NAFCD Distributor Marketplace - December 2010
By Jessica Chevalier
The National Association of Floor Covering Distributors (NAFCD) held its annual Distributor Marketplace show in Colorado Springs at The Broadmoor resort this year. The show, which ran from November 16 to 18, partnered with the National Building Materials Distributor Association (NBMDA) for this year’s event. Members of the Hardwood, Plywood and Veneer Association were also in attendance. As a whole, the show communicated a clear message to manufacturer and distributor attendees: the old ways of doing business won’t work in the new economy.
Since the distribution of flooring and building materials is essentially the same business with different products, the pairing of the organizations was a natural decision, especially in consideration of the current economic environment. While shared costs were likely the driving factor in the decision, increased energy and excitement were a positive outcome. Trade shows, in general, are experiencing reduced attendance; the NBMDA membership accounted for an estimated 55% to 60% of attendance—a significant boost in faces and energy.
As an organization, the NAFCD seeks to provide its members with education, networking opportunities, leadership and trend information. To that end, the conference featured three general sessions, led by Michael Marks of the Indian River Consulting Group, Brent Grover of Evergreen Consulting LLC, and Brian Beaulieu of the Institute for Trend Research. The sessions involved both lecture and roundtable discussions among the audience members.
All three speakers hinged their discussions on the premise that the recession is over, and that 2012, not 2011, will be the year of strong recovery. Marks was clear in his belief that things are different from how they were before the recession and will not return to “normal” anytime soon. He noted, “It’s not about what you’re selling; it’s about what [the customers] are buying.” Having a warehouse full of yesterday’s inventory is no promise of success. Catering products and services to the customers’ buying preferences is a much more effective means of gaining marketshare and growing revenues.
Much of Grover’s talk was centered on a survey that he asked NAFCD and NBMDA members to complete before the trade show. Grover’s data revealed that the most serious problems in the floorcovering industry, as reported by participating members, are healthcare costs, margin compressions, competition from larger companies, credit risks and passing along price increases. Grover’s survey also revealed that members report 2010 to be much stronger than 2009, though still below their expectations. Sales were reported to be the most disappointing area of business in 2010.
With this knowledge in hand, Grover’s goal was to show the audience how they could increase their margins. He offered practical strategies: putting one employee (not a member of the sales team, preferably) in charge of product pricing; normalizing pricing outliers, those customers getting “bargain” deals on products and services; and increasing revenue by adding charges for freight, handling and the like.
In many ways, the third speaker, Beaulieu, painted the most optimistic picture of the near future, noting that the whole world is in an upward cycle economically and that while specific indicators, like housing starts and employment rates, may not yet be where we would like them to be, almost all reveal a positive trend. Beaulieu strongly advocated that it was time to buy assets and take calculated risks. With interest low, the world’s population set to swell by one billion in the next 25 years, and inflation predicted on the horizon, Beaulieu advised that attendees borrow and buy. The speaker offered a list of recession proof industries—energy, sustainability, water, Canada/exports, higher education, healthcare, food, pets, funeral services, alcohol, security and legal services—and advised those in attendance to find ways to tie their businesses into those areas.
During the show, Floor Focus had the opportunity to speak with four 2010 NAFCD board members: president Fred Reitz of J.J. Haines & Company; past president Jack Lindenschmidt of ISC Surfaces; David Williams of Horizon Forest Products/Long Flooring Supply; and Daniel Blakely of Blakely Products Co. These four board members agreed that the roundtable discussions were one of the most valuable elements of the show. Reitz noted that, within a group, each participant is likely to latch onto a different “nugget” of truth from the lecture. The roundtables gave attendees the opportunity to exchange these nuggets with their peers and hash them out with regard to their specific business circumstances.
As some significant flooring players such as Armstrong and Faus have decided to go direct to the retailer in the past year, bypassing distribution, we asked the board members whether they felt distributors should anticipate particularly trying times in the coming years. Lindenschmidt noted that, though he doesn’t feel that the viability of distribution, as an industry, is threatened, he does believe that if the industry fails to react to the change, it will experience death by a thousand paper cuts. The members pointed out that distribution offers a number of distinct advantages to its customers, including the distributors’ ability to provide design, installation and product knowledge; to track down and source requested or unique products, thereby saving the retailer time; to promote the manufacturers that they work with; to transport products in a prompt manner; and to bundle products—flooring, adhesive, and cleaning products, for example—to save the retailer time and money.
In addition to providing a “meeting of the minds” and networking space for members, the Distributor Marketplace offered the NAFCD the opportunity to announce its new board members. Four new members are elected annually to the 12-member board—members serve three-year terms. This year David Ford of Stauf, Shane Calloway of Columbia Flooring Originals, and Chris O’Connor of CMH Space replace outgoing members Darren Abraham of Abraham Linc, Roy Foster of Columbia Flooring Originals, and Scott Rozmus of Floorstar Sales, Inc.
Robert Wagner of Fishman Flooring Solutions replaces outgoing president Reitz. Members serving a second or third year on the board are Blakely; Reitz; Wagner; Williams, who will serve as the 2011 vice president; Duane Goetz of Shaw Floors; Brian Greenwell of Mullican Flooring; Harvey Johnson of Mastercraft Flooring Distributors, who will serve as 2011 secretary; George Roth of Lockwood Flooring; and Joe Reddington of BPI, who will serve as the 2011 treasurer. A Lifetime Achievement Award was presented to Don Rado of All Tile Inc.
Perhaps not surprisingly, since everyone is hoping to increase business at present, the flooring side of the showroom was at capacity and included 13 new vendors: Argo Fine Imports; Cross Island Flooring; Dasso Flooring; Diamond Living, LLC; Diversified Industries/The Floor Muffler; Gala Manufacturing; GTP International, Ltd.; Indus Parquet USA; Kronotex USA/Fazmica Flooring USA; Owens Flooring by Colonial Craft; Sealed Air Corporation; Ua Floors; and WD Flooring.
Next year’s NAFCD Distributor Marketplace, which will again partner with the NBMDA, is slated for November 8 to 10 at Nashville’s Gaylord Opryland.
Copyright 2010 Floor Focus