Strategic Exchange: Expect continued growth in residential flooring demand - Feb 2021
By Kemp Harr
Every indication is that this surge in demand for residential flooring will be with us for the remainder of the year-and perhaps longer. Disposable income for the majority of consumers who remain employed is higher than it’s been in years.
It was the long hours spent sequestered at home that started the whole let’s-fix-this-place-up mentality, but studies indicate that fixing one room leads to another and then another. The elevated value of the stock market makes consumers feel secure that the economy is on track, that better days lie ahead, and that investing money in the home-an appreciating asset-is a safe bet.
But wait, won’t life go back to normal once everybody is vaccinated? Most pundits agree that we all have cabin fever, but it will take a while for consumers to jump back into the travel and entertainment spending routine. And in many consumers’ minds, the home has moved more to the center of their daily routine.
And let’s not forget that the Biden administration has prom-ised another round of stimulus-some of which will hope-fully go toward more home improvement. Most adults that understand economics know it’s not wise to hold cash when the government’s printing money. We haven’t seen serious inflation yet, but we need to keep an eye on it.
I dusted off my suitcase in January to visit a friend in the Delaware retail business and then attend the first Mohawk Momentum road show in Dallas. In both cases, I learned how strong business conditions were in the second half of 2020-and they didn’t slow down in January. Of course, we need to factor in the five full weekends this January-which we didn’t have last year-but we’re hearing great comps against a strong January of 2020, pre-Covid.
Mohawk made a bold move to hold hotel-based conventions when most other gatherings have been canceled, but they were visibly taking plenty of precautions to keep people safe. So far this year, I’ve seen new product presentation from Mannington, Shaw and Mohawk, and with Mannington and Mohawk, the number of introductions are way up. Shaw is taking a more phased approach.
Another little tidbit I picked up in my travels last month is that the consumer’s preference for “Made in the USA” is real, and that accentuating it in your showroom is a wise move. I’ve heard it from retailers in the Northeast, Midwest and South-east, so I don’t think this is a regional bias. Most of the RSAs out there know that stories-the why-help close the sale, and I’m hearing this one is resonating.
ARE THE FIBER WARS OVER?
If you’ve never met Pami Bhullar, you’ve missed out on meeting a real character, who for years has lived out of a suit-case, traveling the country to help retailers hone their pitch to consumers-teaching them how to sell better performing, and often more expensive, flooring. Pami is passionate about what he does, and he really does care about the RSAs that he coaches.
I bring him up now because, for the last 23 years, he has worked for DuPont/Invista, promoting the Stainmaster brand. But starting February 1, Pami is an employee of The Dixie Group. You are probably aware that most of what The Dixie Group sells on the carpet side of its business (which is still roughly 85% of its total) is upper-end, highly styled product made out of either nylon or wool. Dixie still firmly believe that nylon 6,6 is the better performing nylon, and in the last couple of years, as Stainmaster has shifted its focus, Dixie has introduced its own EnVision brand of nylon 6,6, which it sources from Ascend and Universal. Many in the industry will tell you that the fiber wars are over, and all fibers perform for their intended purpose. But if that is the case, why would any company in their right mind insist on paying twice as much for their raw material if they believed that all carpet fibers are the same? That’s right, the price per pound for nylon 6,6 polymer today is $1.30, and PET polymer is 65 cents. And let’s not forget that you can recycle nylon 6,6 into car parts at the end of its life as a floorcovering. This is not the case with PET.
I mentioned earlier that the consumer likes to hear the story-the why. Dixie believes this one’s still got legs.
U-Haul just listed the states people are moving to. The top three states are Tennessee, Texas and Florida-all three of which have no state income tax. The states people are moving from: New Jersey, Illinois and California.
If you have any comments about this month’s column, you can email me at email@example.com.
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