Strategic Exchange: The U.S. economy is on track for continued growth, says ITR Economics - June 2022
By Kemp Harr
Last month, at the first Starnet annual meeting in three years, Alan Beaulieu with ITR Economics assured the audience that the Q1 dip in the U.S. GDP was a “technical anomaly,” and that our next recession wouldn’t be until 2026. ITR’s track record for accuracy is around 98%, so this is comforting to hear in contrast to negative headlines we’re reading in some media.
Beaulieu did say that retail sales are going to transition to a slower rate of growth, unemployment is going to stay low, and the commercial (“non-residential”) flooring sector will continue to be strong until the second half of 2023. He quipped, “We’re headed back to a normal rate of growth after absorbing $5 trillion dollars’ worth of government stimulus.” He added that the labor shortage is not going away, but that the quit rate is slowing. On the topic of inflation, he warned that prices are not going to decrease, but they will stop going up.
His last piece of advice was that if you are planning to sell your business, try to get it done by 2025. This advice was worth the price of admission to many of the Starnet members, who are focused on succession planning. Some of the bigger members, like DFS Flooring in Los Angeles, CB Flooring in Maryland and Howard’s Rug in San Diego, have strategically let their next-generation heirs go out and get real-world experience, and now they are back in the family business running day-to-day operations. Those without a next generation are either finding a sole buyer, as in the case of Lansing Tile & Mosaic (see Best Practices on page 85), or are talking to other Starnet members, who are expanding by adding locations, such as Diverzify.
UPDATE ON ARMSTRONG SALE
The fate of Armstrong continues to be a major news item, but by the end of June, we should know the final outcome. From what we hear, there will most likely be four transactions. The Chinese and Australian operations, which are not part of the bankruptcy, will be sold outright, and there are two credible suitors out of a sea of tire kickers that will likely end up with the more meaningful parts of the U.S. assets.
Here is the schedule outlined by the court: bids are due by June 14, and the auction for the U.S. assets will take place on June 16. On June 17, the winning bidder(s) must file a binding purchase agreement. The sale of the Chinese and Australian assets must be completed by June 28.
We’ve been told that the sales process of the U.S. assets had to be taken through this bankruptcy auction to separate the assets from over $60 million of legacy debt. We all know that the bleeding has got to be stopped soon, or the loss of momentum for the business could be even more costly. Meanwhile, the plants are running, and product is being manufactured and sold. Stay tuned to FloorDaily for more details.
RFMS’ AND QFLOORS’ CUSTOMER APPRECIATION EVENTS
Back-end systems specifically tailored for flooring dealers continued to be a smart area for investment as retailers seek to streamline their operations. Two of the strongest brands in this sector of the business, RFMS and QFloors, held well-attended events in May and invited Floor Focus to come along. Both are family-run businesses with decades of focus in this market. RFMS was founded 37 years ago, and QFloors is 23 years old.
RFMS held its biennial users’ conference in Nashville in early May, its first in-person conference since 2019. The event was focused on educating attendees about new and enhanced features in development over the past 12 to 24 months, and 291 guests from 153 flooring companies were in attendance. At the event, special attention was paid to mobile capabilities, and COO Rod Bayless cited a study reporting that 87% of staff at companies that adopt the most modern technology feel positive about their company, while 70% of staff at technology “laggards” feel negatively about theirs. RFMS recently added Warehouse Mobile, which allows warehouse workers to receive, mark the location(s) and pickup of inventory, attaching pictures and notes if need be. Also fairly new is credit card processing through a partnership with Clover Connect.
Held at a resort near Cancun, Mexico, the QFloors event welcomed around 80 users and offered attendees the opportunity to view their businesses from 30,000 feet with discussions on mobile marketing ideas, remote access options and accounting insights. QFloors’ event included time for networking and sharing of best practices, and there were many discussions on digital and social marketing and how those integrate with QFloors. The event held general sessions led by CEO and co-founder Chad Ogden, along with Trent Ogden, co-founder and CFO, covering what’s new with the QFloors system as well as an update on the development of browser-based QPro 2.0.
In both instances, these meetings gave the software providers valuable feedback on the gaps in their offerings as well as allowing customers to learn from each other.
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