Skip to main content

Floor covering consumers turn cautious

FLOOR COVERING STATISTICAL TRENDS AND OUTLOOK

How was your flooring business this summer? Was it disappointing? Did customer counts come in lower than anticipated? Did buyers express even more preference for “value” products? Where did the optimism go for a 2010 recovery?


I was optimistic earlier in the year when I posted "Catalina says U.S. Flooring Industry Set For Spring Thaw-Who Will Benefit?". In that April post I indicated that there would be a recovery in the second quarter and the recovery would accelerate over the entire year. Recent data shows that there was a 4.3% increase in U.S. manufacturer square foot floor coverings sales in the second quarter over the previous year. This was the first increase in U.S. demand in almost four years as retailers restocked in anticipation of rising consumer floor coverings purchases.

However, as a warm spring turned into a hot summer, a series of events turned your customers cautious. The following events turned a spring thaw into a summer stuck in the mud:

• The Flash Crash in May, when the U.S. stock market plunged 600 points, unnerved investor confidence in the stock market and contributed to a renewed decline in household wealth.

• The Greek Meltdown made consumers finally consider the adverse effects of the soaring debt levels of federal, state, and local governments.

• The Gulf oil spill reopened the discussion about the lack of a U.S. energy policy, and how quickly prices could rise due to a supply disruption.

• Consumers began to digest how health care, financial service, and tax legislation will impact their own household budgets, while U.S. employment levels continued to decline.

These events caused consumer sentiment to decline in early September to its lowest point in over a year, according to the Thomson Reuters/University of Michigan survey. As sentiment declined your consumers spending habits and outlook changed. They....

• Cut their debt levels and increased their savings rate as households worked to increase funds to pay for rising health care costs and offset the shortfall in company and government retirement plans.

• Reduced their purchases of new and existing homes. Existing home sales declined by 26.9% in July, after consumers increased their purchases for existing homes at a double-digit rate in the first half of 2010. Builders also sharply reduced their starts of new homes in recent months.

• Slowed their purchases of building materials and home furnishings. In fact, the sales decline at specialty floor coverings stores accelerated in July.

These consumer actions are estimated to cause U.S. manufacturer square foot floor coverings sales to slow to an estimated 1.6% gain in the third quarter of 2010. Sales could grow at a similar rate in the fourth quarter of this year. This sluggish recovery is expected to continue until consumers regain confidence in their ability to get a job, improve their ability to pay for medical care and save for retirement, and trust in their government to meet its obligations without bankrupting the country.

This may take some time. Let us know how the above events changed the attitude of your customers, and how they have changed their spending patterns over the past few months.

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.

Comments

Popular posts from this blog

Concrete Moisture Leading to Flooring Failures - Is this an Epidemic?

Sheet vinyl  lifting off concrete substrates that looks like blistered skin from a burn, wood flooring turning up at the edges, carpet tiles emitting foul odors from reactions with “wet” slabs.  All of these failures in floor covering occur daily around the country plaguing flooring contractors and end users.  Is this a flooring conspiracy or something more sinister?  Well, it’s not a conspiracy, nothing so colorful as that, and it’s not sinister unless you consider that moisture lurking in the substrates is skulking around waiting to pounce. What are the reasons for this outbreak of flooring failures?  Have adhesives changed?  Is flooring material different?  Hasn’t concrete been the same for years?  Why is this all happening now? Adhesives have changed from when solvent carriers were used but adhesives are actually better now.  Flooring products have changed with the onslaught of non-permeable backings which can trap moisture vapor emissions coming from concrete.  Concrete hasn’t

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 challeng

Will Chinese Drywall VOC Issue Affect Flooring?

Chinese drywall shares commonalities with flooring, particularly as it relates to VOCs. If you’re new to the flooring industry you may be surprised to learn that last decade it was necessary for the Consumer Product Safety Commission (CPSC) and the Environmental Protection Agency (EPA) to anoint carpet as a safe product . The proclamation was due to flawed tests perpetrated against the carpet industry by Anderson Laboratories . But the issue isn’t dead if you search the Internet. There are still sites that support Anderson Labs. Even a "green" industry site writes “ A rash of alleged health problems with carpet have yet to be properly explained, suggesting that all carpets, and especially the less expensive synthetics, should be used with great caution .” The drywall industry is going through a similar experience. Two major differences: 1. They’ve pinpointed it to some drywall made in China. 2. It’s true and real, and no one is suggested it isn’t destroying homes and p