Lee's Area Code

By Steven Feldman
Chicago—When the final curtain closed on NeoCon 2006, the premier event for the commercial contract market held here June 12 to 14, there was no doubt this segment continues on the comeback trail. Official figures were not available at press time, but when the dust clears all indications point toward a record-setting performance.

Mark Falanga, senior vice president of the Merchandise Mart, proprietor of NeoCon, reeled off some impressive stats when comparing this year’s version to 2005:

• Pre-registration was up 37%;

• Exhibitor registration was up a total of 40%;

• Seminar registration was up a total of 82%;

• Student preregistration was up a total of 31%, and

• Exhibitor numbers set records, 50 more than last year.

“I sense we are on track for the most attendees ever,” Falanga said minutes before the show closed on day two. Why? He broke it down into a pair of factors: marketing and the economy. It begins with the Mart’s most extensive marketing campaign in NeoCon’s 37-year existence. Specifically, multiple pieces of direct mail were sent to 200,000 members of the A&D community. Couple that with more than 100 ads in 40-plus industry publications, and to say the Mart spread the word is as much an understatement as referring to the aisles as populous.

Testimony was provided by just about every exhibitor with whom FCNews spoke. Take Kathleen Keller, director of marketing for the EcoSurfaces rubber flooring division of Dodge Regapol, for example. “This show has been unbelievable. After a day-and-a-half our leads are up 200% over the entire three days last year.”

And Randy Phillips, national sales manager of commercial at Wilsonart, referred to the show as “excellent. Traffic has been great, we have gotten quality leads and energy has been generated at the booth.”

Not to be outdone, Laurie Lyza, marketing manager for Crossville Porcelain & Stone, referred to NeoCon as “absolutely amazing” and said she was told traffic was up as much as 40%.

But for a show to realize its full potential, even the healthiest marketing campaigns need cooperation from the economy. And that is the landscape in 2006. “Companies have freed up capital spending, particularly in the corporate segment,” Falanga said. “There is plenty of pent-up demand. As such, companies are allocating resources for improvement.” He noted that much of the purchase activity is being fueled by landlord concessions. “There is a lot of relocating going on as companies seek to upgrade their facilities.”

Pent-up demand is also driving the hospitality segment, according to Greg Wittlinger, senior vice president of marketing for Mohawk Commercial, whose revamped showroom highlighted its portfolio of brands— Karastan, Durkan, Mohawk and Bigelow—along with its environmental story. “Hospitality is on fire. There’s so much pent-up demand caused by 9/11, SARS and the war in Iraq. If hotels are not building they are refurbishing.” He noted this is a result of an aging baby boomer population, which controls the lion’s share of disposable income in this country and is spending a significant portion of funds on travel. The Durkan brand is the largest player in this segment.

But hospitality isn’t all that makes Wittlinger smile these days. He noted corporate is coming back, although not near record levels, and healthcare and government work remain strong. “Healthcare is being driven by an aging population, and all designers seek a healing environment. Carpet promotes that.” As for product specifics, broadloom is relatively flat but modular is soaring. In fact, it could be as much as a third of the business. To that end, Mohawk and Bigelow launched an array of modular products, and Durkan rolled out nine carpet tile products called Mind, Body & Soul.

The modular story was repeated at the Lees showroom, where Natalie Jones, vice president of brand management, noted the company was showing more modular “because that’s where carpet seems to be going.” To that end, Lees launched a modular customization program within its Design Studio. The program offers 100 patterns which range from geometric to organic. A 250-yard minimum benefits from a 24- to 48-hour turnaround.

Wittlinger is especially excited about the rebranding of the Karastan and Durkan lines and remassaging of the showroom. The theme was dubbed “inside out. “The Mohawk brand has always been known for performance, technology, sustainability and lifetime warranties.” That’s the inside part. “But the look, or the outside, needed some work.”

Hence, the rebranding. Karastan is getting a new logo, new ads, a new attitude, Wittlinger said. “We are taking a classic and making it contemporary through color.” Durkan, too, gets a new logo, ads and Web site; it will be positioned as a fashion brand with a bit of “edge” to it.

Business is equally robust on the hard surface side. Over at Armstrong, Dominic Rice, vice president of commercial resilient products, told FCNews the company enjoyed a much stronger first half versus. 2005. “At this time last year we were seeing projects being delayed,” citing the availability of steel as one of the culprits. “We saw it coming back in the fourth quarter of ’05.” He added healthcare, the largest commercial segment for Armstrong, has been leading the way, and he, too, sees corporate coming back.

Rice attributed Armstrong’s recent success to an array of new product launches over the last 18 months. “Customers are recognizing all that we are offering.” Chief among these launches is Natural Creations, the collection on which Armstrong was focusing at NeoCon.

Launched at NeoCon ’05, the LVT is taking off, he said. “It is a collection that spans many design categories, from wood and stone visuals to ‘fun stuff’ like bamboo in playful colors.”

Much of the good news reported by Armstrong was echoed at the Tarkett booth, where Diane Martel, vice president of marketing, was enjoying an 8% to 10% uptick in business over the first half of 2005. “The commercial business is strong. Projects [on the drawing board] finally came through. Also, healthcare and education are increasing their square footage.”

Healthcare is being enhanced by an influx of clinics, she said. “An American turns 50 every seven seconds. There is a growing need for clinics of all types.” Tarkett’s Optimum homogeneous sheet has been the segment star. “It’s an IQ product, meaning low maintenance, low lifecycle cost and it restores itself.”

Education is being driven by a pair of trends, Martel said. In the Northeast, many schools are in the 30- to 40-year cycle and need remodeling. And in the Southwest, there is a growing population with a Hispanic influence. “They tend to have large families, which creates the need for more schools.” For this segment, Tarkett is having success with its Cortina Grande homogeneous tile, “a high-performing tile with a low lifecycle cost.”

Retail is only doing “relatively well,” she said, noting many malls across the country are being replaced by outdoor “lifestyle centers,” which are basically open-air shopping areas “that creates less square footage in this segment.”

The other component of resilient flooring is rubber, and this category is also doing well, according to Jeff Krejsa, vice president of marketing for Johnsonite. “Business has been fantastic. Our commercial introductions in 2005, which brought new textures to rubber flooring, created interest in the category beyond its functional attributes. It has sparked the interest of designers and architects,” He noted there are now many more options than the typical raised round texture.

Johnsonite at NeoCon was looking to build on the momentum gained from those 2005 intros and was talking aesthetics rather than the traditional functionality story. “Our focus is less about product and more about what we offer,” he said. “It’s about giving the designers the freedom to design and providing the right solution for the space.” Krejsa was touting the company’s texture, color and pattern customization capabilities, where the designer can mix and match to create a unique floor.

Healthcare and education are the hot segments for rubber, although he, too, is seeing corporate coming back. “Vacancy rates are going down.”