Article Number : 5011 |
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| Date | 10/27/2009 9:51:05 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=5011 |
| Abstract | NAPLES, FLA.—When 35 of the brightest floor covering retail minds from North America converge, not only does everyone emerge as smarter individuals, but you also get a representative pulse of the industry. And that’s what happens... |
| Article | NAPLES, FLA.—When 35 of the brightest floor covering retail minds from North America converge, not only does everyone emerge as smarter individuals, but you also get a representative pulse of the industry. And that’s what happens twice a year when members of the National Floorcovering Alliance (NFA) get together. Such was the case two weeks ago here, and if the group is indeed a barometer, then the worst of things is behind us. While no one is overly optimistic about this winter— and it will be quite some time before business becomes robust—just about every NFA member is seeing signs of life, albeit inconsistent, and agree it will be a slow, steady climb. That is certainly the case for Baker Bros., the seven-store Phoenix retailer. “Business has definitely improved,” said Phil Koufadakis, president. “September was our best month of the year. We are on a run. The question is whether it will be sustained. October will be a good bellweather but I think we are moving in the right direction.” Koufadakis noted that Phoenix felt the effects of the recession early on, so it only makes sense that the city is among the first to feel the recovery. “While I don’t anticipate any great rebound, barring any tragedies that are out of our control, I think we will see improvement going forward.” Things are also looking up in Green Bay, Wis., where NFA president Jeff Macco, president of Macco’s Floor Covering Center, is no longer seeing any declines. “Business has flattened out,” he said. “Consumers are getting back into the market. We actually made money over the last six months—unfortunately not enough to negate the loss of the previous three months, but we are optimistic. I definitely think we are on the uptick, but this fall will be critical.” He added that the business is all remodel replacement and most of the business is still mid to upper end. Even the builder business is coming back a bit, according to Mike Geisler, president of Mid-Atlantic-based L&L Co., the only remaining NFA member whose business is 100% builder. He believes much of that can be attributed to the $8,000 tax credit for first-time homebuyers. “They have to settle by Nov. 30 to be eligible,” he said. “It falls in line with what the builders are selling these days: smaller houses. But they are houses, and they are putting product in.” However, Geisler is expecting business to fall off in the first quarter. Then hopefully Congress will pass another tax credit to help things move into the second quarter. “They are trying to get a $15,000 credit passed that will help move-up buyers.” About 100 miles north on I-95, Richard Longwill, owner of the 10-store, Delaware/ Pennsylvania-based Carpet Mart chain, has also seen an uptick. “More sales slips were written for August and September since 2006. We’re hoping October, November and December will be the same.” He attributes the activity to people wanting to fix up their houses for the holiday season, along with an increase in consumer confidence. The bad news is that margins have gotten much tighter because of labor. “Everyone has had to adjust their prices in response to the big box’ $39 install.” As for specific products, Longwill is doing very well with Mohawk’s SmartStrand fiber, along with multicolor shags. “But our basis is still textures,” he said. “And there is still a large market for low-end goods.” Business is also up at Carpet King in Minnesota, where lately every month has been better than the previous one. However, things have flattened out a bit, and Steve Brannen, COO, thinks he knows why. “Some of the incentive money that has been spread around may have moved to a vehicle instead of floor covering [thanks to the Cash for Clunkers program]. Our hope is that with that over, things will pick up again.” Brannen said today’s customer is shopping for value, regardless of their income. “For us it’s been all about managing margin and finding the right buys. We’re trying to focus on key products where we have a market advantage and spending less time trying to be all things to all people. We’re trying to be important to fewer vendors and negotiate special deals. We’re trying to get some differentiation from everyone else out there.” Then there is the four-store Flooring 101 in affluent Ventura County, Calif. This retailer is like the rest of NFA members in that business is showing signs of life, but it is unlike the group in that business never got bad. “The bottom is simply [a figment] in everyone’s mind,” said Jimmy Poulos, president. “If you want to find an excuse to fail you will find one. Of course, we have to work much harder, we have to think out of the box. We are doing things we have never done, like different advertisements, parking lot sales, midnight sales, direct mail. All of that has helped us gain market share.” Poulos added that every retailer has no choice but to execute better. It’s because the people who are buying today are spending money they earned as opposed to tapping into equity lines. “You have to demonstrate the fashion part of the business. You have to demonstrate the service and the value.” • As it looks to grow its membership, NFA welcomed Columbus, Ohio -based Levi 4 Floors into the fold. “We think he brings a lot to the NFA,” Macco said. “He is more than willing to share his ideas, promotions and products with the group. That is exactly what the NFA is built on.” • NFA is looking at another inventory purchase as a group. “We are trying to funnel some very competitively priced carpets, backed up with the promise of a substantial increase in business,” Macco said. “First we approach the members and ask what price point, which fiber, which type of carpet would be key to their success. Then we approach the vendors with a specific commitment of rolls and see who will give us the best deal. We hope to place that buy at Surfaces.” The last such deal was to the tune of 2,700-plus rolls and $5 million, which has brought more mills to the bargaining table this time, Macco said. • At the group’s last meeting in Mexico, there was discussion on the possibility of raising the $10 million minimum threshold for membership or expelling a member who falls below that number. The decision was made to shelve both discussions until the economy turns. • In its never-ending effort to provide members with added value, NFA challenged its vendors to think outside the box and be creative with their promotions, terms or delivery. As an example, Macco said one vendor was wanting NFA to give input and help create its new launches for next year. • From a housekeeping standpoint, NFA wants to get members more involved. To that end, vendors’ first contacts will now be with the committee chairs rather than the board. —Steven Feldman |