Steven Feldman

At the recent Abbey Carpet & Floor convention, members were given the opportunity to hear Tom Lape, president of Mohawk Residential, and Randy Merritt, president of Shaw Industries, speak on a vast array of topics. Each brought a wealth of information and advice to the table.

Lape acknowledged that the economy has left the flooring industry in a bit of a crisis state, but that does not necessarily represent danger; it can actually represent opportunity. Much of the crisis stems from the lag in the housing market, which saw new home sales drop 16% in 2006 and sales of existing homes off 8%. “When you take into account that builder represents 30% of the industry, the significance is evident.”

While builder is expected to continue to struggle at least through the first half, Lape noted that the opportunity lies in the fact that when this segment slows, residential replacement traditionally comes back. “We expect the consumer to come back and remodel.” Here’s why:

• There is $120 billion sitting available for home equity loans
• Interest rates are at historical lows
• Unemployment is stabilizing
• Consumer confidence is at its highest level in five years
• Inflation is moderating
• GDP in 2006 is higher than the prior 20-year average

Most important, Lape said the downturn is going to create pent-up demand. He advised retailers to be poised to capitalize. “We live in a cyclical market,” he said.

Lape also stressed the importance of marketing to women. It’s a no brainer when you consider they control 94% of all home furnishings decisions in dual-income families. “She is educated on product more so than ever before thanks to all the information available on the Internet; she is also more design daring and not afraid to buy on credit,” he said.

Lape also told retailers to be cognizant of the values of today’s female shopper. For example, more than ever, she is more demanding of her time. Thus, she will shop fewer floor covering stores than she may have in the past. It is important that when she walks into your store, you have everything she wants—in terms of product and information. Because of time constraints, she wants a low-impact product, especially as it relates to maintenance. Finally, she values brands and warranties.

Merritt echoed many of Lape’s comments, stressing that in this challenging climate, retailers must continue to reinvent and diversify. “If you don’t reinvent you get passed by.”

Merritt asked Abbey members if they had a Web strategy. “Two out of three people who have walked into your store have already done some type of research on the Internet.”

He also talked about the importance of diversification, and not just as it relates to segment – residential replacement, builder, commercial, new construction, insurance – but also to product and channel. Merritt advised attendees to look into ancillary products like window treatments, paint and maintenance. He also applauded Abbey Carpet’s move to break into the shop-at-home channel, which is currently dominated by Empire Today to the tune of $550 million a year.