As if surviving three and a half years of recession wasn't hard enough, floor covering dealers face a host of new challenges if they want to prosper in an improving 2010 economy. That was the message delivered by a keynote panel of industry experts at SURFACES 2010 in Las Vegas.
The industry faces heightened competition from big box retailers, a paucity of bank financing, and cash flow challenges. The panelists made it clear, however, that dealers who can successfully navigate these challenges stand to gain from improving conditions in the overall economy, the resale housing market, and home building.
"We've lost some 2000 [flooring] retailers to the recession," said Steve Silverman, president of Abbey Carpet Co. "There are some 12,000 retailers out there who have survived. ... Your market share opportunity becomes greater with fewer competitors."
Silverman said that future prosperity will be determined by whether dealers get in touch with their tech side, since more than 80 percent of customers first visit dealers through the Internet. Other dealers on the panel, while they agreed that a great website is important, argued that nothing replaces face-to-face selling in a tough environment.
"We've seen dramatic growth where our members have done this," said Scott Perron, president of Kansas City-based Big Bob's Flooring Outlet. Salespeople, he said, need to build business "outside the walls" by joining social organizations, calling on prospects in person, and tapping personal connections.
Jeff Macco, president of the National Floorcovering Alliance, who retails in Wisconsin, agrees with the need to get out and meet prospects. He managed to increase sales in a down environment because at least one salesperson was joined at the hip to a local business association.
"We have to sell hard in this economy," said Ron Dunn, co-CEO of CarpetsPlus Color Tile, who suggested that dealers get back to basics. That includes stepping up training efforts, making hard management decisions, and re-igniting a fire in the belly.
Vinnie Virga, president of Flooring America at CCA Global Partners, congratulated the dealers in attendance for making it through the recession. But he said that dealers still have a hard row to hoe, if they want to grab market share and return to profitability.
Specifically, he said, dealers need to right-size their businesses, generate positive cash flow, and be profitable at today's volume. Inventory needs to be converted to cash. "The problem going up is that companies don't have the cash flow to sustain the rise," Virga said.
Much of the discussion involved competing with big box retailers. Virga said most dealers can compete with The Home Depot on total installed price, including moving furniture and installing underlayment. But others may find it more effective to compete on service and warranty. "Your salespeople are five or six times more capable," he said.
Perron downplayed the use of Internet advertising. "No one has a lot of extra cash today to throw into experimental media," he said. But Macco and other panelists argued that a dealer's website is more important now than ever.
Web analytic software, he said, shows that most people who come to his site from Google typed in his company's name. "Google is the new phone book."
Boyce Thompson is editorial director of BUILDER magazine.