How can you stay ahead in the evolving retail landscape?: Strategic Exchange - Oct 2017

By Kemp Harr

October can be one of the strongest months of the year for residential flooring sales. Summer vacations are over, the kids are back in school, the weather is cooler, and there are six weeks before Thanksgiving.

Economically, many of the key indicators are positive. Consumer confidence is high, mortgage rates are low, the major stock indexes are peaking, inflation is under control and unemployment remains low. Granted, the housing numbers seem to have stalled, primarily due to availability of skilled labor and the rising cost of building materials, but the forecast for housing is a continued gradual climb toward a million single-family starts.

Many eyes are focused on the aftermath of hurricanes Harvey and Irma. Now, with those storms behind us, it appears that Houston and the Florida Keys were hit the hardest. Unfortunately, the flooding in Houston could impact the nation and this industry for several months, since it is the primary source for refined gasoline and many of the polymers that are used to make flooring. It looks now as though supply will continue to flow, but prices are spiking. This leaves many to wonder whether the increases are warranted or opportunistic.

There are two business sectors-automotive and department stores-where sales are taking a downward turn, and out of the two, the latter deserves the most scrutiny since some think it could be an early indication of what might happen to floorcovering retailers.

As we delve deeper into the department story quandary, the biggest driver in the decline is a lack of diversity in what’s being offered. Pundits have called it a “sea of sameness,” where over 40% of what’s offered is the same, regardless of the name on the front door. So, to win customers, the only enticement is either discounts or house brands that offer something brand Y down the street doesn’t have.

Clearly, the Internet and Amazon are a factor as well because of the shop-at-home convenience, 24-hour access and lower pricing. But fortunately for us in the flooring business, the products sold today over the Internet are primarily consumables. With the exception of rugs, floorcovering is a tactile, fashion-oriented product that is very difficult to purchase via a screen image; plus, it has to be professionally installed. It’s also a sizable investment that is often financed. So, much like the automotive and real estate businesses, the Internet is a great tool to narrow the options and learn about the differences, but the transaction needs to be made with the help of an experienced dealer (or a broker, in the case of real estate). Those of you who made note of the Whole Foods-Amazon deal and thought, ‘Oh no, sign of the times; we’re next,’ should rest assured that flooring sales require a level of service-both in selection and in installation-that is not available via e-commerce.

Having said this, floorcovering retailers who want to continue to grow do need to make some critical decisions. How are you different? Who are your partners? What are you known for? Do you have the right digital front door? Is your showroom concise and up to date? Does your mix match the clientele you attract? Have you gotten feedback from a mystery shopper who has also visited the store across town?

ARMSTRONG’S NEW CONSUMER AD
In mid-September, Armstrong made an announcement that deserves mention here. The firm-now a separate company focused solely on flooring-spent the last year studying the consumer. And it has launched a consumer broadcast ad campaign on HGTV using the data from this research. Those of you who have been in the industry for a while know that Armstrong has spent millions of dollars over the years on consumer awareness, and it’s great to see the firm back in the groove. And the best part for its aligned retailers is that all the traffic generated from this campaign will be funneled over to them. After all, isn’t that the way partners should treat each other? You carry a wide breadth of my products, and I’ll bring you traffic.

I’ve only seen the spot that promotes its hardwood products, and I can tell you it is edge-of-your-seat type action that will leave a lasting memory in the consumers’ mind. And the message, according to Armstrong, is just what the consumer wants to hear: beautiful, durable and easy to maintain. I can’t wait to see whether this investment pays off.

QUANTIFYING POLISHED CONCRETE
This year in our annual Top 250 Design survey, we added a question about the use of polished concrete. I mentioned a few months ago in this column that polished concrete has been taking marketshare from other flooring types as designers seek to offer their clients a minimalistic, durable, almost industrial look. As Darius Helm reports on page 54, the designers we surveyed are specifying finished concrete on about 14% of the square footage of products over the last year. On top of that, nearly half of the group says that the use of concrete as a wear surface is increasing. There’s no need to repeat what Darius wrote again here, and certainly one datapoint does not a trend make. It’s no surprise that many of the big suppliers in this business hope the use of polished concrete is a fad, but there are also a lot of flooring contractors who have invested heavily in polishing equipment, and they’re happy with the growth it’s brought to the services they provide.

If you have any comments about this month’s column, you can email me at kemp@floorfocus.com.