Survey 2013: What the Retailers Think - July 2013

Survey 2013: What the Retailers Think - July 2013

By Darius Helm

 

This year, retailers from across the country are by and large reporting a significant improvement in conditions. In this year’s survey, just about every indicator of business health is pointing upward. Independent flooring retailers still face significant problems, like weak margins and competition from big boxes and the Internet, but the fundamentals of the business are strong and prospects seem good.

It’s been seven years since the housing market began its reversal. Since then, it’s been a huge struggle in the flooring retailer business. Many smaller dealers went under or sold operations they had nurtured for years for pennies on the dollar. Some larger chains fell apart. In the aftermath, a leaner, more resolute community of dealers emerged, and it’s clear from the survey responses that they’ve also become more sophisticated in their thinking—with targeted marketing through a wider range of media, an improved understanding of how to communicate the value of service, expertise and maintenance, a bolder approach to diversification, and a more complete embrace of the Internet for B2B and B2C functions.

However, while business conditions are the most stable they’ve been in about a decade—the housing boom that emerged after the 2001-2002 recession may have been lucrative but it was far from stable—and while battle-hardened dealers have honed their businesses to maximize efficiency, the fierce competition of the last few years has done its fair share of damage. 

Diversification, for instance, while a potential lifeline to a dealer, has impacted other operations. On the commercial side, contract dealers have suffered from the infringement on their territory by residential dealers with unreasonably low bids and little understanding of the demands of the commercial market. And that same focus on undercutting the competition has also done harm to the residential flooring business, with independent retailers forced to compete against the deceptive deals coming out of the home centers and national chains.

It’s hard to predict the long-term damage from the price pressures, but, coupled with the inexorable rise in energy and raw material prices, it suggests that the U.S. flooring industry is at a greater threat of commoditization and channel collapse than at any other time in recent history. And it also suggests that the independent dealer’s journey toward stability is far from over. Up ahead, there will likely be increased pressure for dealers to add value and differentiate themselves from the price-driven side of the market.

WHO THEY ARE
This year’s survey respondents represent a balanced cross-section of the country. By region, the West accounts for 22%, the East makes up 21%, the South makes up another 25%, and the Midwest is the remaining 32%. Canadian dealers are not included in this survey.

We asked retailers about their annual sales, and it looks like a positive trend is emerging. In 2012, for the first time in a few years, a decreasing percentage of retailers reported sales of less than $600,000, and this year the number has dropped further. In 2011, 26% reported sales below $600,000 and that fell to 19% last year and only 13% this year. 

This year, 65% of the respondents report sales of $2 million or less, compared to 70% last year and 75% the year before. This is a further indication of an overall rise in revenues. And 16% report that they make $5 million or more a year, and that’s up from 12% last year and 10% the year before.

Of the retailers surveyed, 41% pay their salespeople straight salaries—it was 38% last year—and 21% pay straight commission, which is about the same as last year (the balance do salary plus commission). At one end of the spectrum, in the Midwest, 57% of dealers pay straight salaries, and at the other end, only 23% of dealers in the West pay straight salaries.

When it comes to installation, one in six retailers (17%) have installers on staff, and the rest use independent contractors, which is about the same ratio as last year. In the West and Midwest, on-staff installers are somewhat more common, at around 20%, while independent contractors are more favored in the South, where only 12% of retailers have installers on staff.

We asked dealers about their affiliation with retail groups, and this year’s results reflect an increase in membership, from 45% last year to 57% this year. In the South and East, about 50% of the dealers reported being in groups, but it was 57% in the Midwest, and highest in the West, at nearly 70%.

Of those that are in groups, 88% report that they are very or somewhat satisfied, and only 2% say they’re not satisfied at all. And of those that are not currently members of retail groups, not a single one said that they were considering joining one.

For the complete Retailer Survey Results, see the July 2013 issue of Floor Focus Magazine.

 

Copyright 2013 Floor Focus 



Other Archived Articles

Atllanta Home Sales, Prices Dip in July   Full Article
Atlanta, GA, Aug. 18, 2014 -- Home sales and prices in the Atlanta Metro area fell slightly from June, the Atlanta Board of Realtors saiid Monday.

Multilayer Association Gets Three New Members   Full Article
Bielefeld, Germany, Aug. 18, 2014 -- The Multilayer Modular Flooring Association said it has three new members.

Bamboo Hardwoods Signs Midwest Distributor   Full Article
Seattle, WA, Aug. 18, 2014 -- Bamboo Hardwoods said it has entered into a distribution agreement with Bishop Distributing.

Builder Confidence at Seven-Month High   Full Article
Washington, DC, Aug. 18, 2014 -- Homebuilder confidence rose in August to the highest level in seven months, according to the National Association of Home Builders.

New York Manufacturing Improves at Slower Pace   Full Article
New York, NY, Aug. 15, 2014 -- The Empire State manufacturing survey fell back to 14.7 in August after hitting a four-year high of 25.6 in July.

Consumer Sentiment Falls in Early August   Full Article
Washington, DC, Aug. 15, 2014 -- The preliminary August reading on the University of Michigan/Thomson Reuters consumer-sentiment index fell to 79.2 from a final July result of 81.8.

Investors Wondering About Firm's Stake in Armstrong   Full Article
New York, NY, Aug. 15, 2014 -- Flooring industry analyst Stifel Nicolaus says talk is heating among its clients up that Armstrong World Industries could be broken into separate entities.

Office Environments Acquires Flooring Firm   Full Article
Charlotte, NC, Aug. 15, 2014 -- Office Environments, a Charlotte based commercial furniture dealer, said it has acquired Modular Designs, a flooring firm also based in Charlotte.

FCICA Continuing Diamond Member Club   Full Article
West Bloomfield, MI, Aug. 15, 2014 -- FCICA, the Flooring Contractors Association, said it will continue its Diamond Club member program for the 2014-2015 membership year.

Housing Affordability Declines in Second Quarter   Full Article
Washington, DC, Aug. 15, 2014 -- Nationwide housing affordability dipped in the second quarter as several markets saw a firming of home prices, according to the National Association of Home Builders.

Georgia Unemployment Grows but Dalton Layoffs Fall   Full Article
Atlanta, GA, Aug. 14, 2014 -- Unemployment in Georgia in July rose to the highest rate since last October, according to the Georgia Department of Labor.

Initial Jobless Claims Rise Last Week   Full Article
Washington, DC, Aug. 14, 2014 -- Initial claims for unemployment benefits rose 21,000 to 311,000 in the week the ended Aug. 9, according to the Labor Department.

Higher Downpayments Hitting First-Time Home Buyers   Full Article
New York, NY, Aug. 14, 2014 -- Growing requirements for downpayments are shutting many first time buyers out of the housing market, Bloomberg News reports.

Tarkett Contest Features Commercial Flooring   Full Article
Chagrin Falls, OH, Aug. 14, 2014 -- Tarkett has launched a WeLikeItNatural Creative Contest featuring its commercial vinyl flooring.

Retail Sales Flat in July   Full Article
Retail Sales were flat in July as car demand slowed and consumers remained cautious in their spending. This is the weakest performance in six months.

Mortgage Application Volume Down Last Week   Full Article
New York, NY, Aug. 13, 2014 -- Mortgage application volume fell last week as both purchase and refinancing applications declined, according to the Mortgage Bankers Association.

Valinge Awarded Another U.S. Patent   Full Article
Viken, Sweden, Aug. 13, 2014 -- Valinge said it has been awarded a U.S. patents regarding mechanical locking of LVT/resilient floorboards.

Another Investment Firm Discloses Armstrong Position   Full Article
New York, NY, Aug. 13, 2014 -- Another investment firm has disclosed a large position in the shares of Armstrong World Industries.

Home Price Increases Continue To Moderate   Full Article
Washington, DC, Aug. 12, 2014 -- Home-price growth continued to moderate in many metropolitan areas in the second quarter, according to the National Association of Realtors.

Domotex Turkey 2015 Set for May   Full Article
Hannover, Germany, Aug. 12, 2014 -- The dates for Domotex Turkey 2015 are May 25-28 at the Turkish carpet trading capital, Gaziantep.