Strategic Exchange - January 2009

By Kemp Harr

In ten years, iFloor grew to become the largest flooring e-tailer in the U.S. and was on track in 2008 to do over $60 million in sales focusing primarily on hardwood, bamboo, laminate and cork. But on December 4, the firm filed for bankruptcy. Court documents indicate the company owes about five times what it has in assets. Its founder, Steve Simonson, spent six years as president of Midlakes Carpets and Interiors before combining his flooring experience with his passion for the Internet.

Simonson himself must have recognized the flaws in his pure Internet business model when he began to augment his core e-tailing business with a chain of traditional brick and mortar retail stores. Just prior to the bankruptcy, iFloor had opened 38 stores in 19 states. One would suspect that it was the rapid growth of these traditional stores that put such a strain on the company’s balance sheet.

There are certain product categories that are a natural fit for Internet sales and it doesn’t appear that flooring falls into those categories. There are two primary reasons for this—a lack of strong branding and need for installation. Consumers must have confidence that what they buy online will meet their expectations. However, without the promise of quality and consistency that comes with buying a product with a recognized brand, consumers are leery to order online what they can’t touch. Clothing, toys, electronics, books, cameras, and kitchen and houseware items take the lead in the types of products that sell well via the Internet. Not only are many of these items well branded but they also don’t require trained installation.

Some might think that iFloor is just a victim of the current economic times but I would argue that its business model of e-tailing unbranded flooring products direct to consumers is flawed. It’s too bad that Simonson didn’t spend six years selling toys or cameras before his passion drove him to the Internet. The good news for traditional retailers who have worked hard to learn how to assist their customers in picking the right floor and also know how to professionally install it is that they are not going to be easily replaced by some e-tailer.

Weighing Waste-to-Energy
When calculating the sustainability of reclaiming, recycling and reusing a product, one of the determining factors is the relative footprint between reusing a product and making a virgin product. If the energy used to recycle material into a new product is greater than the embodied energy of a virgin product—including the energy required to extract raw materials, manufacture the product, deliver it, install it, maintain it, remove it and dispose of it—then waste-to-energy may make more sense.

Reclaiming and reusing product can be a high energy process. There’s the removal of the product, transportation to recyclers and processors, chemical or mechanical separation of product, and sometimes both. There’s purification, there’s transportation back to the manufacturer to reuse the product—and following that there are the same embodied energies as there are with virgin product in transportation to the point of use, installation, maintenance and disposal or a second round of reclamation.

If the relative footprints are calculated and the reclamation profile has a greater impact than the use of virgin materials, waste-to-energy may be a responsible alternative. Most of the polymers used in the flooring industry are predominantly composed of petroleum byproducts and they’ll generate equivalent BTUs to the petroleum used as raw material to produce them.

So it may not be cradle to cradle, but it could be greener to convert a product into energy instead of using it to make new product. And rather than simply pull hydrocarbons from the ground and burn them for energy, it’s certainly a step in the right direction to put them into service first as floorcoverings for our homes and offices.

It’s worth noting that calculating whether to reuse or convert to waste-to-energy means dealing with a lot of variables. An embodied energy calculation, for instance, won’t address the use of renewable energy sources, while a lifecycle analysis will. Carbon footprints are also inadequate measures, since they don’t address issues like material toxicity and resource depletion. However, despite the daunting calculations required, it’s a necessary process for all those committed to going green.

Keep Faith in the Economy
As we start the new year, we need to have faith that economic recovery is within our grasp in 2009. We must recognize that if we are not part of the solution, we will only be part of the problem. Consumer confidence will be key to how well the economy does this year and unfortunately the news media with its doom and gloom predictions of inflation and currency devaluation are not helping matters.

We must remind ourselves that economic cycles are part of the normal routine for a free market economy. We must also remember that flooring is a fundamental part of the shelters that we all live and work in. Flooring—while sometimes deferrable—is still a fundamental need.

I’m hopeful that our new president-elect, who stumped on a ticket of change, will announce his decision to cut back massively on the expenditures for his inauguration. This would indeed be the type of Lincolnesque gesture that would communicate fiscal responsibility and a willingness to be different—the change agent that he promised to be. Of course the other side of that coin is every dollar that is spent could be justified as economic stimulus.