Survey 2012: What the Retailers Think - July 2012

By Darius Helm

 

While there’s no question that the residential flooring market is still sluggish, today’s dealers are more dynamic and engaged than ever. They seem to understand their businesses better—they know their suppliers, customers and competitors, and they see beyond the day to day to the bigger picture. Most of the respondents to our survey are the owners of retail operations, and this year they had plenty to say. However, for every criticism and negative comment, there was a suggestion, an insight or a constructive idea.

Next month is the sixth anniversary of the turning of the residential housing market, which has led to the most protracted residential flooring slowdown in modern history. One of the elements that has made this slowdown worse has been the inexorable rise in prices. Fifty years ago, this sort of economic performance would have rippled all the way up the chain, knocking down prices along the way, but now we’re in a global economy, and demand in emerging markets like China, India, Russia and Brazil is pushing up prices of everything from crude oil to floorcoverings.

In the U.S., independent flooring retailers have been beset on all sides, with reduced customers on one end, price increases on the other, and big box competition squeezing in from the left and right. And over the last six years, thousands of smaller dealers have shut their doors or sold their operations. 

The ones still standing haven’t survived just because of luck and location. They’ve been proactive, fighting for every customer—finding new ways to increase traffic to their stores, using all media to increase their visibility, broadening their offering, focusing on service, installation and even maintenance.

However, some flooring retailers are still “old school” both in terms of how they promote themselves and how they do the job of selling and installing flooring. For instance, in some regions of the country, a good 20% of retailers don’t have websites—and there’s no way that strategy is boosting their business.

One retailer commented, “Independent dealers need to embrace technology. Every dealer should throw out the ruler and paper and learn to use automated measure and estimating software—and use it during the sales process.”

WHO THEY ARE
This year’s surveyed dealers represent a very similar geographic spread to last year’s respondents. The biggest group is the Midwest, making up 35% of responses, and the smallest group is the East, at 17%—those are both the same as last year. The South accounts for another 27%, compared to 25% last year, and the balance, 21%, is from the West, which made up 23% of responses last year.

We asked retailers about the annual sales of their operations, and their responses featured some changes. Over the last few years, an increasing percentage of respondents have reported smaller sales, and that may be changing. This year, only 19% reported annual sales of less than $600,000, compared to 26% last year, 21% in 2010 and 9% in 2009. The bulk of the surveyed retailers, 70%, have annual sales of $2 million or less, and this follows the same curve—it was 75% in 2011, 71% in 2010 and 58% in 2009. So one possibility is that last year was the low point for annual sales and the industry may well be turning a corner, and the other possibility is that more of the small players have gone out of business or been consolidated.

This year, 12% reported sales over $5 million, compared to 10% last year and 14% in 2010 and 2009.
About 38% of the surveyed retailers pay their salespeople straight salaries and 22% pay straight commissions. The other 40% pay salary plus commission. That’s close to previous years—43% straight salaries last year, 45% in 2010 and 42% in 2009. However, there are some big regional differences. At one end of the spectrum are retailers from the East, with 51% paying straight salaries and only 8% straight commission, compared to retailers from the West, where 32% are straight salary and 31% straight commission.

About 18% of this year’s dealers have installers on staff, while 82% use independent contractors. In recent years, retailers in the Midwest and the South have leaned more heavily toward contractors than retailers in the East and West, and this year’s results reflects the same disparity, with 86% of retailers in the Midwest and the exact same percentage in the South using independent contractors, compared with only 76% in the East and, again, the same percentage in the West.

This year, 45% of surveyed dealers report being part of a retail group. That’s up slightly from last year but not to a significant degree. Regionally, 38% from the South and West are in retail groups, compared to 51% in the East and 52% in the Midwest.

Of the dealers that are members of groups, 90% report that they are very or somewhat satisfied, which is up from last year. Of those not affiliated, only 3% are considering joining a group.

For the complete Retailer Survey results, see the July 2012 issue of Floor Focus Magazine. 

Copyright 2012 Floor Focus



Other Archived Articles

Mortgage Application Volume Rises Last Week   Full Article
Washington, DC, Oct. 8, 2014 -- Mortgage application volume increased 3.8% last week from the previous week, according to the Mortgage Bankers Association.

Got You Floored on Fast 50 List in Piedmont Region   Full Article
Greensboro, NC, Oct. 8, 2014 -- -Got You Floored, Inc. was named by the Triad Business Journal to the Fast 50 for the Piedmont Triad Region in North Carolina.

Georgia Gov. Deal Visits Mohawk in Calhoun   Full Article
Calhoun, GA, Oct. 7, 2014 -- Earlier this week, Georgia Gov. Nathan Deal toured the Mohawk Flooring Center in Calhoun and spoke to employees about the importance of the flooring industry in the state of Georgia.

Interface Issues Third Quarter Earnings Warning   Full Article
New York, NY, Oct. 8, 2014 -- Shares of Interface fell 16.5% in after-hours trading Tuesday after the company announced lower-than-expected preliminary third-quarter results.

National Retail Federation Expects Holiday Sales Boost   Full Article
Washington, DC, Oct. 7, 2014 -- Retail spending during the holiday season is expected to be the highest in three years, according to a forecast by the National Retail Federation.

Job Openings Highest Since 2001   Full Article
Washington, DC, Oct. 7, 2014 -- Job openings increased to 4.84 million in August, up from 4.67 million in July, according to the latest Job Openings and Labor Turnover Survey.

Builders Offering Incentives as Sales Soften   Full Article
New York, NY, Oct. 7, 2014 -- Home builders nationally have begun sweetening offers in light of slowing sales, according to a Bloomberg News story.

Domotex To Feature Installation Technology for First Time   Full Article
Hannover, Germany, Oct. 7, 2014 -- Domotex 2015 set for Jan. 17-20 will feature 1,300 exhibitors from more than 60 countries.

Fincibec Group Seeking Tile Award Entries   Full Article
Sassuolo, Italy, Oct. 6, 2014 -- The Quinquennial Tile Award, now in its fourth edition, seeking entries using the Fincibec Group's three brands, Century, Monocibec and Naxos, between Jan. 1, 2011 and Dec. 31, 2015.

Armstrong Raising Some Vinyl Prices   Full Article
Lancaster, PA, Oct. 6, 2014 -- Armstrong said it will raise prices in the U.S. and Canada on commercial vinyl composition tile and BioBased Tile by 4%, commercial wallbase by 4%, and select residential tile products.

Stifel Sees Stronger Hard Surface Sales, Weaker Carpet Sales   Full Article
New York, NY, Oct. 6, 2014 -- Analyst Stifel Nicolaus believes that third quarter flooring sales will show stronger sales of hard surface flooring and weaker sales of carpet.

NeoCon East Offers Education for Designers   Full Article
Baltimore, MD, Oct. 6, 2014 -- NeoCon East has announced its educational program for design professionals seeking continuing education.

Duncan Appointed President of Mannington's Residential Business   Full Article
Salem, NJ, Oct. 3, 2014 -- Mannington Mills announced today that Ed Duncan will replace Kim Holm, who is retiring, as president of Mannington’s Residential Business.

Services Sector Growth Slows in September   Full Article
Washington, DC, Oct. 3, 2014 -- The services sector of the economy grew at a slower pace in September, according to the Institute for Supply Management.

CRI Annual Meeting Set Nov. 12   Full Article
Dalton, GA, Oct. 3, 2014 -- The Carpet and Rug Institute's 2014 Annual Membership Meeting will be held Nov. 12.

Unemployment at Six-Year Low in September   Full Article
Washington, DC, Oct. 3, 2014 -- The unemployment rate fell to 5.9% in September as the economy created 248,000 jobs, according to the Labor Department.

Foreclosure Rate Lowest Since 2007   Full Article
New York, NY, Oct. 3, 2014 -- The foreclosure rate edged up 1.1% in August compared to July, according to CoreLogic's National Foreclosure Report.

CRI President Yarbrough Goes to Washington   Full Article
Dalton, GA, Oct. 3, 2014 -- Carpet and Rug Institute President Joe W. Yarbrough traveled to Washington, D.C. Sept. 17-18 for two days of back-to-back meetings with congressional representatives.

Dover Rug & Home a Finalist in Association Awards   Full Article
Cambridge, MA, Oct. 3, 2014 -- Dover Rug & Home said it has been named a Family Business Association (FBA) Awards finalist in the category of Fourth Generation Businesses.

Factory Orders Fall on Fewer Aircraft   Full Article
Washington, DC, Oct. 2, 2014 -- Factory orders fell in August on weakness in the aircraft sector, according to the U.S. Census Bureau.