Strategic Exchange - June 2010
By Kemp Harr
It’s an interesting notion to think that people who were born in the same era have common behavioral characteristics that can be predicted. These age groupings have specific names, and date ranges have been assigned to determine when one era started and another stopped. The baby boom generation, for example, ran from 1946 to 1964. People born before 1946 have been coined the traditionalists and those born between ’65 and ’76 are called Gen Xers. The next generation, born from 1977 to 2002, is called a millennial or (Gen Y), and any baby born since 2003 is part of the digital-from-birth generation.
One of the primary reasons psychologists study the behavior patterns of these generations is to tell employers how to motivate employees and make them productive workers. But another big reason—and the reason I bring it up now—is to understand their buying habits. More specifically to our business, can we predict how flooring trends might change based on the size of these groups and the lifestyles they prefer?
According to Maxine Lauer of Sphere Trending, who spoke at a seminar at the Coverings Expo this year, profiling your customers based on which generation they fall into can provide insight into their decorating tastes. Lauer referred to the millennial group as the “Gen-Now” group and she pointed out that, with 84 million members, they are bigger in size than the boomers. Many of them are working to buy their first house and they prefer a customized/personalized look. They are fine with smaller spaces and most of them are extremely eco-conscious. Gen-Nows are more visually oriented, they like open spaces, and many of them would rather live in an urban dwelling or at least closer to downtown. If Lauer’s predictions hold true, the millennials will be more interested in bold colors and textures, and they will want to hear the green message, but the size of their purchase will be smaller.
Observations from HD Expo
Anyone who has played the board game Monopoly knows that owning a hotel is perceived as the fast way to get ahead. But as you learned in our update on the hospitality market last month, the lodging market has been severely impacted in the last couple of years. This business is going through some major changes, some of which can be attributed to technology, but much of which the industry did to itself.
Whether you travel for business or leisure, most people know that the best deals are found on the Internet. Websites that are not brand specific like Bing, Priceline and Orbitz have replaced travel agents and allow travelers to serve themselves and compare properties at any given destination. Lost in this mix are the agents that could sell you on the idea of picking a swankier property based on the experience. And now, in their place are websites that let you bid on accommodations using price and star rating as the only differentiators in the mix. Travelers have learned that the best price doesn’t come from the hotel’s own website but rather from one of these aggregator travel sites. As a result, the average daily rates have continued to decline.
Another factor is the shift toward the limited service sector. As hotel chains aggressively push to build out a network of properties in this increasing popular midrange sector of the market, they are adding capacity at a time when demand is on the decline. As a result, occupancy levels have fallen to just over 50% and revenues per available room are at a record low. A few examples of these new brands are Aloft by Starwood and Hilton’s Home 2 Suites. The biggest victims in all this are the luxury hotels on the upper end of the spectrum. Properties like the Ritz-Carlton Lake Las Vegas are being shuttered due to lack of demand.
Toward the end of last month, the Hospitality Design (HD) show was held at the Sands Convention Center in Las Vegas. Reviews on the show floor were mixed between cautious optimism for a recovery and pessimism for a longer downturn. The fact that the stock market took a significant dive the week of the show probably didn’t help much since so much of travel is tied to sentiment, especially on the leisure end of the business.
From an interior furnishings standpoint, some interesting trends are starting to evolve that could well become part of the new normal in the lodging sector. Guest room layout is now set up so there’s a partial wall that separates the bed area from the sitting/work area—all of which can be serviced by one large flat screen television that swivels to service both areas. As a result you get the feel of a suite in basically the same 450 square foot footprint.
Carpet is still the primary floor covering but average face weight is dropping from the old guest room standard of 32 ounces down to 26 ounces. Carpet tile is also picking up momentum. Granted, the price per square yard of the material itself is more expensive—and this is no time to be adding cost—but property owners are discovering that the installed price is very similar when you factor in installation, pad and scrap. And one huge benefit is the ability to change out one square when a guest burns the carpet with a hot iron—still one of the biggest claim issues in the business. Guest room carpet is traditionally changed every five years, but with this economy that cycle has been moving out toward seven years. And while broadloom carpet is recyclable, many hotel chains prefer the end of use reclamation story of modular carpet.
White topped bedding is still very popular due to the message it conveys about cleanliness, which moves the room décor styling down to the floor level. As a result, printed carpet reigns due to the low cost of customization, but solution dyed textured LCLs are also popular. There also appears to be a movement toward hardwood flooring in guest rooms. Granted, this fits better in the more boutique upscale properties, but several of the designers I met at the show were talking about using hardwood flooring.
Cash for Caulkers Includes Hardwood Flooring
The next stimulus gimmick from the federal government may actually benefit the hardwood flooring market. Last month, Congress approved the $6 billion Home Star Energy Retrofit Act designed to reward American homeowners for retrofitting their homes with energy efficient products that can lead to lower utility bills. Granted this legislation hasn’t passed the Senate yet and it may never see the light of day, but apparently adding hardwood flooring to your home is one of the recognized improvements that would qualify a homeowner for a rebate. Hardwood has been singled out by some environmental groups as the only renewable flooring option available, making it a green building material.
This could be the second time that government legislation gives the hardwood flooring business a boost. After World War II, the GI Bill mandated that homes built for returning servicemen use hardwood flooring.
Shaw and CCA Global Promote Tigressa by Blog
Social networking now accounts for 11% of all time spent online in the U.S. One component of social media via the Internet is the blog (short for web log). Now, in this digital world, self proclaimed pundits can, with very little upfront investment, publish their thoughts and opinions for the whole world to read. This “user-generated content” can have varying levels of credibility depending on the source. On the positive side, a blog is a quick way to disseminate information to a group of followers. Some feel that a product recommendation from a blogger is akin to the recommendation of a friend.
Last month, Shaw Industries and CCA Global decided to use bloggers with a large following in the interiors and home furnishings industry to promote their new Tigressa carpet line—a line of soft nylon carpets with fibers half the width of human hair. To roll out its new Tigressa carpet, Shaw and CCA invited bloggers for an evening at Barnsley Gardens and a day at the Shaw campus. Through a series of product demonstrations, not to mention a little wining and dining, Shaw sought to sell the Tigressa advantage to these influential industry voices so that they would, in turn, send the message to their readers. The question, of course, is whether these bloggers—fully aware that their success as bloggers depends upon remaining independent and unbiased—will create the stir that Shaw anticipates.
The Tigressa sales pitch hinges on the product’s fine nylon fibers. More fibers yield better color saturation within the carpet as well as greater durability and wear resistance since it spreads wear out across more individual threads. Higher thread count also offers added softness. In addition, treated with Shaw’s R2X Stain and Soil Repellent System, the nylon fiber doesn’t wick liquids down its strands. In fact, liquids will puddle atop the carpet—at least those carpets at the high end of the offering range—making cleanup a breeze.
Ultimately, Shaw’s hope is that the May 23 launch of Tigressa will translate into a viral event among the interiors community. To complement this, the company has launched a promotion through Twitter. As a nod to its inspiration, the tiger, Shaw will donate a dollar to the Save the Tiger fund for every Tweet that uses the #tigressa tag. It will also donate a portion of all Tigressa sales to this cause. These campaigns last through August 20; Shaw has capped this donation at $25,000.
Shaw will employ a more traditional marketing campaign for the line as well. Approximately 1,500 stores will carry the product on the launch date. The stores will feature large Tigressa graphics and plush tigers in their showrooms. The carpet will sell at retail for $15 to $30 per yard. The carpet ranges from plush to tailored looks and is suited for residential use. Tigressa is offered in 31 styles.
If you have any comments about this month’s column, you can email me at email@example.com.
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