Monday, March 4, 2013

Commoditization: the new "C" word in floor covering

Sometimes you write an article that really hits a hot button and the feedback is tremendous.  I've written about commoditization and the threat it poses to the flooring industry before but my most recent article written for Floor Covering News, Commoditization-the Silent Killer, has generated a lot of attention and discussion.  Even Steve Feldman, Floor Covering News publisher, referred to commoditization as the new "c" word "  when he wrote about "everyone and their mother attempting to join the party with their version of click systems."

I wanted to share it with our readers and get your feedback. Here is the article just as it appeared in Floor Covering New's January 21/28 Surfaces issue.
Commoditization-the Silent Killer

I just returned from Domotex 2013 in Germany and am both excited and concerned for the flooring industry.  Excited because of the innovations I saw in every product category and concerned for fear that they will become absorbed in the increasing commoditization of products in our industry.  I consider commoditization to be our biggest threat but we can reduce its impact if we simply recognize it and set our minds to fight it.

Compare today’s floor covering to those of 20 years ago. The improvements are impressive.  Manufacturers and engineers have invested heavily to create performance and visual advancements while addressing environmental and installation issues.  Has the industry seen increasing profits and strong returns on the investments made to create improvements? Not really.  As a whole, our industry has a habit of commoditizing uniqueness into a blur behind the  ever increasing focus on price.  The result is more consumers dissatisfied with an underperforming floor, manufacturers struggling for differentiation and an industry as a whole scrapping for profitability and return on investments.  It’s a sad commentary when all of the hard work, money and commitment to excellence made by our industry leaders are often boiled down to the lowest price per square foot.

When we advertise “oak floors for just $0.99“ or “laminate floors for $0.49”, as anyone can find on the Internet, it creates the perception that all oak flooring or all laminate is the same.  In the absence of information, price becomes the only differentiator and that’s all the consumer has to go on.  We’ve done this to ourselves. You don’t see major electronics retailers advertising “laptops for $299.”  Why? Because they explain to the buyer how small differences in specifications make a significant difference in performance, thus justifying different prices. They walk the customer through a process to determine which computer is best for them.  Of course this requires a trained and knowledgeable sales force to guide customers through the selection process, so that ideally, the purchase matches the buyer’s needs resulting in a satisfied customer.  The promotion of subtle differences between products also produces profits for the entire channel. 

You can sell short boards of oak flooring and reduce the price by 20%. The uninformed consumer will wonder why their floor looks so busy and nothing like they envisioned.  Sell wool carpet containing fiber from third world countries rather than New Zealand or the UK and it’s likely the consumer will end up with more fuzzing and matting or the color may be dull or different than they selected.  Sell soft bamboo and the consumer will end up believing that all bamboo floors scratch and pit.  I am not saying that we should not have a range of product qualities but the consumer must know why one floor costs more than another.

Marketing material and labels often carry the message of unique properties.  The retail salesperson is the gatekeeper who must explain and demonstrate these differences. If unsuccessful, they often resort to dropping the price for fear of losing the sale to the discount store down the street.  Without an understanding for price differences in similar looking products consumers will consider their challenge s to get the lowest price rather than finding the right flooring solution for their needs. 

I am not suggesting that we stop advertising prices.  However, price wars are a competition our industry should not enter into against the likes of commodity sellers like Home Depot and Lumber Liquidators.  Instead we should be running advertisement with large warning labels: “Warning – There are major performance differences between various flooring products.  BEWARE of companies advertising generic floors at low prices.  Learn about the differences to make your home beautiful.”  As an industry we cannot abdicate to the price only sellers.  We must call out companies that twist or eliminate facts to create false impressions.  We must warn consumers in hopes of maintaining the integrity of our industry, its financial health and its desire to continually improve the look and performance of the products we offer.

Manufacturers spend billions each year establishing brand awareness and creating innovative products. Distributors invest heavily in logistics and sales forces to inform retailers of the benefits and differences of one product over another.  The retail showroom is the best place to educate consumers, yet squeezed margins and cutbacks in staff and training budgets have left a shortage of well-trained professionals.  If we hope to survive we must refocus on education and communication with our customers.

Laminate is a good example of commoditization and its results.  A product that was once retailed at $4.99 is now being sold under $1.  Everyone questions how long it will take for today’s LVT to suffer the same squeeze.  I am not advocating that we fix prices or charge more than is fair but rather stressing that consumers must know what to expect and what they are buying.

Two of the most exciting innovations at Domotex were an inert core board made of bamboo and wood dust with an attached LVT top, and a few locking systems designed for vinyl rather than adaptations of laminate click systems.  These great new innovations offer wonderful benefits to consumers over existing products. And accordingly prices should reflect that. But how will consumers learn why these new innovations may cost more? Not through those people selling laminate floors for $0.49; they are simply focused on making a sale.  The rest of us need to focus on education and satisfying consumers to ensure the continued growth of this wonderful industry.
 
Jim Gould, president of the Floor Covering Institute

Monday, February 25, 2013

DOMOTEX asia / CHINAFLOOR is 95% booked as March 26 show approaches

The Floor Covering Institute is a big supporter of floor covering shows.  Jim Gould has spoken often here about how important they are for anyone who wants to stay on top of product trends and build their professional network.  Next month, Asia's largest floor covering show, and the world's second largest, will kick of on March 26th in Shanghai and it may be their best show ever.

Truly an international show with 1,200 exhibitors from 90 countries, we were struck this year by how many manufacturers the tiny country of Belgium is sending.  According to the latest press release being picked up by industry press, Belgium is sending 30 manufacturers including Unilin, Berry Alloc, Beaulieu International Group and Balta.  Lumber Liquidators will be there, as will the National Wood Flooring Association whose arrangement with Domotex Asia is making free exhibitor space available to its members.

The show's new InnovAction flooring campaign will bring 300 new, innovative flooring solutions together in one location on the showroom floor where they can be viewed in a kind of "new-product hall of fame" giving exhibitors two changes to show their product and visitors one place to see all the most exciting new innovations.

We also appreciate that this year Domotex Asia is making their travel agent available to people wanting to attend.  The information is a little difficult to find on the Domotex Asia website so we've extracted it for you. Their official travel agent is Orient Explorer China, tel +86 21 51099795. You can email Ms. Leslie Huang at booking@orient-explorer.com.cn.

On line registration is available on their website  just click the "Register to Visit" button.
The venue is the very large Shanghai New International Exhibition Center in Shanghai and the show runs March 26-28, 2013.

There are also a number of other events taking place at the same time and co-located in the Exhibitions Center that may interest you.  These include the Shanghai Architect Fair, the China Warehouse and Logistics Forum, the China Wood Flooring Retailers Conference, Materials for Future Floors, Floor Tech Forum, and the Carpet Tech Forum. The show's Events Page explains the value of each of these events.


Besides a great floor covering show that really does take two days to cover, and the other special events going on, who wouldn't want to visit Shanghai one of the most modern, beautiful and exciting cities in the world.   The shopping is great and restaurants are unbelievable.

You need a visa for China even if you have a passport.  You should give yourself no less than two weeks to get a visa.  We use Visarite with a lot of success. They can also help you with a passport or passport renewal.

We suggest that you go to the Domotex Asia website and download the "Visitor Invitation."  It's really a brochure with all the information you need to contact the organizers or the travel agent, make reservations and pre-register.

Perhaps we'll see you there!
  - Susan Negley


Wednesday, May 2, 2012

Intelligent merchandising in the floor covering showroom

Donato Pompo

In a ceramic tile and stone showroom the two biggest challenges for customers are  visualizing how the tile or combination of tiles will look installed in the home and determining which tiles are suitable for their intended application. Figuring out how to address these two challenges should be a priority for every showroom.

Along with that, conveying the features, benefits and limitations of the products is the next challenge. And perhaps the most important piece of the showroom puzzle, is to train sales people so they are knowledgeable and competent showroom consultants (I wrote about this previously on the blog in, How Training and E-learning Can Improve ROI).
 
Years ago, when I was an importer and distributor with several showrooms I coined the term Intelligent Merchandising to represent the approach we developed to help our customers make selections and our sales people more effective in assisting our customers during the selection process. The challenges we faced back then are the same challenges many of you face today.

Then, ceramic tile and stone was relatively new to consumers. They had lots of questions and tended to be possessive of the showroom consultants assisting them. The consultants would sometimes get frustrated by customers who insisted on undivided attention since it became difficult to help new showroom visitors.
Example of intelligent merchandising

As most retailers know, showrooms tend to run hot and cold - sometimes empty and other times loaded with customers - but you can only have so many sales consultants working at one time.  We made a point to teach our consultants to manage busy conditions so customers were never ignored. We taught our consultants that anyone who stepped through our door represented a potential large sale because people don't tend to visit tile and stone showrooms unless they are in the market for the product. We spent considerable advertising dollars to bring those people into the showroom and we didn't want any of them to walk away.

Training new sales consultants in a busy showroom is a challenge. Typically, we couldn't find experienced tile and stone salespeople so we trained them ourselves. Often, trainees had to look to experienced showroom consultants for help to answer customers questions. This took productive time away from the more knowledgeable employees, slowed downed customer service and subjected our valuable clients to frustrating delays.

Implementing  Intelligent Merchandising in all of our showrooms was my way of responding to the challenges I've described above.

Intelligent Merchandising involved creating displays with at least one full-size tile sample and small sample chips of all the colors in the line. All the trim and accessories available for any given product were shown in the display. There was a list of recommended uses for each product as well as its features, benefits and limitations. We also displayed a photograph of an actual installation where the product was used to help customers visualize a finished room.  If decorative tiles or accents or other finishes were available we may have also included them for the benefit of the customer to further visualize their options.  Retail price lists and product availability were included.  In addition to this, we created “vignettes” or mockup rooms in our showrooms featuring popular installation applications.  We also had binders full of photographs indexed by application type to further help our clients visualize how to use ceramic tile, glass tile, and stone products in their home.

Intelligent Merchandising solved several problems.  It was a more complete display so clients could help themselves visualize the rooms or locations they were going to tile, and they could immediately get answers to all of their typical questions (kind of like today’s FAQs page on a website).  It was a great sales aid for trainees too, because they could use the displays to quickly find answers to customers’ questions without interrupting another showroom consultant.  Furthermore, the display helped teach the trainee more effectively by providing easy access and repeated reinforcing of the information, and it gave the trainee more credibility in the eyes of the customer because they could simply read the information from the display.

Intelligent Merchandising was an intelligent solution for helping our showroom clients in a more effective and timely way.  This avoided the scenario of frustrated customers walking out due to lack of attention.  It helped the clients visualize and understand the kind of design options they had which often led to larger purchases. Clear, straight-forward information also led clients to purchase better quality products (and more profitable for us),  which was essentially a result of them up-selling themselves!

Today showrooms have the benefit of technology, which is a great asset, especially when it comes to helping the customer visualize a completed room. Inventories can be tracked faster and generally there is quicker access to key information.  However, nothing can replicate the “touchy-feely” experience for customers who can handle the actual product, see the color and texture up close and help themselves when a showroom consultant isn't readily available.

Thank you for reading,
Donato Pompo
Donato@CTaSC.com
Visit the CTaSC website for more information.


Donato Pompo  is founder of two well-known flooring industry companies focused on improving everything about ceramic tile and stone flooring and the businesses that produce and sell them. They are Ceramic Tile and Stone Consultants (CTaSC) and the University of Ceramic Tile and Stone (UofCTS).

Thursday, March 22, 2012

Key issue: commoditization of floor covering products

Jim Gould
I believe that commoditization is the key issue facing the flooring industry now. I recently wrote about this threat on the Surfaces blog site and it seems my opinion has struck a chord. Commoditization is a process that transforms the market for unique, branded products into a market based on undifferentiated price competition.

Most people agree that consumers will shop on price alone if they do not learn about performance and quality differences that justify a range of prices. That is happening all through our industry. If we let it continue it could lead to the destruction of our industry as we know it. Do you agree?

Read what I think is causing commoditization in our industry and what we can do about it in Commoditization - The Silent Killer

Jim 

Jim Gould is President of the Floor Covering Institute

Thursday, January 26, 2012

Consider the possibilities: Jump into the global flooring market


Like many of you in the industry, I am just returning from the US floor covering show, Surfaces.  Surfaces followed Domotex, the European floor covering show earlier in January, which I attend every year. While sitting at the Vegas airport and thinking over these last two shows, I remembered the article I wrote recently that appeared in Floor Covering Weekly - Jump into the Global Flooring Market.

I wrote this article after introducing my client, a Korean manufacturer of carpet tile, to several distributors, logistics providers and buyers in the US market. They were well received by those who understood the opportunity in this segment and the advantage of offering something new to their retailers. My client also attended Surfaces and as I reflect on the great reception they received there, I feel it underscores the point of my article...


Participating directly in the global market is a great way for distributors to differentiate themselves and justify their existence. Wholesalers who wait for a foreign manufacturer to walk into their office in America or who only attend domestic shows are only duplicating what retailers can do for themselves. Opportunity lies across the water. I have been finding and introducing new products into the US for decades, but I am only one man; there is so much out there for you to discover.

I encourage you to take the leap.  I'm headed to Domotex asia CHINAFLOOR in March and you should be too. It's the largest floor covering show in Asia. It's full of exciting products and manufacturers from around the world; not just Asia. My client, SuperClick, will be there again. They are a Belgian manufacturer of click LVT that got a big boost from Domotex asia and are now embarking on global distribution.  Lumber Liquidators will exhibit there this year. I'm curious to see what that's all about.  The National Wood Flooring Association will be there along with some of its members.  I know of several US distributors going to Shanghai for the show this year, but many more of you should be going.  I hope you will consider the possibilities.

Jim 
Jim Gould is President of the Floor Covering Institute

Tuesday, January 24, 2012

Floor Covering Institute releases research on China's flooring industry, consumers, logistics


FCI has just released its latest research paper: The Growing Opportunity in China, a look at China's economy, consumer market, floor covering demand and logistics channels. Researched and authored by Jim Gould, the paper is the first of its kind to offer an overview of China from the floor covering industry point of view.

Major sections of this industry paper include:
  1. China's rapid economic advancement and the growing consumer market;
  2. China's floor covering market;
  3. China's retail channel and performance;
  4. China's retail flooring channel;
  5. The state of China's logistics channel; and
  6. Channel options.
 Here's a look at a few "fast facts" taken from the paper.
  • Between 1.6 billion and 1.9 billion square meters of new floor space will be needed each year between now and 2025 to accommodate China's urban migration.  This yearly increase is the size of the entire US market. 
  •  
  • China's floor covering market was 12.8 billion square meters in 2011. 
  •  
  • China is the second largest luxury market in the world. 
  •  
  • China is not a DIY market; consumers prefer Do-It-For-Me.
  •  
  • US exports of flooring to China increased by 36.8% in the first eight months of 2011.
  •  
  • There are 700,000 logistics companies in China.
    What does all this mean to the US floor covering industry?  Is China an opportunity or a threat? Why do some large Western companies fail in China while others prosper? How does a company begin to to assess the opportunity in China?
Join Jim Gould at Surfaces on Wednesday, January, 25 (at noon in Lagoon D) for his seminar on Expanding Business Overseas where he will also preview sections of this paper and answer questions about China. Obtain a copy of the paper on our website: http://floorcoveringinstitute.com/
or go directly to The Growing Opportunity in China.



Tuesday, January 17, 2012

Floor Covering Institute experts to present 10 seminars at Surfaces 2012


Join us this year at Surfaces! 
Register for our education classes
January 23-26, 2012 -  Las Vegas, Nevada
Mandalay Bay Convention Center

 
Monday, January 23, 2012
9:00 a.m. to 12:00 p.m.
Social Media: How - To for Business
Social media tools help flooring and stone businesses extend relationships with customers, however as easy as the tools are to set up, keeping them going can bring you to your knees.  This workshop will teach you how to use these tools so the resources you put into them actually benefit your business.
• Identify how social media tools fit into your overall business
• Assess your online presence and how to improve it
• Explore best practices on how to engage with customers online

1:00 p.m. to 2:30 p.m.
How to Hire for Success
Presented by Warren Tyler
New hires represent tremendous risk. Learn what not to ask and what you have to know about prospective employees. There are proven methods that will tell you who this new person is and if you should or should not hire them. This seminar will save you lots of heartache and cash.
• Discover how to ascertain whether your prospective hire possesses the attitudes of success
• Recognize what you can learn from their previous work experience
• Discuss how to comply with new government regulations
Tuesday, January 24, 2012
8 a.m. - 9:30 a.m.
7 Trends That are Going to Change Your Life and the Floor Covering Industry
Presented by Christopher Ramey
Your future depends on knowing consumer and industry trends. This seminar will explore the future, and how consumer trends are going to change the way you do business. 
• Recognize the nature of trends
• Explore the major consumer and industry trends
• Discuss strategies and tactics you can use to ensure you are ahead of the changing world

8 a.m. - 9:30 a.m.
The New Promotional Paradigm
Presented by Warren Tyler
Drastic economic and social changes have influenced how we promote and market our products. What worked a few short years ago does not work now. Attend this session to understand these changes and learn how to adapt your marketing and promotion efforts to the new retail paradigm. Your success depends on it.
• Discover why traditional promotional venues are not as effective in today’s market
• Identify what is effective in the new retail paradigm and how to use these new promotional venues
• Recognize the pitfalls of the new retail paradigm

12:00 p.m. to  1 p.m.
Improving Your Digital Visibility to Better Connect with Customers
Many customers start the purchase process online. If they can't find you there, you don't exist for them. This session will teach you how to maximize the opportunities to be found online beyond store hours and physical location while also building credibility and trust with customers before they walk through your doors. We’ll discuss not just your website, but how social media can help you connect with customers.
• Define the role digital visibility plays in your marketplace
• Recognize how to assess your digital visibility
• Apply best practices to improve your digital visibility via your website and using social media

12:00 p.m. to 1 p.m.
Floor Covering Sales Opportunities in 2012 and the Outlook Through 2016
Presented by Stuart Hirschhorn
The session is designed to offer the manufacturer, distributor and retailer an overview of the opportunities and challenges facing the U.S. floor covering industry.  Discussion will focus on sales by product, consumer and commercial markets, sales by channel, builder and replacement purchases, regional demographics and other trends.  The goal is to have the information needed to develop a plan to face the challenges of 2012 and beyond.
• Explore the opportunities and challenges facing the floor covering industry
• Discuss sales by product, market and channel
• Develop a plan to face the challenges of 2012 and beyond

4:00 p.m. to 5:30 p.m.
How to Transform Your Showroom from Chaos to Clam by Eliminating Merchandising Mistakes
Presented by Christopher Ramey
Review the physical, emotional and practical aspects of your showroom by exploring the best practices of the best retailers and service providers, finishing with the universal imperatives for a successful showroom.
• Identify retail best practices to avoid merchandising mistakes to ensure your showroom is unique and differentiated
• Create a new vision for your showroom by identifying how consumers shop for products
• Explore new strategies and tactics to immediately impress and connect with your customers by transforming your “showroom” into a “sellroom” 
Wednesday, January 25, 2012
12:00 p.m. to 1 p.m.
Marketing and Selling to Flooring and Stone Power Consumers (aka Women)
Women consumers make or influence over 80% of flooring and stone purchase decisions and, yet, many in the industry haven’t fully figured out how to market or sell effectively to them in-store or online. Women are demanding customers. Meet their needs, though, and see your overall business satisfaction and profitability improve. This session will review the latest marketplace trends, present a framework for marketing and selling to women customers and explore best practices from the flooring and stone industry.
• Recognize how changes in the marketplace affect how you connect with flooring and  stone power consumers
• Develop a framework for marketing and selling your products to women customers in your store
• Use case studies to learn how to improve your business’ success marketing and selling to flooring and stone power consumers

12:00 p.m. to 1 p.m.
New Green Floor Covering Backings and Installation Technology
Presented by Lew Migliore
Most of the new technology in flooring materials exists in product backings and installation. In light of concerns about moisture issues, installation failures and socially responsible flooring products, no matter what position you occupy in the industry, you must know about the changes and paradigm shifts that are here now.
•Recognize the newest technologies, techniques and trends in green floor covering backings and installation systems
•Acquire thorough knowledge of the products and see and touch samples
•Discuss how these new technologies will help you avoid problems that may require premature flooring replacement due to substrate issues and other compromising conditions

12:00 p.m. to 1 p.m.
Expanding Your Business Overseas and Overview of China's Floor Covering Market
Presented by Jim Gould
 All attendees will receive a copy of Jim's new Industry Briefing Paper:  The Growing Opportunity in China - A look at China's economy, consumer market, floor covering demand and logistics channels.
 This session is for manufacturers and agents interested in expanding their business outside of North America. We will focus on opportunities, threats and methodology of trading in new and growing foreign markets.
• Explore the opportunities that exist in emerging markets including Asia, Eastern Europe and others
• Identify differences in retail channels, consumer preferences, logistics and governmental regulations
• Discuss available government, legal and business resources for companies wishing to expand beyond the North American market

We hope to see you there!

Monday, December 19, 2011

Finding Opportunities in the Growing Area Rug Market

FLOOR COVERING STATISTICAL TRENDS AND OUTLOOK

As a floor covering industry consultant and analyst, I was always surprised by the lack of interest in the market for area rugs.  And as a consumer, I always wondered why floor covering stores paid little attention to this market sector.  I purchased area rugs and runners at specialty rug stores, home centers or other mass merchandisers.

So when I read “Selling Rugs Profitably” in Floor Covering Weekly , I just skimmed over the contents.  Shortly thereafter, a client asked me to do an in-depth investigation of the area rug and bath mat market.  Well, the analysis of the U.S. area rug and bath mat market really opened my eyes to the opportunities in this industry sector.


Below are a few of the findings uncovered in the Catalina Market Profile on Area Rugs:

• Consumers are estimated to have purchased $6.0 billion of room size area rugs, scatter and accent rugs, bath mats, and runners in 2011, a 4.7% increase over the previous year.

• Rugs and runners are estimated to have accounted for 18.5% of total U.S. floor coverings manufacturer sales in 2011.  This is up from 15.0% in 2007 and only 9.1% in 1997.

• Room size area rugs are increasing at the sharpest rate in line with hard surface flooring’s rising position in the U.S. floor coverings market.  I guess a consumer purchases a room size area rug shortly after the installation of a new hard surface floor.

• Home centers, warehouse and superstores, and other mass merchandisers are increasing their share of area rug and bath mat retail sales.  This reflects consumer’s increasing preference for value-priced decorating products during the current period of weak economic growth and high unemployment rates.  Consumers are purchasing area rugs and bath mats at mass merchandisers as a low cost way to refresh the look of a room.
However, Floor Covering Weekly reports in its 2011 Annual Statistical Issue that only one-third of all specialty floor coverings stores (defined as retailers with 50% or more of their total sales in carpet, area rugs, and resilient flooring) sell area rugs.  This statistic makes me wonder why the typical floor covering retailer is passing up the opportunity to participate in this growing sector of the U.S. floor coverings industry, especially since floor covering store sales have been declining over the past five years.

Floor Covering Weekly’s article on selling rugs profitably indicates that to be successful in this market a retailer has to display 250 to 300 rug styles and designs, the line has to be continuously updated, and the consumer has to be offered a return policy.  There must also be an investment in developing a knowledgeable sales staff.

This may take time and dollars; however, it is imperative for floor covering retailers to consider this investment in order to participate in one of the strongest growing sectors of the U.S. floor coverings market.

Please let me know the efforts you are making to participate in this $6.0 billion market.

Stuart

Stuart Hirschhorn is a member of the Floor Covering Institute and Director of Research of Catalina Research, Inc. which provides in-depth market research on the floor covering industry.

Thursday, December 15, 2011

Benefits of Attending Trade Shows and Conferences

Donato Pompo
Attending industry trade shows and conferences can cost people and companies a lot of time and money.  First, there are expenses associated with out of town travel such as airfare, hotel and meals. Then there are show registration fees. And then there is the lost opportunity cost of you and/or your employees not being in the office and therefore not being productive.  If you plan and spend your time effectively, however, by participating in and networking at these events, you will walk away with great insight and potentially new opportunities that will give you a nice return on that initial investment.

In this tough economy industry organizations and associations are looking for ways to help their members reduce costs related to attending annual meetings, exhibitions and conferences.  One example is the ceramic tile and stone industry whose leading associations merged their events into one larger one.  In fact, I just returned from Total Solutions Plus, held near Phoenix earlier in November.  This was actually the second annual combined conference of the Ceramic Tile Distributors Association (CTDA) , the National Tile Contractor's Association (NTCA) , and the Tile Council of North America (TCNA). This creative solution accomplished several things:
1) members saved money and time by attending only one event instead of three,
2) overall attendance of the event was increased and
3) members from different segments of the industry were brought together and this fostered a spirited exchange of ideas and discussions.
This last point is very important. Manufacturers, distributors, standards committee members and installers of ceramic tile and stone were in an environment that provided education and allowed for open lines of communication and networking.  This proved to be very valuable in terms of unifying and promoting the tile and stone industry.

Trade shows and conferences typically offer a host of seminars and educational presentations in an effort to keep members informed about new developments. Total Solutions Plus organized a number of meetings on industry standards and information on how to ensure quality tile installations. Quality tile installations are a very important goal and concern for the industry.  A bad installation is in effect negative advertising and does not promote the use of tile.  This is the exact opposite of what all three associations try to accomplish.

 CTDA’s education committee met at the conference and has training programs to educate industry members.  NTCA had their technical committee meeting at the conference where their focus is on helping the installer avoid installation problems. TCNA had their ANSI and ISO meetings focusing on improving installation standards for the industry.  The Ceramic Tile Education Foundation (CTEF) , a division of TCNA, also met to review their Certified Tile Installer program and to review the new UofCTS online tile installer training program to teach installers the thin-set standards.  All of the associations are focused on improving the quality of tile installations to ensure the consumer gets all of the product’s benefits that they were promised.

Total Solutions Plus speakers all seemed to have similar messages for the tile industry. Futurist Dr. Jay Lehr, a well known and often interviewed expert, suggested that the tile industry needs to unite in its efforts to promote itself, similar to what the milk and egg industries did years ago. Got Milk! and The Incredible Egg campaigns were a huge success and changed the consumers’ image of those products.

Dr. Lehr challenged the ceramic tile industry to join together to create a statement about the value of ceramic tile.  I came up with "Ceramic Tile is a Healthy, Durable, Lasting, Sustainable Investment, and our Art and Legacy for Future Generations."  If all the ceramic tile manufacturers, distributors, and installers put that statement on their business cards, invoices, packaging, brochures, data sheets, websites, and showrooms do you think the consumer might get the message?  You betcha...

Then there are the networking opportunities at the trade shows and conferences.  You only get out of networking what you put into it.  If you plan in advance to meet with individuals and groups, take the time to introduce yourself to new members and to catch up with existing members, attend all of the committee meetings and educational sessions so you have a chance to run into others as you learn from the sessions, then you will reap what you sew.

Probably one of the more important opportunities and benefits of attending an industry conference is that you get a chance to think and reflect on your business without the distraction of doing business.  This process can be a tremendous opportunity to formulate new ideas, plans and strategies so you can go back to work and make a difference.

Considering the cost of attending industry conferences in terms of travel expenses and lost productivity, and how much in return you can gain if you plan and exert the effort to learn, network and reflect, it is an opportunity you can't afford to miss or waste.


Thank you for reading,
Donato Pompo
Donato@CTaSC.com
Visit the CTaSC website for more information.


Donato Pompo  is founder of two well-known flooring industry companies focused on improving everything about ceramic tile and stone flooring and the businesses that produce and sell them. They are Ceramic Tile and Stone Consultants (CTaSC) and the University of Ceramic Tile and Stone (UofCTS).

Thursday, December 1, 2011

How Consumers Purchase Flooring: In-Store, Online

Christine B. Whittemore
Did you get a chance to read National Floor Trends' article titled WFCA Consumer Study: Consumers Not Using Social Media For Flooring Purchases? It caught my attention.

I love data about consumers and the purchase process. Especially in flooring. In a world where the overall retail experience is evolving beyond the physical store to encompass digital tools, how different is flooring? And what role does social media play?

According to the article "Seventy-five percent of consumers surveyed used online resources when shopping for their most recent flooring purchase."

That's not too different from what Google details in an ebook titled "ZMOT" which states that 84% of Americans engage in ZMOT activities prior to purchase. This is based on research by Shopper Sciences of 5000 shoppers across 12 categories. [Note: "ZMOT" stands for 'zero moment of truth' [i.e., the moment between purchase stimulus and purchase decision [aka first moment of truth as identified by P&G] when buyers go through extensive research to learn about their eventual purchase]. The majority of ZMOT activities take place online.

[To learn more about ZMOT, read my article Inbound Marketing and ZMOT: Perfect Together?.]

According to National Floor Trends, "Consumers are most likely to decide to visit a store to purchase flooring products based on previous experiences with a store, information they’ve found online or based on a referral from someone they know."

Intuitively, this makes sense. The majority of flooring stores represent local businesses. They have ties to the community and are proud of the referral based business they have established over the years. Having an online presence further cements all of that hard relationship-building work and allows retailers to address consumer questions and concerns.

John Jantsch, leading marketing and small business consultant, explains in an article titled How spreading the ‘local love’ can help small retailers capture consumers’ attention that "Search engines – like Google, Yahoo and Bing – are now among the primary means that people find products and services in their hometown. And, 82% of local searchers follow up offline via an in-store visit, phone call, or purchase. As a local retailer, you, of course, want to be among those search results."

Does this surprise you?

By the way, I hope when consumers do enter flooring stores they will find welcoming and engaging retail experiences. If you need advice on that front, please read Marketing To Women, The Retail Experience, Manny Llerena and Flooring. And be sure to offer solutions rather than products!

Finally, on the subject of social media and flooring, National Floor Trends details that "Even though 80 percent of survey participants use social media, they are unlikely to use it to find a specialty flooring retailer and do not find it important that specialty flooring retailers are involved in social media. Social media does appear to positively influence consumers’ perceptions of specialty floor retailers. Consumers indicate that retailers involved in social media are focused on growing their customer base and feel that those retailers are more up-to-date on current product trends, are doing well and are investing in new ways to better serve their customers."

Social media tools - think Facebook, Twitter, even LinkedIn - favor strengthening existing relationships. Many retailers find them more effective for connecting with customers than with prospects. They also work best when used to communicate as real people rather than as a megaphone for deals and formal messages.

Blogs, on the other hand, because they offer the means for creating richer, deeper content that answers questions and concerns prospects may have, not only offer retailers the means for participating in ZMOT activities and getting found online, but also for developing new relationships that help to prequalify prospects into becoming in-store customers.

What are you noticing with your customers? How do they use online resources? If you have embraced social media, at what point in the purchase process are you finding it effective for connecting with customers?

Let me know in the comments.

If you find this subject as fascinating as I do, I invite you to subscribe to Flooring The Consumer where I explore these themes and more.

Best,
Christine

Christine B. Whittemore
Chief Simplifier
Simple Marketing Now

Monday, November 28, 2011

If Housing Is Rebounding Can Floor Covering Sales Be Far Behind?

Stuart Hirschhorn
FLOOR COVERING STATISTICAL TRENDS AND OUTLOOK - Housing Data

Something happened on the way to the predicted double-dip recession that was to be caused by the European debt crisis and the paralysis in Washington- the housing market showed strong gains and specialty floor coverings store sales turned upwards.  These trends can be seen in the following reports.

• According to the Department of Commerce (http://www.census.gov/const/newresconst.pdf), housing permits increased by 6.5% and starts rose by 5.5% in the third quarter of 2011.  In October, these gains accelerated, growing 17.7% and 18.9%, respectively.

• Existing home sales increased at even sharper rates.  According to the National Association of Realtors  existing home sales increased by 17.8% in the third quarter of 2011 and by 11.7% in October.(http://www.realtor.org/research/research/ehsdata)
• Floor covering store sales also began to rebound as housing demand increased.  Commerce reported that specialty floor covering store sales increased by 1.2% in the third quarter after declining 7.9% in the first half of the year.  Sales are estimated to have increased by 3.4% in October, based on preliminary Commerce data.  Positive specialty floor covering store sales are not a surprise, since floor covering sales are highly correlated with housing demand.  This has been seen in the findings of the Catalina Floor Coverings Quarterly Update. (http://www.informationgiant.com/www/index.cfm?action=catalog.browse&category=Floor%20Coverings%20Quarterly%20Update&id_category=06a50ffa-04c4-4f6b-9dda-c14d67bd2247).

Considering the uncertainties of the economic environment and the low level of consumer confidence, it would seem unlikely the housing data would be so strong.  So why are we seeing such positive housing data?

•  Can it be that consumers consider housing prices low enough after declining by 26% over the last five years?  They are also reacting to historic low mortgage rates.

• Can it be that consumers are “acting” more confident as initial unemployment claims fall and employment increases?  After increasing at a 0.4% rate over the first three quarters of 2011, U.S. employment levels increased by 0.9% in October 2011.

• Can it be that we are finally seeing the peak of our housing woes?   A recent Wall Street Journal  (WSJ)article indicates that “the share of households delinquent on their mortgage payments has fallen to the lowest level since the end of 2008.” according to the Mortgage Bankers Association. (http://online.wsj.com/article/SB10001424052970204517204577044401122300024.htm)

Now that we are seeing an upward trend in U.S. housing demand, the question now is how sustainable are these trends?  I think we could see continued gains in the housing market, since the lack of Congressional action on the budget results in neither a cut in spending or an increase in taxes.  So we may see stronger floor covering sales for 2012.  However, all bets are off for 2013 if the automatic cut in spending and increase in taxes (a total of $4.9 trillion over ten years) goes into effect.

What do you think?
Stuart

Stuart Hirschhorn is a member of the Floor Covering Institute and Director of Research of Catalina Research, Inc. which provides in-depth market research on the floor covering industry.

Monday, November 21, 2011

Assessing opportunities in China; the market, logistics and consumer buying habits

Jim Gould
As a consultant to the global floor covering industry I talk to manufacturers about shifting markets and how to reach new opportunities. The fastest growing and yet most mysterious market is Asia where the demand for all products, including floor covering, is rapidly rising. It’s no secret that China’s market is expanding at unheard of rates and some floor covering companies have already made the leap to China. In fact, US exports of floor covering to China increased 36.8% over the first eight months of 2011, according to Stuart Hirschhorn of Catalina Reports.

Flooring Mall on Yi Shan Lu Rd, Shanghai

I have written about the growing opportunity in China many times and you’ve certainly heard the message from others.  But I know many of you are asking, What does it mean to me?  Is there an opportunity for my company and if so, How can I capture it?

These are serious questions especially when you consider the trouble that some of the world’s largest, and presumably most sophisticated, retailers have faced in China. Best Buy Company, the world’s largest electronics retail chain, while successful around the world, has closed all of their Best Buy branded stores in China (http://www.bloomberg.com/news/2011-02-22/best-buy-s-china-stores-shut-as-retailer-focuses-on-more-profitable-brand.html ).  Closer to the flooring industry, Ian Cheshire, CEO of Kingfisher plc, Europe’s largest home improvement chain with 900 stores worldwide, explained after closing its 22 stores in China that big-box DIY “is not the model for China.” (http://www.kingfisher.com) Giant Atlanta-based Home Depot, too, has closed some Chinese stores with only seven still operating in mainland China. (http://www.homechannelnews.com/article/kingfisher-has-new-idea-chinese-diy-retail).  At the same time, Starbucks opened their 500th store in mainland China and announced plans to increase that to 1,500 by 2015.  KFC is China’s largest restaurant chain and is still opening new stores at the rate of one per day. One can't help but wonder:
Why are some globally successful companies failing while others are flourishing?  
Is there a market for Western made products in China and if so how would those products get to market? 
What do we need to understand about the Chinese consumer in order to succeed in business there?
I’ve been asked these questions by companies around the world. My client Domotex asia CHINAFLOOR (Asia’s largest floor covering trade show) wants to answer these questions for people and companies considering if they should attend or exhibit at the show in March, 2012… and so my research began.

As expected, questions begat more questions but ultimately I focused on three main areas:  
The MARKET -what changes are taking place in China’s consuming market that could affect your company and your opportunity? 
LOGISTICS -  if you were to expand into China, how could your products get to market – what is the state of China’s logistics channel?
RETAIL - how and where do consumers buy goods in China and what do we need to know about the Chinese consumer?
After dozens of interviews with experts across China, a White Paper on the Chinese market and logistics channels is taking shape. I will also publish a series of articles in the industry trade press and of course I’ll also post here.

For now, here’s something to think about. China is the third largest market for US exports (after Canada and Mexico).  US exports of goods to China are up 468% since 2000 and since 2009 alone US exports to China have grown by 32%. This percentage increase is ten times the increase in exports to Canada and  Mexico. (US Dept of Commerce)

There is a huge expansion of consumerism in China; already more BMWs are sold there than anywhere in the world, and that was before the Chinese State government made increasing domestic consumption a key target of its economic restructuring goals in its 12th Five Year Plan (2011-2015). Through a series of macro and social changes and continuing shifts in urbanization the consuming middle class is growing faster in China than anywhere else in the world. Retail sales in China grew about 18% in 2010.

This new focus on consumerism can transform China from the World’s Manufacturer into the World’s Supermarket.  Already the number two consuming nation in the world, behind only the United States, it’s not hard to predict that it will become the largest.  These changes will have a major impact on countries, industries, and companies - perhaps yours.

What I hope you are doing now is assessing how you and your company may prosper from these changes.

Here are some related articles I've written on China:
The Great Urbanization Threats and Opportunities in China   
China-Threats and Opportunities Part 1 (Floor Covering News)
  Part 2

China's Economy and Construction Boom Creates Huge Floor Covering Potential

Jim 
Jim Gould is President of the Floor Covering Institute