Strategic Exchange: Feedback from the 2019 residential winter markets - Feb 2019

By Kemp Harr

January was a blur with the many winter markets. We did learn from our many discussions with retailers that November and December were soft, but the year as a whole brought growth. In fact, the top line growth numbers for both Shaw and Carpet One were above 5%.

It was also good to hear that carpet sales on a revenue basis leveled off and, in some cases, ticked up. I’m sure the deep freeze toward the end of January will have an impact, but most retailers are starting the year in a good mood.

The big growth story for the year continues to be rigid core LVT. And much of the innovation and many of the new products we’re seeing for 2019 are in the multilayered category-in some cases without the vinyl. Two new products that we saw at both Domotex Germany and Surfaces have a mineral core that almost looks like concrete in place of the typical PVC core. And now we’re seeing a thin real wood veneer atop some products, and, in the case of stone and tile visual products, we’re seeing a photographic image with a melamine wear surface over a mineral core. We’ll share more details on this in our March issue, but Thomas Baert with Firmfit told me in Germany that his firm has focused its new product development to solve some performance issues in the areas of dimensional stability, noise and scratches. He also admitted that the European market has a phobia against plastic flooring, and Firmfit is working to address that as well.

ARMSTRONG’S FOCUS ON RESILENT
Naturally, one of the biggest stories in the latter part of 2018 was Armstrong’s decision to sell its hardwood business. Don Maier told me in an interview that it was a relief to unload a business that consumed 80% of his time and only represented 10% of his bottom line. On the other hand, the buyers, the same PE firm (American Industrial Partners) that bought Armstrong’s cabinet business, think they got a steal and can’t wait to re-establish a leadership role in the natural wood business under the Bruce name. It’s going to be a while before we see who got the better deal. Perhaps a bigger question might be what this says about continued consolidation on the supply side. As John Gilbert, the new president of Carpet One, framed it in a recent FloorDaily interview, could we be moving to an era of fragmentation, where the specialist is more preferred by the consumer than the generalist? Stay tuned.

NWFA’S NEW CONSUMER CAMPAIGN
Speaking of hardwood, let’s talk about the “Real Wood. Real Life.” campaign recently unveiled by the National Wood Flooring Association (NWFA). I’ve said for years that each of the flooring categories needs to recognize that it competes with the others. I remember 20 years ago when Joan Sealaus, the marketing director for the Carpet and Rug Institute (CRI) at the time, proposed that the organization run magazine ads targeting the education facility managers and talking about the exorbitant maintenance costs of VCT-with the goal of selling more carpet tile to schools. The idea was immediately shot down because several of the CRI board members made both carpet and VCT.

Two years ago, the Tile Council of North America rolled out its “Why Tile?” campaign, and I had to chuckle at last year’s Covering’s show in Atlanta when I saw the video that humorously took aim at the fire and mold issues that could be an issue with other types of flooring. I’m guessing that the “Why Tile?” campaign is making a difference because it continues to be funded.

If you’d like to hear specific information about the NWFA’s “Real Wood. Real Life.” campaign, I did a FloorDaily interview about it with Michael Martin, the trade association’s CEO. With a limited budget, the NWFA has rolled out a website using the woodfloors.org address. It has also created some ad materials and brochures that its members can personalize with their own logo and either utilize as magazine ads or distribute to their retail sales associates, who can then share them with consumers. The message is simple: wood is natural, timeless, beautiful, easy to maintain, durable and environmentally friendly.

Like the CRI issue I mentioned above, the problem is that multi-category flooring firms realize that supporting the wood campaign could potentially hurt their LVT or laminate businesses, leaving a shrinking number of wood-only flooring firms to fund it.

GOING BROKE IN VEGAS
Have you done your expense report from your Surfaces trip to Vegas? Can you believe how expensive the city has gotten? I jumped into a cab because I was running late and didn’t want to wait for an Uber. The cab ride was $30 and 30 minutes, and the Uber ride back was $12 and 15 minutes-and traffic was not the issue. It was the route chosen and the stick-it-to-you attitude.

I was talking with the leader of a mid-sized carpet and LVT company, and he was telling me that exhibiting and staffing a Surfaces booth this year cost his company $600,000 when you factor in all the travel-related expenses. How much flooring do you have to sell to cover that much overhead?

So what’s the answer? I don’t know for sure, but something’s got to change. How about a different venue? It’s nothing personal, and I’m not choosing the side of one show over another, but we’ve got to get out of Vegas.

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

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