Strategic Exchange: The economic landscape may be mountainous and forbidding, but there are green pastures, as well– Feb 2022
By Kemp Harr
Right before Surfaces, the Fed announced plans to combat soaring inflation by raising interest rates next month-for the first time since 2018. Increases in consumer prices topped 7% in December, the highest reading since 1982, driven by rising labor costs and supply chain issues.
This move, coupled with the sharp dip in the stock market in mid-January, the continued fear of catching the Omicron Covid variant and Russia’s looming threat to attack Ukraine, is enough to make any business owner wonder how this all might affect their business plans for 2022.
The mainstream media doesn’t believe that good news keeps the audience coming back, as we are reminded in Don Henley’s Dirty Laundry song. But there is good news. On the positive side, let’s not forget that U.S. GDP increased almost 7% in Q4 2021. Economic growth for the year was up 5.7%-the fastest pace in 37 years. One of the drivers is wages, with unemployment at a low 3.9%.
Here within the flooring industry, Santo Torcivia’s preliminary 2021 year-end numbers put revenue growth up 21% in the residential sector and 16% overall. Granted, some of that top-line growth was inflated due to the multiple price increases over the course of the year, but that didn’t stop the consumer.
There is concern that rising interest rates will decelerate growth, but something has to be done to slow the rate of inflation. If you read the commentary last month when Fed chairman Jerome Powell announced his plan to increase interest rates, he said the economy is strong enough on its own and will continue to grow without monetary policy support.
As we monitor store traffic in the independent retail sector, we learn that the usual seasonality of January-historically the slowest month of the year-remains a factor, but we’re still seeing a mid-single-digit increase in sales over last year. Let’s face it, we’re all spending more time at home, homes are worth more and consumers aren’t afraid to invest to make them more comfortable.
Momentum continues to build in the lagging commercial sector. Starnet’s board met in mid-January, and the consensus from that meeting was that business in 2022 would meet or exceed 2019 levels. Office and hospitality are the two sectors that are still being impacted by social distancing, but the other sectors are slowly coming back.
OMICRON & SEASON ONE SHOWS
Omicron is having a definite impact on season one trade show attendance. Attendance at the Dallas, Atlanta and Huntington Beach regional shows held in January was better than last year but not where exhibitors hoped it would be. Retailers have gaps to fill in their assortment and are anxious to see what’s new, but they also have employees who are calling in sick, so they can’t venture far from their place of business-or they are afraid of bringing something back if they do go to a market. Many in the industry were caught off guard to hear CCA Global canceled its Florida winter convention, but it wasn’t that surprising, since it was scheduled at the projected peak of this highly contagious variant.
CCA’s canceled event could very well drive more traffic to Surfaces in early February. Our staff at Floor Focus is fully vaccinated, so we’ll be there with our masks on. Look for that report in our next issue.
Growing and retaining top-quality employees is the key to success for every business. And while, with regard to work, we are all motivated by different factors-some by purpose, some by pay, some by flexibility, some by power-what we all share is an enjoyment in being acknowledged for our successes and a job well done.
Floor Focus’ Emerging Leaders awards give business heads a chance to do exactly that, on a somewhat larger scale. And there is no more important time to do it. The pandemic has demanded that workers flex, stretch and bend to fill the needs of a changing marketplace. It has added to their stress-loads and workloads, professionally and personally, making it more important than ever to acknowledge those who have stayed true and kept their head in the game.
This year’s group of young professionals-all under the age of 40 and working in the dealer sector-is a strong crew, comprising six women and four men. They are well-educated, driven and confident. We commend them all. Learn more about the winners on page 70.
If you have any comments about this month’s column, you can email me at firstname.lastname@example.org.
Copyright 2022 Floor Focus