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

Former Starnet Chairman Wins Mayoral Election   Full Article
Point Pleasant, NJ, Nov. 7, 2014 -- Former Starnet chairman Bob Sabosik won his bid for mayor in Tuesday's elections in Point Pleasant.

Mohawk CEO Lorberbaum Discusses Firm's Growth   Full Article
Chattanooga, TN, Nov. 7, 2014 -- Mohawk Industries CEO Jeff Lorberbaum told the Chattanooga Rotary Club that his firm is investing $500 million in its existing businesses in a bet on an improving economy.

Economy Adds 214K Jobs, Unemployment Falls   Full Article
Washington, DC, Nov. 7, 2014 -- Employers added 214,000 jobs in October and the unemployment rate fell again, the Labor Department said.

Attendance at Cersaie Rises This Year   Full Article
Bologna, Italy, Nov. 7, 2014 -- Attendance at Cersaie 2014, the international exhibition of ceramic tile and bathroom furnishings held in Bologna in September, once again topped 100,000 visits, according to organizers.

Builders More Confident in Senior Housing Market   Full Article
Washington, DC, Nov. 7, 2014 -- Builder confidence in the 55+ housing market was up again in the third quarter, according to the latest release of NAHB’s 55+ Housing Market Index.

Housing Markets Improving at a Gradual Pace   Full Article
Washington, DC, Nov. 6, 2014 -- Markets in 59 of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the third quarter.

Planned Job Cuts Surge in October   Full Article
Chicago, IL, Nov. 6, 2014 -- Planned job cuts jumped 68% in October to the second-highest total this year, according to outplacement consultancy Challenger, Gray & Christmas.

Initial Jobless Claims Fall Again   Full Article
Washington, DC, Nov. 6, 2014 -- Initial claims for unemployment benefits fell by 10,000 to 278,000 in the week ended Nov. 1, the Labor Department said

Grosser Named Tile Person of Year   Full Article
San Antonio, TX, Nov. 6, 2014 -- Tile Council of North America presented its Tile Person of the Year award to Donato Grosser at the Total Solutions Plus event.

NWFA Renews Agreement With Wildlife Fund   Full Article
St. Louis, MO, Nov. 6, 2014 -- The National Wood Flooring Association said it has renewed its Memorandum of Understanding with the World Wildlife Fund.

Tarkett Hosts Second Sustainability Summit   Full Article
Chagrin Falls, OH, Nov. 6, 2014 -- Tarkett recently hosted its second annual Sustainability Summit in Cleveland, Ohio.

Gerflor Acquires Connor Sport Court   Full Article
Chicago, IL, Nov. 5, 2014 -- Gerflor said it has acquired Connor Sport Court of Amasa, Michigan.

Armstrong Illinois Plant Wins Sustainability Award   Full Article
Lancaster, PA, Nov. 5, 2014 -- Armstrong Flooring said its Kankakee, Illinois manufacturing facility has received the 2014 Illinois Governor’s Sustainability Award.

Services Sector Continues To Grow in October   Full Article
Washington, DC, Nov. 5, 2014 -- The services sector of the economy continued to expand in October but at a slower pace, according to the Institute for Supply Management.

Mortgage Applications Fall Last Week   Full Article
Washington, DC, Nov. 5, 2014 -- Mortgage application volume fell last week as interest rates increased, according to the Mortgage Bankers Association.

Businesses Add 230,000 Jobs in October   Full Article
Roseland, NJ, Nov. 5, 2014 -- Private employers added 230,000 jobs in October, payroll processor ADP said.

Earthwerks Names Head of Product Development   Full Article
Houston, TX, Nov. 5, 2014 -- Earthwerks has named Lindsey Nisbet head of product development and marketing strategy.

Linron Names de Beaumont VP Business Development   Full Article
Houston, TX, Nov. 5, 2014 -- Linron Co. has named Gilles de Beaumont, vice president of business development.

Domotex Asia Anticipates Larger Wood, Laminate Area   Full Article
Shanghai, China, Nov. 4, 2014 -- It will require four dedicated halls to house just the wood and laminate exhibitions at Domotex asia/Chinafloor’s 17th annual flooring show March 24-26 in Shanghai, organizers said.

Factory Orders Decline in September   Full Article
Washington, DC, Nov. 4, 2014 -- New orders for manufactured goods fell for second straight month in September on softness in the aircraft sector.