Strategic Exchange: Commercial demand continues to drive flooring sales – July 2024

By Kemp Harr

While the retail/residential flooring business continues its elevated-interest-rate-induced doldrums, demand in the commercial market is continuing to keep people busy. However, May’s American Institute of Architects’ Architecture Billings Index dropped down to 42.4 from April’s 48.3, indicating a further softening of billings within architectural firms on a nationwide basis.

A more granular review of this data shows that the vertical sector that pulled back from hiring architects was government/institutional. Both commercial/industrial and residential started spending more for project design work. Also, remember that the billings index is positioned as a leading economic indicator for what’s to come nine to 12 months from now. Since October 2022, the index has averaged 47.35.

Consumer sentiment held steady in June. Most consumers are confident that inflation will continue to moderate, though some continue to be concerned about weakening incomes. Sentiment is currently about 36%, above the trough seen in June 2022.

Remember, retailers, if customers are in your store, they have a need and are there to buy, so don’t be shy about selling better-quality goods to make sure they are still happy with their purchase ten years from now. Better-quality products enhance the value of their home-which, by the way, continues to be worth more every year.

THE MART VERSUS DESIGN DAYS
It’s been almost six years since furniture brand Knoll announced that it was leaving The Mart for Fulton Market. And since then, on the furniture side, iconic brands like Allsteel, Humanscale, Teknion, Steelcase and OFS have made the same decision. Interface was the first flooring brand to exit The Mart to a permanent showroom just across the street years ago, but now, many have followed. Tarkett, Mohawk, Milliken, Bentley, J+J Flooring and Novalis’ Ava brand have all exited The Mart.

So, what will become of the three-day contract furnishings show that meets on the second full week of June in Chicago, and has attracted over 50,000 design-focused attendees for over 50 years?

Put yourself in the shoes of the HOK specifier from Los Angeles, who is working on a law firm project and has decided to fly to Chicago for two days to finalize her interior finishes decisions. Everybody knows you can’t discern texture and scale from a website image, and she wants her client to be happy with her decisions. Five years ago, she could have taken the elevator up to 11, walked The Mart for a day and a half, seen all of the major brands and accomplished her mission.

Today, she has to venture out into the weather and stand in a bus line that will ultimately drop her off in a neighborhood with showrooms scattered across a 20-block rectangle. Sounds like a fun adventure if you’re attending Bonnaroo, but she’s on the client’s dime and has a job to accomplish.

So how is NeoCon doing? If you talk to Byron Morton, the vice president of leasing for Vornado Realty Trust (yes, that’s right-a real estate company) which owns The Mart, as I did on Tuesday morning during this year’s show, he said, “Kemp, I couldn’t feel more energized. This building and this show have never been stronger.”

But, on the flip side, the 57 brands outside of The Mart have gotten organized under their magenta Fulton Market Design Days banner. Robert Tivadar, founder of Oetee, which is charged with running Design Days for the brands outside of The Mart, told me, “We’ve created a great little party in the Fulton Market area, and we’re seeking a combined event focused on design.”

New for this year was a Design Days Welcome Center on the west end of the Fulton Market neighborhood, where buses from The Mart dropped off attendees, who were given maps to help them navigate the area and t-shirts to build on the Design Days brand. Although subtle, it’s also interesting to note that, starting this year, the NeoCon Showdaily was running print ads from brands outside of The Mart, and the HiP Awards included entries from companies that weren’t exhibiting in The Mart. It will be interesting to see if the Best of NeoCon awards will open up its contest to other brands around town. The NeoCon trademark is owned by Vornado Realty Trust, so that may be a hurdle to overcome. But perhaps not-just charge an additional fee and use the money to offset the cost of running the show. Change is the only constant, right?

RETAILER SURVEY
Every July issue features our retailer survey, a resource unlike any other in the industry. Surveying a significant number of flooring retailers, collating the collected data and synthesizing it into trends and useful observations is a lot of work, but work driven by our passion for retailers to learn from other retailers as well as for manufacturers and suppliers to learn how they can better support their frontline retail partners. This year’s survey feels particularly important as retailers speak openly about the challenges they face amid the retail slowdown and the support they need from the manufacturers with which they have cast their lots.

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

Copyright 2024 Floor Focus

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