Strategic Exchange - February 2010

By Kemp Harr

Allstate Insurance’s latest television commercial talks about the effects recessions have on people; “After the fear subsides, people start enjoying the small things in life…a home cooked meal…time with loved ones…appreciating the things we have…it’s back to basics.”

For those of you who have seen this spot, it’s a moving message complete with alluring background piano music. Unfortunately, however, if consumers only buy to fulfill their “basic” needs, our economy will never recover. We need consumers to feel good about where this country is headed and feel good about the solvency of their investments.

Retailers are telling us that store traffic is starting to pick up but shoppers are bargain hunting for value—they want to get more for less. It’s our job to tell them that they get what they pay for. While this recession has “corrected” home values and appreciation, the home is still one of the best investments most people will ever make. We need to remind them that buying cheap flooring that wears out quickly will cost more in the long run and it’s bad for the environment.

In a recent interview on Floordaily.net, retail psychologist Jim Dion said, “American consumers’ expectations have not changed. People still want the bigger house and nicer interior furnishings and as soon as they get more money in their pocket they are going to go back and get those things.” He believes that today’s “new normal” of people building their savings account and living within their means is a temporary mindset. “The solution to economic recovery,” Dion says, “is for consumers to quit listening to the 24 hour instant news media that is fueling discontent and get back to their spending habits. Spending is what creates the new jobs and fuels the whole economic engine.”

There are many factors impacting consumer confidence right now. Unemployment levels and fear of the future tax implications of federal deficit spending are probably two of the biggest. But once the consumer feels more comfortable that the all excesses have been put in check—whether they be in Washington, on Wall Street or in the banking community—I predict consumers will loosen up in most markets about the time the weather starts to turn warmer. And hopefully the commercial market will follow quickly behind.

ARMSTRONG TAKES A CHANCE
Last month, when Charlie Dilks stood before the whole Carpet One membership at the CCA Global Partner Winter Convention in Washington, D.C. and started talking about monumental and historic changes in the flooring industry that had lasting ramifications, like Shaw buying Cabin Craft and Mohawk buying Daltile, I knew something big was coming. And indeed the news he announced, that Armstrong was going to hire a direct sales force and service all CCA Global members on a direct basis, could have long lasting consequences. In the short term it will earn Armstrong more business with many of the CCA retailers and it will also reinforce Armstrong’s reputation as a company that’s not scared to take risks that could result in marketshare gains.

“Could” is an operative word here as there is certainly some risk associated with this milestone decision. There’s little doubt that the CCA Global program will be expanded at the expense of some of the other suppliers. But CCA retailers are independent entrepreneurs and their level of buy-in could be dependent on how strong of a relationship they’ve built with their distributor over the years. Armstrong admits they still need their distributor because the logistics of handling hard surface products are much different than handling a roll of carpet. The real test in this equation is whether the distributor will be content with their new role moving forward. As Peter Drucker points out, compensation can motivate action and one has to wonder of there will be enough margin in the distributors new role to keep them happy and on-task for their diminished but yet still critical logistics role. I’m sure Armstrong probably sought their buy-in before pulling the trigger on this.

Only time will tell whether this decision will go down in history as one that forever changed the face of the industry.

PIE FIGHT IN TEXAS
Back in the mid 80’s, DuPont was the first company to stage a memorable stunt designed to prove the stain-proof resiliency of its Stainmaster carpet fiber. This was before I started in the industry but I’m told it involved a steam roller and a bag of groceries. Now, over 20 years later, the two mega mills have their own carpet brands and are staging their own torture tests to prove the stain-proof performance of their carpet yarn. Last year, Mohawk’s Smartstrand carpet successfully survived several days as the floorcovering in a rhinoceros cage in the Birmingham Zoo.

The latest stunt involved 434 participants, 1,200 pies, and a Guinness world record. To prove that Anso nylon was worthy of its new lifetime stain warranty, Shaw raised a big circus tent outside its Dallas, Texas regional market event and set a world record for the largest pie fight. After the 60 second fight, they called in the cleaning crew and successfully removed all the cherry, apple and chocolate pie, proving that Anso nylon carpet can survive the largest pie fight in recorded history. Several years from now, the strongest memories left from this event will probably not be about the stain resistance of the carpet fiber but rather that Shaw allowed their retailers to throw pies in the faces of their reps—now that’s what I call customer entertainment.

It’s too soon to tell which stunt left the most lasting impression but it’s entertaining to watch how these companies use social media and streaming video over the Internet to spread the word. Can Beaulieu be far behind with its own memorable torture test?

CARPET ONE PREPS FOR A BRIGHTER YEAR
It’s encouraging to hear that Carpet One is moving from defense to offense in 2010—encouraging because the group wouldn’t be making this change if it didn’t think the market was going to start to recover this year. More specifically, we learned at its winter convention last month that its goal is to take marketshare, drive more traffic and grow profitability. It plans to accomplish this by tracking every customer and prospect with a new CRM tool, by maximizing its presence on the Internet, and by offering the right mix of products. As Carpet One president Eric Demaree said, “Now is the time to switch gears and put your foot on the gas.”

While there were many new products being introduced, one of the most noteworthy was a line of ultra soft nylon carpets from Shaw Industries called Tigressa.

A big part of the buzz at this year’s meeting was centered on Carpet One’s 25th anniversary. It was January of 1985 when the first 13 members joined to form a buying cooperative that is now by far the largest in the business. But as co-founder Howard Brodsky told me, he and Alan Greenberg were determined from the very beginning to not just be a buying group but also to integrate marketing and management tools into the mix. Their goal was to form an organization to help the members sell more product and improve their profitability. And it’s a tribute to their mission and vision that with all the industry changes, and even through this recent economic recession, Carpet One’s membership is stronger now than it’s ever been.

Colin Powell was the keynote speaker for Carpet One’s opening session. While some of Powell’s remarks were anecdotal and nostalgic as he talked about what it was like to return to civilian life after being the number one military official and later secretary of state for the strongest nation on earth, there were also some powerful lessons about leadership. Powell did take a couple of subtle shots at the leaders on Capitol Hill and pointed out that over the years we’ve lost a little of our standing in the world but reminded us that we’re still the country that everyone wants to move to. Powell admitted that he had learned many of his leadership skills in officer training.

Here are a few he shared:
• Get the most out of your human talent by motivating and inspiring them;
• Give your people the tools and the skills they need to accomplish their work;
• Recognize success by either praising face-to-face or writing a note;
• Show empathy and warmth to others;
• Be disciplined, have integrity and moral courage;
• Never complain—leaders are never cold, tired or wet;
• Build a bond of trust within your organization.

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

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