Strategic Exchange: The housing market is starting to provide a lift in flooring sales – April 2024
By Kemp Harr
It was good news to see that existing-home sales rose 9.5% in February. That’s the largest month-to-month increase in a year. Americans are beginning to realize that 6% mortgages are the new normal and, as “life happens,” it’s time to get off the porch and make a move. One catalyst for the uptick was more inventory of available homes on the market to choose from.
Those of you who listened to Jerome Powell on March 20 learned that the Fed is planning on three interest-rate cuts this year, but the big unknown is when. Powell highlighted that U.S. GDP grew 3.1% for fiscal year 2023, and the GDP forecast for 2024 is 2.1%. The two big deterrents for dropping rates are the strong labor market and inflation running at 2.8% versus the Fed’s target of 2.0%.
Don’t miss our single-family builder report in this issue, where you will learn that carpet’s share loss in this sector has stabilized and is holding steady. Also, within the hard surface category, some builders are shifting from SPC back to hardwood due to performance issues. This sector will be the engine that brings the residential market out of the doldrums in the second half of this year.
FUSE COMMERCIAL FLOORING ALLIANCE
There were three noteworthy buying group meetings in March that are worth mentioning: Fuse, Alliance Flooring and the NFA.
The theme for the Fuse meeting, held in Phoenix, was “Fuse on Fire” due, in part, to its rapid growth in both number of members and revenue. This group of commercial flooring contractors now has 171 members, and its total revenue grew 8% in 2023. This year’s meeting attracted 430 attendees-the largest yet.
The two strongest vertical sectors for the group are healthcare and education/government. And despite economic headwinds, the group is forecasting a 5% growth in 2024.
On the final night of the meeting, suppliers and member awards were announced, as were the annual Spark Awards-see our coverage on page 68. The final award of the night was a special hall of fame tribute award for Ron Lee, who was instrumental in founding both Starnet and Fuse.
NFA SPRING MEETING
Attendance was on par with prior years for the NFA’s spring meeting, which was held at the Fairmont “Castle in the Rockies” in Banff, Canada. Many of the group’s 40 members are investing additional advertising dollars on sales events. Revenue for the group was down mid-single digits in 2023, but the group is optimistic that a lift in demand in the second half of 2024 will bring growth for the year. The group’s Lasting Luxury private-label brand is continuing to grow.
Dixie regained its position as the third-largest carpet supplier to this group, many of which focus on upper-end products. Crossville joined the group this year with a vendor table now that it’s part of AHF Products.
At the final dinner, a special tribute was given in memory of Phillip Raby and Mark Carnino, who passed away just before the meeting.
ALLIANCE FLOORING
For years, the Alliance Flooring group has been a low-pressure buying group option for entrepreneurial retailers who seek marketing help and bulk discounts but don’t want to be told what to name their store or which products they have to purchase. Celebrating its 28th anniversary this year, the buying group has approximately 300 core members, around 130 of which came to the annual meeting in Orlando last month.
The group, based out of Chattanooga, Tennessee, is now run by the founders’ sons, Kevin Logue and Ryan Dunn. Revenue for the group was down 8% in 2023, but, year to date, business is up 2%. Alliance Flooring’s two core brands are CarpetsPlus Colortile and Carpetland USA Colortile.
At this year’s meeting, the group unveiled a new merchandising program streamlining the consumer’s shopping experience by grouping products by color/aesthetic and focusing the price conversation on easy-to-understand warranties and benefits. But Alliance is going a step further, and the move holds implications for the future of the sales process.
Before customers even enter a store, they can enlist the help of Alliance’s interactive design consultant (IDC) on members’ websites. The scripted actor walks customers through various selection criteria to focus in on the best options for their preferences and lifestyle, asking them simple questions and offering straightforward information to help them understand key points, such as the differences in carpet styles. The IDC then presents them with a handful of curated products, which they can see in room scenes and “favorite” to be shared with the Alliance retailer nearest them. Member websites are being outfitted with Roomvo’s visualizer, while in-store kiosks help them validate their selection through the enhanced visual provided.
This year’s keynote speaker was Russ Rogg, president of HMTX’s Metroflor and chairman of the Resilient Floor Covering Institute (RFCI). He spoke about RFCI’s efforts to promote growth and the wellbeing of the category by establishing performance standards. Russ implored Alliance members to support manufacturers offering products that are vetted and tested, in order to provide customers the best user experience possible.
If you have any comments about this month’s column, you can email me at kemp@floorfocus.com.
Copyright 2024 Floor Focus
Related Topics:Metroflor Luxury Vinyl Tile, Fuse, Crossville, HMTX, Starnet, AHF Products, Fuse Alliance, National Flooring Alliance (NFA)