Strategic Exchange: Prepare for change; don’t brace for disaster - December 2022

By Kemp Harr

Alan Beaulieu with ITR Economics recently spoke at the National Association of Floor Covering Distributors (NAFCD) meeting in Chicago and opened by pointing to a Newsweek article written in June with the headline, “Economy is Already Collapsing, Majority of Americans Believe,” followed by a group of slides giving evidence to the contrary, pointing to U.S. GDP growth, rising personal income and near-record low unemployment.

Granted, the Fed’s actions to curb inflation by raising interest rates will slow demand for flooring in the near term, but the theme of Beaulieu’s presentation was to prepare for change, not brace for inevitable disaster. It is true that most of the U.S. leading economic indicators are signaling a decline, but this is a normal cycle that often follows a burst of growth like the one we experienced in 2021.

Beaulieu does point to several factors that deserve special attention, the biggest of which are the shortage of labor and ongoing supply chain issues. But his last slide reminded us that the U.S. consumer is poised for more spending and coached us to “focus on being the best to maximize share in areas of culture, competitive advantage and efficiencies.”

In this year-end issue of Floor Focus, we polled several of the industry leaders for their read on the business climate in the coming months and got a blend of realism and optimism. Many point to the silver lining of a slowing housing market, which should encourage homeowners to invest in the home they are likely to be stuck in until interest rates normalize. Don’t miss reading the insights from this leadership group, which start on page 27.

MEETING MINUTES
In the past month, our team here at Floor Focus made seven out of the eight industry meetings. Just to name them, the FEI Group met on Marco Island, Florida; Total Solutions Plus met in Indian Wells, California; the NWFA held its manufacturers meeting in Louisville, Kentucky; Starnet met in Austin, Texas; the NAFCD met in Chicago, Illinois; the FCEF board met in Nashville, Tennessee; Mohawk had an Edge preview meeting in Sedona, Arizona; and Broadlume hosted its FloorCon meeting in Tucson, Arizona. In every instance, we pulled out all the stops to keep our readers informed on the highlights. Almost all the meetings had a trade show component that recorded attendance at pre-Covid levels or higher.

At the Starnet fall meeting in Austin, we learned that growth among the members is, in many cases, up over 20% with a long runway of projects that could carry most of them through 2023. Historically, this fall meeting of commercial flooring contractors is centered on mini workshops, and this year much of the focus was on handling labor issues-not just related to installation labor but also about keeping employees motivated, as well. In this post-Covid era of “quiet quitting,” guest speakers focused on creating the right culture, one that helps employees feel good about where they work and the role they play in the company’s purpose. One speaker admitted that it’s important when hiring to realize that you can teach skills, but you can’t change behavior issues, and it’s best to filter out bad applicants in the hiring process.

One exceptional breakout session revealed the benefit of having a close relationship between A&D design project managers and a local commercial flooring contractor. In fact, we were so enamored with interior designer Jennifer Tart Thompson at Austin-based Corgan Associates that we invited her to do a Design Ovations column for us which starts on page 68. One trend she pointed to in the Austin market is a shift away from polished concrete due to cost and acoustical issues.

In Starnet chairman Chuck Bode’s remarks to the membership, he encouraged them to face the complicated post-Covid era challenges head-on, quoting poet Robert Frost who said the “only way around is through.”

One big topic at this year’s NAFCD meeting was continued consolidation among distributors. Just in the last couple of months, we’ve seen Belknap-Haines acquire STC (formerly Swiff-Train) and Crown Products acquire All-Tile. Other news from this annual meeting of floorcovering distributors was the pre-Covid attendance level at the tabletop trade show and the incoming president, A.J. Warne -the youngest to ever hold this position at age 33. I invite you to listen to my podcast with Warne who, in addition to being the new president, is also vice president of sales and marketing at Abraham Linc, based in West Virginia.

One of my favorite trade shows is BDNY, focused on the hospitality market. We all know that finishes within this sector are usually bold and inviting, and it’s great to see firsthand that this sector is recovering-at least on the remodel side of the business. I’d venture to guess that attendance was greater than expected based on the length of the line for attendees to pick up their badges. This show works because booths are small, and, by being in New York, it attracts key players from the brands, the owners, the designers, the suppliers and the purchasing groups. It also doesn’t hurt that it takes place near Times Square and the Theater District in Manhattan.

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

Copyright 2022 Floor Focus

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