Strategic Exchange: Millennials’ leap into home ownerships should fuel flooring demand – Oct 2023

By Kemp Harr

There is no denying that demand for new flooring has been negatively impacted by the Fed’s decision to increase interest rates 11 times in the last 18 months, taking the Federal Funds Rate to 5.50%-the highest level in 22 years.

We all recognize that the goal is to take the rate of inflation down to around 2%. The sooner we stabilize the rate of inflation, the sooner interest rates can be moderated, and consumers can relax. knowing that the economy is back on track. But working against us is the rising cost of oil, which increased 15% in July. When oil goes up, so do the price of gas, diesel and petroleum derivatives like plastic and adhesives. A second factor working against us is the rising cost of labor, and the UAW is seeking a 36% pay increase over four years for its 146,000 union auto workers. Can you imagine asking for that type of raise? But I digress.

Higher interest rates are cooling builder confidence, which slid five points in September to 45. This same NAHB/Wells Fargo Housing Market Index (HMI) dropped six points in August. Shelter inflation posted a 7.3% year-over-year gain compared to a 3.7% consumer inflation reading. Another important statistic revealed in the most recent HMI is that 42% of new single-family homebuyers were first-time buyers. That compares with 27% for the first eight months of 2018.

Millennials are recognizing that home ownership beats throwing hard-earned rent money away, and it’s encouraging to see them finally enter the system that fuels demand for replacement flooring. When homes are bought and sold, consumers routinely choose to spend money to upgrade the flooring.

PROSPECTING, DIFFERENTIATION & TRAINING
As we enter the fourth quarter and recognize that growth will favor those who prepare, now is the time to focus in three areas: prospecting, differentiation and sales training. Two years ago, the consumer was standing in line to buy flooring, and our retail sales associates could hardly keep up. Today, that chime on the front door is ringing less, and it’s time to do some missionary work. Now is the time to go into hunter mode and make sure you beat your competition at prospecting and positioning.

We mentioned above that home sales trigger flooring purchases. Do the leading realtors in your community know about the design assistance your team offers new homebuyers? Where are people gathering in your community, and how can you subtly influence those groups? Encourage your team to build your community presence: at the Chamber of Commerce, PTA events, neighborhood associations, Habitat for Humanity-any place where people gather.

Also, are you asking happy customers to spread the word about their recent experience? Sure, you want an online review, but also ask customers to spread the word to their friends when you call to ensure that everything went smoothly with yesterday’s installation.

The primary target for business today is the Millennial shopper, and they are experts at searching the Internet for answers. So yes, you need to cover all the bases for having an online presence. The key to success on the Internet is differentiation. If your website looks like everybody else’s, you might need to change vendors. Is your service provider building your business or their business? Here’s a test: take a look at your “About Us” page. That is the essence of who you are, and your story should be unique, like no other. You can bet that a Millennial who is seeking a curated home-tailored to their specific needs and personality-does not want to shop at a chain store or anything that resembles one.

Lastly, your showroom sales staff needs to be trained. Recent research conducted by CCA Global revealed that the RSA often undersells the consumer because they are afraid they might lose the sale if they pitch a more expensive product. The trick here is to be selective with who does the training. Many of the large suppliers offer product knowledge training that teaches the RSA to promote their product over a competitor’s.

The better training option should be centered on developing rapport, listening, mirroring, tailoring the pitch, overcoming objections, closing the sale, scheduling the installation and ensuring satisfaction. I recently asked Pierre Thabet, owner and president of Mirage Floors, about the secret behind its success in gaining share from its bigger competitors, and his answer was RSA training. Here is a link to that interview.

SHAW’S DECISION TO SKIP SURFACES NEXT JANUARY
Brand differentiation is critical on the supply side as well. I recently interviewed Annie Cowart, who has been leading Shaw Industries’ residential marketing efforts for six months and is focused on carving out distinct messages for the firm’s three core brands-Shaw Floors, Coretec and Anderson Tuftex-while minimizing the overlap.

As part of that strategy, Shaw is choosing to shuffle its trade show plans and attend shows like PetCon-where it can gain more insight on the ultimate consumer-and share that data with its core independent retail dealers. But to fund that outreach, Shaw is having to be more selective on the trade shows it can afford to attend. While the company does plan to have a small presence at Surfaces, it will not be bringing its three core brands to the Vegas show in January. Listen to the podcast with Annie Cowart for more details.

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

Copyright 2023 Floor Focus

Print the Article