Contract Dealer Survey - December 2011
By Darius Helm
Though there are signs of a strengthening in the commercial market, competition is still as fierce as ever, margins are slim and partnerships between the different entities—contract dealers, architects and designers, facility managers, general contractors and manufacturer reps—are strained and problematic. However, there are also signs that the tough economy has increased the level of partnership (perhaps out of necessity), particularly with the A&D community.
It’s not just the commercial slowdown that has impacted the contract dealer business. The residential housing market, now in its sixth year of decline, has led a number of independent flooring retailers and residential flooring contractors to look farther afield to earn a living, and many of those businesses have targeted the commercial market. This movement has generated a good deal of chaos, with residential dealers low-bidding on projects on the one hand and often doing poor work on the other. This has made it harder for seasoned contract dealers to win bids and it has also impacted the reputation of the profession. The only silver lining coming out of this trend has been, in some instances, additional business coming the way of contract dealers when they have to go in and redo a job left in tatters by residential trespassers.
The last time this biennial survey was conducted, in 2009, the commercial market was at its lowest point, one year into the deepest fiscal crisis since the Great Depression. Commercial development slammed on the brakes, practically grinding to a halt in the corporate sector. Over the last year, there have been clear indications of markets turning positive, but the unique structures of the different sectors—project timelines, susceptibility to pent-up demand, reliance on credit, owned versus leased space, private versus public funding, client demographics and of course demand itself—result in different responses to the fragile recovery.
The corporate sector showed the best growth this year, having fallen further than most markets, with the exception of hospitality. And even the hospitality market is showing signs of life, with steady growth expected to kick in next year, in part because of the need to maintain and update looks.
Sectors that are predominantly exposed to the public and generate revenue directly from them, like hospitality and retail, feel the pressure of pent-up demand more significantly than many other sectors. It’s just about all remodeling and refurbishing, though, with very little going toward new construction, and that’s true for every vertical sector in the commercial market. Most experts anticipate a slow and irregular return to health, with new construction lagging behind refurbishing.
However, despite the shift in momentum in the last year, this year’s survey respondents are focused on many of the same issues that rose to the top in the 2009 survey, suggesting that many contract dealers are still in the thick of this struggle to survive, never mind thrive, in this unsteady, nervous and jumpy market.
For the complete Contract Dealer Survey results, see the December 2011 issue of Floor Focus Magazine.
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