Thursday, January 28, 2010

Prince Charles, wool growers and carpet industry converge in new wool brand

On Tuesday, His Royal Highness Prince Charles announced a new international wool program directed at saving the sheep industry by promoting the attributes of wool to textile buyers, retailers and consumers. Next week you’ll hear about how that story dovetails with the floor covering industry when The International Design Guild (a division of CCA Global Partners) launches the Just Shorn™ brand of premium wool carpets the day before Surfaces (the U.S. international flooring show in Las Vegas).Just Shorn Logo

The two stories may appear to be only tangentially related but in fact there has been considerable cooperation behind the scenes to create a new focus on wool, a premium wool fiber brand and a new, branded marketing story to differentiate the fiber directed at retailers and consumers. In recent years wool fiber’s marketing story has been commoditized and overshadowed by synthetics. Next week that will change with the launch of the Just Shorn™ brand.

Last month I posted “Branding to Create Profit Opportunity” where I made the point that brands with a verifiable difference create profit opportunity while assuring the customer that they will receive what they want and expect. Here is a classic example. While working on the Just Shorn™ project over the last six months I learned to appreciate the significant differences in wools. There is such a thing as premium wool that meets standards for color, fiber length and thickness, resiliency and feel. Only premium New Zealand wool qualifies for the Just Shorn™ label and their Verifi TT™ textile tracking technology makes it possible to verify then certify for consumers that Just Shorn™ branded products are made with their high quality fiber. The marketing story is geared to help retailers and consumers understand the differences and benefits. This is a good example of branding to create profit opportunity and consumer confidence.

New Zealand SheepIt’s not often that a royal’s priorities and those of the flooring industry converge and to have the Prince's support is greatly appreciated. While the Prince’s goal may be to create more revenue for passionate wool growers, he and the Just Shorn™ program have created a great new opportunity in floor covering and the International Design Guild will be the first to capitalize on it. The British Wool Marketing Board will show Prince Charles’ Cambridge press event on video at their Surfaces booth starting at 4 pm next Tuesday. Their press release, Major Wool Campaign Launched by HRH The Prince of Wales, summarizes their story.

Prince Charles is a naturalist and protector of the environment. He stresses that wool is sustainable, renewable and biodegradable. Let me add, from a flooring perspective, that wool is a fabulous fiber for carpet. It is better for the environment and because wool prices are so low, it is the best value available in broadloom. While the ends of synthetic fibers elongate, look fuzzy and stringy under heavy traffic, wool carpet always looks fresh and new. That is because wool is like hair. The ends break off after years of heavy traffic creating a “new” fiber end that keeps the carpet looking new. That is why 100 year old Persian rugs can be worn almost to the back and yet still look great.

This all makes wool carpet a great value for the consumer - one that is also sustainable and environmentally friendly. With Just Shorn’s certified label they also get assurance of quality. This feels like a win for the sheep growers, the flooring industry and the consumer - it is surely an over-due development for a product whose time has come.

I’ll be at the IDG product launch and at the British Wool Press conference. I would love to see you there and hear what you think. If you can’t be there I’d still like to hear your thoughts.

Jim

Jim Gould, president and founder of the Floor Covering Institute
jgould@FloorCoveringInstitute.com

Tuesday, January 26, 2010

Do New Housing Stats Signal Recovery for Flooring Industry?

When is a “flat” housing statistic a good sign? When it halts a downward trend. A .2% increase in single family housing starts for 2009 over 2008 isn’t a sexy headline but it could be worse. Could this possibly mean we've finally found the bottom?

Despite some “bad news” headlines, new housing statistics released last week show a healthy increase in building permits - which is often a good indicator of what flooring and other housing dependent industries can expect in the coming months. Plus, single family housing starts, while down for the month of December, were virtually even over 2008. That's a big increase in permits plus no decrease in starts over last year. It's not time to celebrate but I'd like to be able to dust off the cautious optimism.

If you like dry statistics you can draw your own conclusions from the New Residential Construction Report released by the U.S. Census Bureau and the Depart of Housing and Urban Development with statistics for 2009 housing starts, construction permits, and regional construction data at http://www.census.gov/const/newresconst.pdf . Otherwise, here are a few highlights:

Building Permits…the good news and leading indicator of housing starts to come.
Applications for building permits surged nearly 11 percent in December to an annual rate of 653,000 – stronger than economists had predicted and the highest level since October 2008. This spike in applications might mean that builders feel the need to ramp up production before the home buyer tax credit expires later in the year. We should watch this carefully because we are a long way from seeing a safe level of mortgage delinquencies and foreclosure inventory. Single family permits rose 8.3 percent in December to an annual rate of 508,000. Multi-family permits for 5+ units rose nearly 21 percent in December.

Housing Starts. . . . not glorious but they could be worse.
Although some headlines are shouting that single family home starts fell 6.9% in December – a bigger than expected monthly drop likely to due to bad weather – I want to balance that with the fact that single family housing starts were up .2% over 2008. That's important because it represents the first year over year increase since March 2006. Also, multi-family home starts for 5+ units rose 12.2% in December.

The chart below: Housing Starts: Total and One Unit Structures, shows that we are in a flat trough - could this means that single family home starts have stabilized? Let's hope.

Graph from (http://www/calculatedriskblog.com/).

While everyone is waiting and hoping for a return to business as usual, and we are looking for good news wherever we can find it, we must moderate our expectation to be realistic. Four years ago we were building 1.8 million new homes in what we now refer to as “the bubble.” A realistic expectation is 1 to 1.2 million but it will take time to reach that level as long as unemployment remains high. Mortgage delinquencies and foreclosures have not yet peaked. In fact, foreclosures and 90-day past due mortgages combined represent 8.22% of total mortgages outstanding as of December and 55% of our national foreclosure inventory is located in many of the states that are key to the housing recovery. Housing guru, Ivy Zelman, says this problem remains "extremely concerning" and we should expect any housing recovery to remain muted until those select states deal with their problem loans.

The National Home Builder’s Association predicts 2010 housing starts will reach 697,000 . While I've seen stronger predictions, most seem to agree that it won’t be a steady climb from today; rather they expect a slow-down mid year and a stronger finish late in the year.

The bottom line is we have a couple of years to go for sure before we can feel stable ground under our feet, but ironically, with fewer competitors the survivors may find that this is not all that bad; the key is to survive as we climb out of the hole.

There are plenty of opportunities out there and I hope to see many of you at Surfaces next week. You can catch me at my seminar on importing, or shoot me an email. I'd love to catch up with you and next week is a great opportunity to see old friends.

Jim

Jim Gould is the founder and president of the Floor Covering Institute.

Thursday, January 21, 2010

Impact and Importance of Brand Equity in Floor Covering

Chris RameyBrand equity is an important issue for those in floor covering. For purposes of this post I’ll define brand equity as the value the brand brings to the seller or owner of the product or service. In other words, the brand brings significant cachet so that a customer will pay more for it.

Marty Collins, president of Gatehouse Capital and widely considered the “Father of residential hospitality” and I were dining together last week when he told me that adding a brand to a residential development adds about 30% to the value of the property. In other words, consumers will pay about a third more to live in The Ritz-Carlton, Four Seasons or similar residential development. Marty would know; he is opening the W Hollywood Residences.

It reminds me that in the last couple months I’ve heard four presenters ask their audience “What is branding?” The de rigueur answer is “it’s a promise.” Perhaps that’s accurate, but to me it’s too ethereal. According to Wikipedia “a brand is a distinguishing name and/or symbol, intended to identify a product or producer.” To others a brand is the positioning and/or the pillars to which it is perceived. In flooring, the general consensus is that consumers judge stores by the brands they carry; brand equity is likely the more relevant issue for those in floor covering.

Stainmaster, Karastan, Masland, Fabrica and Stark have brand equity. These are also the brands that were most often recognized by the wealthy when The American Affluence Research Center researched the flooring industry in 2008. But, you have to be cautious, brand awareness doesn’t necessarily manifest into equity. And equity rarely helps everyone in the channel.

Stainmaster adds margin for Invista. But, few manufacturers or retailers would claim they make additional margin on Stainmaster products. Unfortunately Stainmaster is a commodity and Invista is the only winner.

Karastan and Fabrica, on the other hand, have limited distribution. Brand equity allows Mohawk for Karastan and Dixie Group for Fabrica to increase their margins on their products. The opportunity for dealers to increase their margins is obvious. Unfortunately, most retailers who sell these products take a lower margin on them due to the perceived competitive nature of the marketplace or their lack of conviction. Too many retailers use Karastan and Fabrica as tools for positioning rather than the brand equity they present to the marketplace. This may be the greatest waste in the floor covering industry.

Stark, on the other hand, is the most interesting brand because it manages the entire process. It maintains the highest margins in the “retail” industry. As a side note; retail is probably the wrong term. Stark has less than 35 showrooms in the U.S. and they sell primarily to the trade. Key is that they’ve invested in their brand for decades, they source and merchandiseFabrica's Larochelle extraordinarily well, they’ve created separate channels of distribution, and they hold their margins. Stark is the best example of brand equity in flooring and perhaps the entire design trade. I’ve heard dozens of examples of retailers competing against Stark with a lower price and still losing the job. Brand equity still trumps low price.

Private labels rarely have brand equity. Perhaps you’ve found the consumer’s newly recalibrated values frown upon private label products because it appears you’re trying to fool them. Authenticity is important today. Authenticity means it has to be believable. I was driving down Brickell Blvd in Miami yesterday on my way to a keynote speech. A teachers union was picketing in front of the building. I’m reasonable sympathetic to teachers. However, the individuals who were picketing weren’t teachers. It was pretty clear to me that the union had hired the homeless. They were dirty and disheveled and looked woefully out of place. Are the private labels that hide from whence your product came akin to the homeless people picketing?

Customers are more informed, cynical and desirous of negotiating on price. They’re looking for a reason not to be attracted to you. Beating-up retailers is now sport. It’s another reason why brand equity is so important. We’ll talk more about this subject at my workshop at Surfaces “The 2010 Success Plan for Selling the Post-Recession Customer." I hope you’ll be there.

If you’re wondering if brand equity is important consider that Louis Vuitton consistently earns margins in excess of 62% - almost twice the average flooring covering product. If a product in the field is remotely considered damaged or an off-good they automatically destroy it. Vuitton would rather preserve their brand than discount a sale. Unfortunately, most floor covering stores earn 34% margin, discount daily, and are happy to accept a manufacturer’s credit to pacify a customer.

No one questions that brands are important. But don’t assume the brand you think has equity is helping you, and don’t confuse awareness with equity. It’s been a long time since DuPont originally invested in Stainmaster to make it a household brand. The dollars necessary to maintain that awareness may no longer make sense in our declining flooring market. It may be they only need to convince the industry rather than consumers.

The textile industry overcame the polyester brand by re-making it into “microfiber.” Under Armour created a new category with its polyester; oops, I mean microfiber products. Mohawk and DuPont did the same with Triexta. They all realized that polyester has negative brand equity.

How about you? Have you defined where brand equity benefits your organization? Is it possible you’re carrying a brand that emasculates your margins while enriching someone else in the supply chain?

Perhaps the proper questions are:
  • Why aren’t you leveraging brand equity (particularly for Karastan and Fabrica)?
  • Why sell any product if you have to take a short margin?

Look around your showroom and ask yourself these questions:
  • Which brands have equity and which have negative or no equity?

  • Can you define the fine line between brand equity, parity and commodity?
The answers may not be easy. Call me if you need help or would like to discuss your particular situation.

Back to my friend Marty Collins; he wouldn’t consider selling a product without a brand adding 30% to his top-line revenue. Should you?

Thank you for reading,

Chris

Chris Ramey is president of Affluent Insights and a member of the Floor Covering Institute.

Tuesday, January 19, 2010

Why Flooring Retailers Should Focus on Selling Solutions

...And not back over the flower beds.

Susan NegleyFrom tile floor installation to chimney sweeping, kitchen cabinets and landscaping, as a homeowner with responsibility for upkeep and all that goes wrong I have plenty of opportunity to hire people to work on my home. As a customer, my service experiences are routinely disappointing; sometimes absurd. Listening to customer service expert Lis Calandrino last week on Talk Floor reminded me that I’d really like to be able to raise my expectations and prompted this post.

Just Showing Up Does Not Equal Customer Service.

It totally amazes me what happens sometimes when I try to hire someone for a home improvement/repair job. Too often their response is: (a) None, because they fail to call me back or (b) they call me back and say, “Yes I’ll be there Thursday at 2,” and then they don’t show up.

Sadly, I have become thankful for those who just show up! Calling me back and showing up on time meets the first threshold of customer service for me. If they do what they promise and the bill is reasonably within the estimate I am thrilled. If they don’t leave half eaten lunches behind I get goofey with happiness. If they were to call me back to check on the job or see if I needed anything else I’d probably think they were stalking me. I know I’m not alone in this. My neighbors and friends tell the same stories. And when one of us finds someone reliable you can bet that the entire network begins to use them. We share business cards.

What's your point you ask? My point is - what an opportunity! It doesn’t take much to stand out anymore. With a little effort you can be everyone’s favorite service provider, flooring installer, retailer or distributor.

Lis Calandrino reminded me that showing up on time, doing what was promised, and cleaning up after the job should be assumed. If you send a thank you note or call and ask if things are going well or if I need more work done you will become the number one person on my list to call next time, and, I will recommend you to my network.

Why Selling Solutions to Women will Create More Business

I have become used to using the Internet to figure out my own solutions and then hiring someone else to execute them because too often the service provider leaves the solution search up to me. That's another thing I wish would change and Lis Calandrino got it right when she said:

Many in flooring/carpet don't understand [that] women don't buy products. They buy solutions. They want to know what the product can do in terms of the solution. " You can read her whole interview on Flooring the Consumer .

I will pay more for the comfort of knowing I can place my problem in your hands; you will provide options for me to choose and then you will execute the solution – without backing over the flower bed or leaving half eaten lunches behind. That would make me ecstatically happy. And if you called me back to check on the job I might still think you are stalking me but that’s a problem I’d like to get used to.

So... the next time a woman strolls into your floor covering store, don’t ask her what kind of products she wants to see. Ask her what kind of problem she needs you to solve!

Let her chose the solution then deliver and install it with minimal drama. Make sure her home is left in the same condition that you would want someone to leave your home then check back later and see if there are any other problems you can solve for her, or for someone in her network. I bet you will find there is no shortage of problems for you to work on.

Let's talk about customer service. We all have stories of good experiences and bad ones. I love hearing about them and oh the stories I could tell.

Susan

Sunday, January 17, 2010

Update: What's Happening at Domotex Today

Jim Gould



After a year in the doldrums, the global floor covering industry is finally getting together at the largest international floor covering exhibition at Domotex in Hannover, Germany. The show brings a vast and mixed offering of products, information and experiences that have been developed during the last year. Many manufacturers target Domotex as their global launching platform for new introductions and innovations. Here are some quick notes and thoughts from the first day of the show. The picture below shows laminate flooring on display.
Laminate Display at Domotex 2010
  • Powder” or "Paper Free" technology for laminate flooring has improved dramatically. The innovation is being led by Valinge and Kronotex. This technology eliminates the need for décor paper and, therefore, balance backing paper, and carries an ecological story since it uses recycled HDF to create the wood fiber. It also increases wear and impact resistance. You can read Valinge's press release at this link. The driving goal of lower production cost doesn't seem to have been achieved yet and design and color flexibility appears rather limited. Still, I applaud Valinge for their continued efforts to perfect this technology since it could become the production method of the future if improvement continues.
A large North American contingency is attending this year’s show as exhibitors, shoppers and buyers. Monday and Tuesday this group will be able to tour German retail DIY "Big Box" stores for the first time. Germany has over 4,000 DIY outlets and this channel plays a large role in the overall distribution of flooring, especially ceramic, in Germany.

No chance to shop for innovative products - yet - but I’ll quickly report anything that is exciting in my next blog post. Wish you were here, but if you aren’t I’ll just have to drink your allotment of German beer!

Jim

Thursday, January 14, 2010

Moisture in concrete wreaks flooring havoc; learn why it's getting worse

A problem with concrete moisture causing vinyl flooring complaints has increased in epic proportions lately – it’s an epidemic in the making and flooring consumers, retailers, distributorsLew Migliore, manufacturers, general contractors project manager, specifiers and architects need to take heed. Unless addressed it will continue to create massive installation failures costing the flooring industry, installers and end users tens of millions of dollars annually.

In the past two weeks LGM and Associates has had four installation failures reported to us that stem from moisture in concrete – three in hospitals and one in a school. All of the installations involved homogenous sheet vinyl flooring with welded seams and in each case the flooring was lifting off the substrate. These four cases could represent over 2 million dollars in liability. Multiply that number by 10, and that’s being conservative, and you get an idea of what is lurking out there in the mine fields of flooring installation. Dealing with these issues is now the fastest growing part of our business.


Why is this happening?

Flooring complaints can occur whenever flooring it is installed over concrete substrates if the moisture content of the concrete is too high - whether it’s a basement or a high rise, a home or a school. In the case of these four complaints - one was linked to the make up of the concrete itself, in another the building was not properly acclimated prior to testing of the concrete and installation of the material. And in another the building was built over a marsh; the concrete extraordinarily thick, the spec was not followed for testing and communications went awry.


Is this a problem limited to vinyl flooring?
Concrete moisture trapped under LVT flooring
The problem isn’t limited to vinyl and the issue will get worse as new flooring materials are introduced with recycled content backing that is non permeable; that is to say that does not allow anything to pass through it. These new products include carpet as well. Welded sheet vinyl is not permeable therefore any moisture build-up will be trapped beneath it looking for a place to escape and pushing the material off the floor in the process. The picture to the right shows moisture that seeped through concrete and was trapped between the concrete and LVT flooring.


What is the fix for this kind of complaint?

The fixes are not easy, they are very invasive, interrupting to business and unbelievably expensive. These are situations that you want the most knowledgeable, experienced and reputed individuals involved to help bring a resolution and solution.


What can I do to make sure I don't encounter this problem?

This isn’t a product issue; it’s a failure to understand and communicate the product specifications and know the consequences if they are not followed. Sometimes architectural specs are not written clearly or followed. One of the biggest problems is that everyone’s in a such a rush to complete a project - as if taking the time to do it right means the end of the world. Often the project is finished on time but more money is spent after the fact fixing things that should have been done right the first time. Common sense isn’t common in these cases.

When installing floor covering of any kind one of the most important areas of concern is the substrate; it must be clean, dry and free of any contaminants or foreign materials that will prevent the flooring material from being and staying installed. Moisture in the substrate is the greatest of these concerns. It's important to know what the moisture content is in the concrete and to make sure that it is consistent with the specifications of the flooring being installed.

Every flooring dealer whether in the commercial or residential market must be aware of moisture. The same problem can occur in the basement of a home installing a few hundred square feet of luxury vinyl tile that commercial dealers have installing thousands of square feet of sheet vinyl.


Is there anything happening in the industry to help?


There is a big movement in this direction right now and the first certification program offered to individuals who work is this area is being conducted at the World of Concrete 2010 in Las Vegas being held at the same time as Surfaces 2010. One of our associates does the certification program for World of Concrete.


How can I learn more about this?

You owe it to yourself to learn as much about this issue as you possibly can. Research it on the Internet, or contact us for help. I have written about concrete moisture problems with floor covering in the Commercial Flooring Report and the Claims File that appears regularly in Floor Covering news. A compilation of those articles are archived on my company’s website.

At Surfaces I will hold two education seminars on Wednesday, February 3rd and this issue will be covered in both of them. This link will take you to the full schedule of education seminars being presented by my Floor Covering Institute colleagues and provides a summary of my sessions and links to Surfaces registration.

This is an area where you must be proactive as being reactive is far too expensive. If you have comments, or questions we’d love to hear from you. This is a very involved and hot topic covered only briefly here.

Thank you for reading!

Lew

Lew Migliore is President of LGM and Associates, a technical consulting firm specializing in all aspects of product and installation performance and education. He is also a consultant with the Floor Covering Institute.

Tuesday, January 12, 2010

China Has Awakened. Are You Ready?

Christine B. Whittemore

Why China Should Matter To You - In Flooring Or Beyond.



Whether you're involved in doing business [flooring or other] in China - as Jim Gould is - or not, you've surely been affected by China. I have, twice. In both cases with businesses firmly established domestically [perhaps you remember the Brooklyn based sweater industry? or what about the residential upholstery fabric market?] that disappeared almost overnight to reappear in China.

This isn't a post about gripes, but rather about change and opportunity inherent to living in a global environment, given curiosity and knowledge.

In 1973, I was a kid living in French-speaking West Africa. My French grandmother came to visit bringing with her a book titled Quand la Chine s'eveillera... le monde tremblera [when China awakens..., the world will tremble]. I was mesmerized.

What's wrong with China, I asked? Why will the world tremble? Should I be afraid? The image of a slumbering giant awakening and shaking the world stuck.

The image was with me when I visited China in 1991. And, yes, I experienced a giant, but a vibrant one where single-minded focus seemingly made massive hand-built public works projects [i.e., multi-mile highways, transforming a mountainside into farmland...] look like child's play.

Quand la Chine s'eveillera..., the monde trembleraI've not been back since, but I'm more aware than ever because of conversations relating to the Floor Covering Institute about our global marketplace. Although global often means intense change, it can also signify immense opportunity given knowledge, an open mind and a willingness to consider possibilities.

Global possibilities may relate directly to China, or not. They may relate to other countries and they may simply offer a different perspective on an opportunity you face in your immediate marketplace.

To that end, I plan on sharing with you here digital resources to help with understanding global opportunities, starting with China. I'll add links to these resources in the Floor Covering Institute Blog sidebar.

That way, you'll be ready for an awakened society wherever it happens.

First Resource Focuses on China Consumers



Here is a first resource that looks at consumers in Asia Pacific:

I discovered in via this article titled The Power Of The 50+ Market in Asia Pacific by Kim Walker from SILVER "a marketing consultancy that helps companies leverage the opportunities presented by the rapidly expanding 50+ market across Asia Pacific."

The article mentions that, as in Western Society, the 50+ population is large [in China, "50+ is already greater than the entire population of the U.S. and will grow dramatically in the coming years, while at the same time, the under-50's will shrink by 117 million"], and wealthy. Be sure, though, to note differences in attitudes between obligations to family vs. to self. SILVER offers a research report dated January 2009 on the subject.

Kim Walker writes the SILVER blog which is filled with insights about consumers in Asia Pacific. You can specifically sift through his posts about China and other Asia Pacific countries, or simply follow his fascinating observations that are just as relevant for our 50+ consumer marketplace.

Let me know what you think; and think about which country I should explore when I get done with China!

~ Christine

cbwhittemore@SimpleMarketingNow.com

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Thursday, January 7, 2010

Flooring and the Internet - Now I’m a Believer

David WoottonI am certain I am not the only baby boomer who only fairly recently discovered the world of the Internet. Having since turned into a true believer of its benefits, I also believe that more and more people of my generation will use it to research floor covering products prior to visiting bricks and mortar showrooms.

Since birth I have been classified as part of the “baby boomer generation." This generation has always been an important demographic especially now that we are “older boomers” and are (or were before the economic disasters of ‘08 and ‘09) at the peak of our spending power -making decisions about where and how we want to live and how we allocate funds to these decisions.

Something we baby boomers have navigated through the past 50 years is the "technology revolution.” I didn't grow up with a laptop on my nightstand. The first computers were the size of a house. Today, all the information we need can be carried in a small hand held device with access to the Internet where we can find everything we need to know about anything - except perhaps the “meaning of life” and even then there are sites that profess to know this.

For pretty much all of my life I have been “technophobic” - avoiding any new electronic device and technology I could, preferring instead to rely upon my “executive assistant” to help with correspondence, arrange my calendar, flights, hotels, restaurant reservations, etc.

My forced introduction to technology came in 1999 when I was appointed President of Columbia Flooring. On my first day, I was handed a lap top computer and given an e-mail address and a 30-minute introduction on how to use it. Welcome to e-mail! This was a truly life changing experience.

Over the next 10 years I became a little more adventurous with forays into the world of the Internet to research companies, financial information and of course to follow the daily happenings in our industry via electronic media like Floor Focus and Floordaily.net and Talk Floor. Then the beginning of 2009 brought a major change in my life. Retirement (apart from my involvement with the Floor Covering Institute, of course).

Suddenly I found myself technically alone; no MIS department to call and no assistant to arrange flights and hotels. My wife and I began spending more time away from home which brought the additional complications of paying bills, tracking investments, flight details, etc. I had no option but to learn to rely on my lap top and the Internet. I had to make myself more computer savvy - something I never thought possible. I didn’t realize how straightforward it would be, given time and patience, -things I didn’t have so much of in the past.

Over the past 12 months I have discovered Internet banking. I book flights, hotels and restaurants on line and research lots of “stuff” on the Internet.

Now, if you are still reading this you are probably wondering “where is all this leading?”

Last summer we decided to remodel a bathroom in our house in England. We spend most of our time in Atlanta which meant communicating with a contractor who was 4,000 miles away. How could we discuss the project and research the materials needed? The answer of course was the Internet. We were able to choose from literally hundreds of options from bidets to baths, to sinks and shower heads, wall and floor tiles and even ceiling lights. We even agreed on specifications with the contractor without ever meeting him. (We did of course check all his references!)

At the same time I took the opportunity to research floor coverings and discovered a myriad of information available from all segments of the industry. So finally, here is my point:

I began this blog post by talking about the baby boomer generation and the important demographic they represent. I am certain that among my generation my latent Internet savvy is not unique nor is my belief that more of my generation will use it to research products prior to visiting bricks and mortar showrooms.

This represents a huge opportunity for manufacturers, distributors, retailers and contractors to attract a new audience so it is vitally important to ensure your websites are current, user friendly and very informative. I believe consumers are more interested in the product information than any discount offers.

For more information about this subject visit Simple Marketing Now and see what my Floor Covering Institute colleague and social media expert, Christine Whittemore, says about this and other ways to use today’s technology to improve your selling opportunities.

To those of you in the industry who are not computer savvy, if an old dog like me can learn new tricks please give it a try and you will find a bright, new world out there.

The Monkeys sang “Now I’m a Believer” and I truly am. How about you? I would love to hear what you think and as always if you have, thanks for reading this.

David

Tuesday, January 5, 2010

Catalina says Floor Covering Sales Expected To Begin Recovery in 2010

FLOOR COVERING STATISTICAL TRENDS AND OUTLOOK

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. The following is an extract from Mr. Hirschhorn's most recent Floor Coverings Industry Quarterly Update.

The U.S. floor coverings market is finally seeing the light at the end of the tunnel. Catalina estimates that U.S. floor coverings square foot sales (shipments minus exports plus imports) could see only a 4.0% decline in the fourth quarter of 2009 over the same period for 2008. This could be the first time, since the first quarter of 2007 U.S. floor coverings square foot sales will not decline at double-digit rates. This improvement reflects the turnaround in U.S. housing demand during the third quarter of 2009 as existing home sales increased by 4.7%. This indicates that the rebound in floor coverings sales will be led by recovery in the residential remodeling and replacement market. Meanwhile, the builder market remains weak and nonresidential building construction spending is falling sharply.

The turnaround in existing home sales is due to increased affordability as average home prices and interest rates declined, and government programs to stabilize the housing market, especially the $8,000 first time home-buyers tax credit. The turnaround is especially important to floor covering manufacturers and retailers since some 10.0% of homeowners invest in new flooring in the first year of ownership.

Despite the improved economic environment for the U.S. floor coverings market in the fourth quarter, the entire year was quite weak. Square foot sales are estimated to decline by 13.4% for all of 2009 to 17.7 billion square feet. This is close to a 40.0% decline over the past four years. Dollar sales are estimated to drop by 16.9% for all of 2009 to $16.8 billion. This is worse than the 11.5% decrease in 2008, and reflects a 4.0% decrease in average prices as customers shift their preference to lower-priced flooring. Dollar sales are about one-third below 2005 levels.

The flattening out of U.S. floor coverings sales (shipments minus exports plus imports) is expected to continue in the first quarter of 2010. This is based on the 23.3% increase in total U.S. housing demand estimated for the fourth quarter of 2009. This gain could be led by a 30.0% surge in existing home sales, boosting the importance of the residential remodeling and replacement market even further. These gains are benefiting from the extension of the first time home-buyer tax credit and the addition of an existing home-buyer tax credit. In addition, interest rates continue to be held down by Federal programs and average home prices remain low.

As a result, Catalina estimates a small drop in square foot sales in the first quarter of 2010 with sales turning upward in the second quarter. Square foot sales are seen rising about 2.0% in the first half of 2010 and 3.0% to 4.0% for the entire year. Dollar sales are estimated to rise by 4.0% to 5.0% for all of 2010. This indicates that average prices could rise. Average prices are expected to rise as manufacturers try to recapture pricing power as demand grows and consumers seek out higher value flooring as their confidence in the recovery rises. However, overall sales trends will be held down by continued sluggishness in the builder market and a relatively sharp decline in the commercial market.


I hope this information is helpful. I'm always interested to hear from you to learn what is happening in your area of the world. What is happening with remodel sales in your area?

Stuart