Survey 2009: What the Retailers Think - July 2009

By Darius Helm

It was three years ago next month that the tides turned in the housing market, setting off a prolonged slump that packed enough of a punch to help generate a global recession. Residential flooring retailers were among the first groups to feel the effects of the housing bust, and they’re hoping they’ve endured the worst of it and that, unlike this year, next year will offer some relief.

When the slowdown hit, flooring contractors and retailers were enjoying the fruits of unprecedented housing growth, somewhat moderated by escalating energy and raw material prices. When business slowed and crude oil prices continued to climb, margins shrank alarmingly. The intervening years have been an exercise in both austerity and ingenuity. The retailers that are doing best have attacked the problem on all fronts, cutting down costs where possible, spending money judiciously, finding creative ways to get customers through the door, and, where feasible, diversifying both in terms of product and market.

However, none of it has been easy. This year, over 80% of the respondents reported that both sales and earnings were down, compared to about 70% last year. No matter how much a retailer does to streamline business and target potential markets, one fundamental problem rises above all others. As one Midwestern retailer put it, “We all just need customers!”

WHO THEY ARE
This year’s survey generated hundreds of responses from all regions in the nation. The Midwest comprised a whopping 40% of respondents, while 23% came from the South, 24% came from the West, and only 13% came from the East.

Nearly half the respondents reported sales ranging from $600,000 to $2 million, and about 9% had sales of under $600,000. Less than 7% had sales over $10 million. Overall, the spread was very close to last year’s.

About 79% reported using independent contractors for installation, as opposed to company employees, a bit higher than last year. Like last year, retailers from the South reported the highest use of independent contractors (89%) and the number was lowest in the West, with 71% using outside installers, compared to 68% last year.

In terms of compensation of salespeople, 25% of this year’s respondents do straight commission, 42% do straight salary, and the remaining third do salary plus commission, so salary numbers were about the same as last year, but there was some movement from salary plus commission to straight commission.

None of the respondents from the East reported paying straight commission, compared to a high of 42% in the South. The West had the lowest percentage of straight salary compensation (29%) followed closely by the South. The Midwest percentage was 42%, and it was 82% in the East.

For the complete survey results, see the July 2009 issue of Floor Focus Magazine.

Copyright 2009 Floor Focus