prices Slid in February   Full Article
Washington, DC, March 13, 2015—Wholesale prices fell 0.5% in February, says the U.S. Bureau of Labor Statistics. The unexpected drop represents the fourth consecutive down month, as measured by the Labor Department’s producer price index.

Interface's Claims New Microsfera Has Lowest Carbon Footprint Ever   Full Article
LaGrange, GA, March 13, 2015—Interface has unveiled its latest product, Microsfera, which the firm says has the smallest carbon footprint of any carpet tile in history.

Ecore Revamps Business Structure   Full Article
Lancaster, PA, March 13, 2015—Ecore is making changes to its business structure in conjunction with IHRSA 2015 by launching a new category of sports and fitness flooring called Ecore Athletic.

J+J Flooring Video Wins Gold in AVA Digital Awards   Full Article
Dalton, GA, March 13, 2015—J+J Flooring Group video was named gold winner in the corporate image category of the AVA Digital Awards.

Average Mortgage Rates Rising, Buoyed by Strong Jobs Report   Full Article
McLean, VA, March 13, 2015—Average fixed rate mortgage rates are moving higher amid a strong jobs report and bringing mortgage rates back to where they were at the start of 2015, according to the results of Freddie Mac’s Primary Mortgage Market Survey.

Trade Sales & Manufacturer Shipments Edge Down in January   Full Article
Washington, DC, March 12, 2015—The combined value of distributive trade sales and manufacturers’ shipments for January was estimated at $1,302.5 billion, down 2.0% from December 2014 and down 0.3% from January 2014, says the Commerce Department.

Retail Trade Sales Down from Previous Month But Up YOY   Full Article
Washington, DC, March 12, 2015—Retail trade sales were down 0.6% (±0.5%) from January 2015 but up 1.0% (±0.9%) over 2014, says the Commerce Department.

LL's Free Air Quality Testing Won't Meet CARB Standards   Full Article
New York, NY, March 12, 2015—Lumber Liquidators will offer free indoor air quality testing for its consumers--conducted to workplace standards,-- but OSHA's thresholds for formaldehyde in the workplace are not as stringent as CARB's for the home.

Parterre's Vertu Resilient Plank Wins ADEX Recognition   Full Article
Wilmington, MA, March 12, 2015—Parterre’s Vertu Resilient Plank won two ADEX awards.

Consumer Survey Reveals Optimism about Housing Market   Full Article
Washington, DC, March 12, 2015—Consumer optimism toward the economy is growing and appears to be contributing to further improvement in overall housing sentiment, according to results from Fannie Mae's February 2015 National Housing Survey.

Millennials Account for Largest Share of Home Buyers, Says NAR   Full Article
Washington, DC, March 12, 2015—The millennial generation represented the largest share of recent buyers, according to the 2015 National Association of Realtors Home Buyer and Seller Generational Trends study.

Three Tarkett Rubber Textures Win ADEX Platinum   Full Article
Chagrin Falls, OH, March 12, 2015—Tarkett received the Platinum Award for Design Excellence (ADEX) for its new range of rubber textures: Brushed, Concrete and Leather.

Fuse Alliance Focuses on Digital Marketing to Raise Awareness   Full Article
Laguna Niguel, CA, March 12, 2015—Fuse Alliance, a member-owned organization of professional, commercial flooring contractors, unveiled a next generation public facing website that clarifies the group's target audience and services offered.

U.S. Container Imports Down Over 5% in 2015   Full Article
Minneapolis, MN, March 12, 2015—Total U.S. container imports are down over 5% this year, compared to January and February of 2014, reports Zepol. Nearly the entire decline in imports is attributed to the West Coast ports of Los Angeles and Long Beach.

Armstrong Top Execs Offered Retention Award to Stay Through Spinoff   Full Article
Lancaster, PA, March 11, 2015—Armstrong World Industries is giving three of its top executives an incentive to stay at the company through the spinoff of its flooring business into a new, independent company next year, reports Lancaster Online.

Small Business Optimism Edges Upward   Full Article
New York, NY, March 11, 2015—U.S. small business optimism edged up in February amid signs of tightening labor market conditions, bolstering the view that a recent slowdown in economic activity will be temporary, reports Reuters.

LL Class Action Lawsuits Extend Beyond Formaldehyde Issue   Full Article
Toana, VA, March 11, 2015—Lumber Liquidators is currently facing at least 12 class action lawsuits.

Foreclosure Inventory Fell 33.2% Year Over Year   Full Article
Irvine, CA, March 11, 2015—CoreLogic's January 2015 National Foreclosure Report reveals U.S. foreclosure inventory declined 33.2% from January 2014, and completed foreclosures declined 22.5%, reports World Property Journal.

The Floor Store Earns Sixth Armstrong Elite Retailer Recognition   Full Article
Lancaster, PA, March 10, 2015—The Floor Store’s new San Francisco, California showroom has been named an Elite Retailer by Armstrong, the chain’s sixth location to earn the distinction.

Wholesale Inventories Up Slightly   Full Article
Washington, DC, March 10, 2015—Wholesale inventories were up 0.3% to $548.7 at the end of January, says the U.S. Census Bureau.