• S&P downgraded US credit rating.
• The European banking crisis intensified.
• Stock market volatility like never before.
• The formation of a “super group” to determine what spending cuts are to be implemented.
• Another debate between the Republican candidates for the Presidency which by the way is still 15 months away.
So how is any of the above going to improve business conditions for you in the near term?
It is not. What we need is action to stimulate the housing market to bring back the good times.
What are the experts telling us about this?
The S&P Case-Shiller is the leading measure for the US residential housing market. Its 20-city index of prices has fallen to where it was in 2003. Housing prices in Phoenix are at 2000 levels while in Las Vegas it’s 1999. Some of the experts think we may have reached the bottom but none of them agree on when we will start to see sustainable increases in housing starts.Some seem to think it could be as early as the end of this summer or late fall, but lets face it given the events of the past week this is surely a long shot. So no help from new home construction in the near future.
So who is going to improve your business?
At this stage I am reminded of a presentation I heard back in 2000. It was delivered by Pat Williams the Senior Vice President of the Orlando Magic Basketball Franchise. The subject was leadership and he passed on this quote:
“If it is to be, it is up to me."
In other words, the only person you can rely on to improve the situation in the near term is yourself because nobody and nothing will do it for you. The quote about self reliance applies to managers in each channel of our industry, be they manufacturers, distributors or retailers.
Here are my unsolicited suggestions to each of them:
• Stop trying to improve your position by invoking “protectionism” as recently demonstrated in the on-going countervailing and anti-dumping battle which I believe was essentially waged against US distributors as well as Chinese manufacturers.
• If you cannot exist in harmony with your distribution network find a better channel to market.
• Invest in human and physical resources to come up with innovative new product development and reductions in production cost.
• Send some of your people to emerging markets such as China and India to see how their market is growing and what products you can viably provide to help support this growth.
• If you are looking for inspiration read Mohawk’s press release detailing their second quarter earnings and you will find phrases like:
A few years ago Mohawk was a US manufacturer of carpet. Today it is truly a global flooring manufacturer of carpet, ceramic, laminate and hardwood who typifies “If it is to be, it is up to me."-- Our operating margin improved as a result of continuing cost reductions throughout the enterprise.
-- Our ceramic tile business in Mexico is expanding and we are constructing a plant in Mexico City.
-- European flooring is gaining share in a challenging market.
-- We are growing our customer base to support the new plant under construction near Moscow.
-- We are close to completing a major investment project in our Malaysian wood plant
-- We are introducing new innovative products.
• Decide whether you want to be a channel partner for a manufacturer branded product or be a powerhouse in your own market using your own exclusive brand either outsourcing or importing floor covering products.
• Realize just as no man can keep two wives happy at the same time you cannot enjoy a good loyal and faithful relationship with a branded manufacturer whilst at the same time selling your own competing products.
• Become focused on what is expected by your customers - inventory availability, on-time deliveries, customer service, training, product support and claims resolution.
It amazes me that despite everything that is happening in the world retailers continue to believe and state that it is Lumber Liquidators, Home Depot and Lowes who are killing their business.This is nonsense…..sure they are big but they are also bringing the products you sell to the notice of consumers, free advertising if you like.
• Take advantage of this by offering consumers a better value proposition (not necessarily a lower price) by using your expert product knowledge regarding products, installation, maintenance details etc.
• Read Kim Gavin’s excellent article, Competition to make you better, in the July from July in the July 4/11 edition of Floor Covering Weekly. Its full of excellent advice and commonsense.
No one is going to help you. It is up to management to develop strategies, get buy-in from the rest of the organization and then turn strategy into reality AND if the strategy is not working before confronting the organization look in the mirror and remember “If It is to be, it is up to me."
Finally, there is a second line to the quote - “If it is to be, it is up to me and if it is up to me, it shall be."
As always thanks for reading this, please let me know how you are making it be!
David Wootton is President of The Wootton Group, an independent flooring consultancy, and a member of the Floor Covering Institute. He is past CEO of both Columbia Flooring and Harris-Tarkett.