Floor Covering News Distributor Perspective Archive

Conquering Retail Challenges on Both Sides of the Border

(Floor Covering News - May 2007) --

By Tom Giancani

Sometimes your best lessons are those learned from your neighbor’s experience. Consider the Canadian market. From coast to coast, Canada stretches across five time zones and seven-and-a-half hours of flight time! On top of that, the Canadian population is only ten percent of that in the United States. This equals fewer fish in a much bigger sea; one that is more difficult and costly to service. Canadian market segments are, at best, one tenth of those same segments in the United States. One of my personal sayings is that "a failure in the U.S. can be more successful than a success in Canada" due to the sheer numbers game.    
 
Because of Canada’s size and distance, the consumer becomes accustomed to shopping a larger area. It becomes especially true in areas outside the urban centers. Canadian retailers need a more compelling reason than location for people to buy from them.
 
Distributors in Canada also must face the challenge of direct selling. The provinces of Ontario and Quebec are home to most of the country's hardwood flooring manufacturing. Although most hard wood product goes through distribution in the United States, they sell direct to retailers in most of Canada. It puts significant pressure on pricing and therefore makes it difficult for a wood program to be profitable through distribution.

While imported products are an issue on both sides of the border, Canadian retailers have long been accustomed to a variety of currencies, opening lines of credit for international purchases and working with customs brokers. As a result, the overall competition base to the world expands and allows countries like China to easily gain access to the market.

Smaller margins are a by-product of the small retail population fighting for fewer sales opportunities. Add direct selling to the mix and you have retail price points that are on average 30 percent less than they are in the United States. What these challenges add up to for the successful Canadian retailer is the need for a leaner, more strategic approach to competing in the market.

The battle to keep clients in the store is one that Canadian retailers have always fought and it is one that U.S. retailers have had to take up more vigorously in the past 15 years. Regardless of the issues faced by both, setting the business apart in a competitive market is the key concern. What has worked in Canada – heavily marketing and promoting services and the early adaptation to technology that expedites customer orders – are tactics the U.S. retailer must embrace. There is no room to wait for the customer to come to you in either country. Success lies with larger margins from fewer clients.

To achieve this success, savvy retailers know they cannot be all things to all consumers. These retailers shed brands that are in box stores and partner with suppliers focused on their business and not everyone that sells flooring in their market. These retailers spruce up the showroom with design flair, invest in staff training and narrow their focus.

Like the other members of the North American Association of Floor Covering Distributors (NAFCD), our company offers participating dealers the ability to invest time, effort and energy in selling a product with the assurance that their close rate will be higher because of the ability to shop this product on price has been dramatically reduced. Today, TORLYS Inc. serves approximately 800 fewer dealers than we did five years ago, and we are doing significantly more overall business. Part of our success was a planned exit from home centers and intentional support for the professional floor covering channel.

Regardless of which side of the U.S.-Canadian border you service, be certain that your distributor is like-minded in their approach to margin and profitability, which creates "good" competition for our dealers vs. the discounters and price slashers. We all need to remember that the business we get on price, we will lose on price!

Tom Giancani is vice president of sales for TORLYS Inc. in Mississauga, Ontario, Canada. He is also an active board member for the North American Association of Floor Covering Distributors (NAFCD). To contact him, call 905.696.2406.

How a Cutting-Edge Retailer Purposefully Targets the Market

(Floor Covering News - April 2007) --

By Art Layton

Sophistication is the essence of business today. Whether dealing in floor covering or farm equipment, a successful merchant must purposefully select a target audience and cater to their needs with superior products and support. The key is a strategic plan.

What niche in your market needs most attention? What is the skill level of your sales staff? Is it possible to reach that underserved market niche by re-training your sales staff and fine-tuning your product mix? The answer to that lies with your distributor partner, who can help you seek out that market niche, select the appropriate products to suit it and fine tune the training of your sales staff.

The time of staying in the store and making an honest living with a few floor covering samples has passed. The retailer must decide who he or she wants to draw through the door and then custom design the store and its marketing package to serve the needs of that audience. Everything you do must stream from the decision about what your customer wants. The marketplace is far too competitive to allow for complacency and unwillingness to offer a variety of flooring products.

Consider the product mix in your store. Understanding the trends in home fashion and how that matches up to the tastes of your regional market are key in developing your product mix. While wood and tile are hot items, for example, consider that laminates capture a similar look in a variety of beautiful designs. By consulting with your distributor, you may find products unique to your market that  have the potential to be a big seller with your selected clientele. Be price conscious, but be more focused on the end result that a client wants. If you pre-judge what the customer wants based on price, you may limit your sales and profit potential.

Position yourself as the floor covering resource in your community. This can require hours of work outside the store but will pay off in the long run. Plan to be involved in organizations or events that will better connect you to your key customer. Participating in local home shows or charitable community events or developing partnerships with new home builders will help you connect with the consumer market. Builder associations, trade shows and even the local chamber of commerce might help you connect with the contract market.

Market your sophisticated image to your target audience. This goes beyond the standard Yellow Pages advertisement. Instead, use direct mail pieces or email communications to reach your audience – both consumer and contract. Try re-vamping your company’s Web site. A site that features only a shot of the exterior of your store and map guiding them to it will not inspire the Information Age audience. Instead, motivate their imagination by using your Web site as additional showroom space with great roomset photos, images of your actual client projects and helpful links to manufacturer Web sites.

When you have made such a wonderful effort to inspire your audience before they enter the store, make certain that your physical showroom continues to deliver when they walk through the door. Turn your “showroom” into a “gallery” of fine home interior art. Employ all the virtues of interior design and beautiful lighting needed to create a look that a customer could envision in their home.

Most important of all, call on the expertise of your distributors for ideas. We are here to support every level of the process, from sharing our market knowledge for developing that successful niche, to supplying the products and support those consumers demand. Your success is our success.

Art Layton is marketing director for CMH Flooring Products in Wadesboro, N.C. He is also an active board member for the North American Association of Floor Covering Distributors (NAFCD). To contact him, please call 704.694.6213.

Showdown in Your Showroom

(Floor Covering News - March 2007) --

By Jack Lindenschmidt

If you are reading this column in your retail place of business, I suggest you do the following:

1. Finish the article
2. Walk outside your main entrance
3. Put your hand over your eyes
4. Turn around, and
5. Remove your hands and start a careful inspection, first outside the store, then inside the showroom.

You may not like what you see; or you may think that it looks fine the way it is. However, if you are not looking through the eyes of a trend-conscious, color-savvy, House Beautiful female flooring shopper, you might be missing more than a few sales.

If you, like me, are one of the many gray/balding, football-over-fashion kind of guys that populate our industry, then this task is too big of a stretch. Don't even try to go there. Get an employee, daughter, friend, or somebody who frequents retail home goods stores to review your store's first impression.

Are you sending the right signals? Are you saying to your lady shopper: "I speak your language. I have the color choices, the fashion sense, the latest products, and the expertise to bring them all together and make your project come to life?"

If that shopper does not connect with your fashion savvy within the first 20 seconds – literally – then you lose. You will have one of two outcomes:

1. She will walk away (assuming she actually got out of the car in the first place), or
2. She'll let you play "price-bingo" with all your competitors.

Your potential customer will end up playing the only game left if your store does not communicate fashion and style into the depths of the parking lot. Why should the customer pay more than they have to if there are very few differentiated points between your product and that of the store down the street?

As a floor covering distributor for over 20 years, I have had the opportunity to see hundreds of retail flooring showrooms. I am sorry to report that the two things I see in all too many of them are clutter and randomness. And, we wonder why we get beat up for nickels per square foot.

Do not jump to the conclusion that the answer must be "more." More showroom, more square footage, more samples, more choices. No. Sorry. Wrong. Stop reading. Go back to the football game. It is not about size, it is about quality. It is about a showroom with a purpose. Some of the most successful stores I have visited had smaller, yet more effective, selling arenas.

Is there hope and a purpose waiting to step into your showroom? Yes. As Mick and The Stones said, "We all need someone we can lean on." Hire a consultant for $30,000 or partner with your favorite NAFCD distributor, who has the resources that you need to put some "show" into your showroom.

They can help you select, and intentionally de-select, which products you show and the reasons to show them. They can ensure your showrooms have broad walkways – a minimum three feet – without boards or tiles or swatches spilling into them. They can help your selection centers exude style, fashion and color, but only if you let them. That's one of the primary jobs of your North American Association of Floor Covering Distributors.

Jack Lindenschmidt is president of Interstate Supply Co., St. Louis, Mo. He is also the treasurer of the North American Association of Floor Covering Distributors (NAFCD). To contact him, call 314-481-2222.

Diversifying Your Client Base

(Floor Covering News - February 2007) --

By Steve Rosenthal

Diversification is a concept that encourages us not to put all of our eggs in one basket. It can keep our businesses healthy and prosperous when specific segments of our industry slow down.

It is a great concept when one considers customers and products, yet loses strength when applied to the number of business partners you engage. A diverse client base ensures that when a segment of the market shows a slowdown, it will not have impacted the entire business. A diverse product mix will keep sales in your store. You can meet both of these needs through one source: the floor covering distributor. A distributor partner, who has a diverse mix of products and services, can be the answer to many of the challenges you face in the floor covering industry.

For illustration purposes, we will look at floor covering retailers who cater largely to the new residential segment of the marketplace. During the past 13 years, that part of our industry has shown growth like never before. Many floor covering retailers have taken advantage of that trend and it has become a large percentage of their overall business. If your business derives more than 50 percent of your total revenues from the contract market, the following is pertinent information.

According to figures released by the Commerce Department in August 2006, new-home construction dropped 2.5 percent in July, continuing the orderly cool down of the housing market. In September, the National Association of Home Builders (NAHB) told Congress that the current downswing in home sales and housing production, following the record housing boom of 2004-2005, is expected to bottom out around the middle of next year and gradually move back up by mid 2008. What does the retailer with 60 percent of their client base in home building do until 2008?

Open their doors a little wider to the residential remodeling market.

Consider the advantages of expanding your residential remodeling sales. Profit margins tend to be higher. Typically, you can obtain a reasonable deposit. Final payment comes after installation, as opposed to waiting 60 to 90 days that is typical with a contract client. There is usually a greater opportunity to upgrade a consumer at the retail level, thus creating larger sales.

What are the first steps in courting the retail customer?

An experienced distributor partner would advise you to consider a consumer-friendly environment. This process begins outside the store.

If your business is located in an industrial complex, make sure you can draw customers to it. If not, work with your distributor partners and use other resources to see if a second location is an option. Develop a concept like a boutique-style store or a stocking retail location. Obviously, the location should have good consumer traffic and easy access.

Create an inviting store layout and idea-provoking design touches in your showroom. To capture the residential client, retailers must move beyond the utilitarian waterfall of carpet samples. Many of the key brands in our industry have well designed fixtures available are very consumer- and retail-salesperson friendly. Consider the needs of your potential shopper. Do they shop with children in tow? Add a child-friendly area and/or a coffee or beverage bar that invites them to linger over sample selections. The point here is to create a consumer friendly and functional showroom. Visit other retailers who have perfected the concept and do not limit yourself to shopping the competition in floor covering. You compete with retailers from every category for discretionary dollars. See what kind of shopping experience upscale furniture stores and car dealerships are offering and think about how to incorporate into your store.

While diversifying might require the retailer to change how they look, he or she might actually benefit by keeping the contract sales approach with residential clients. Qualify your customers by asking where the product will go in their home, what colors they want and what their budget is. This should help narrow down the choices and help you close the sale quicker.

Instead of carrying a million floor covering products, ask your distributor partners what the key products are for your market area. Read the trade publications to see what products are hot or up and coming. Then immerse yourself in knowing all there is to know about those products. Become an authority in your community on that handful of key product lines. You and your salespeople will sell more knowing everything about a handful of key items than knowing little or only what the back of the sample reads on many products.

But, before you consider any change in your business, talk to your distributor partners. As I mentioned before, diversification is a great concept when applied to customers and products in the retail center. What works best with supplier partners are smaller numbers and exclusive relationships. If you place your purchasing power with a strong distributor, their wealth of knowledge becomes yours. Expert advice in product and consumer marketing, guidance through business change and tough economic times is easily at your disposal when you place your business confidence in a few strong distributor relationships.

Steve Rosenthal is vice president of sales for All Tile, Inc., in Elk Grove Village, Ill. He is also an active board member for the National Association of Floor Covering Distributors (NAFCD). To contact him, please call 847-364-9191, ext. 314.

A New Beginning

(Floor Covering News - January 2007) --

By Christophe J. Freed

Is your business changing and evolving? Chances are that it is. Because the life of an association is no different, you might notice a few changes in the industry's leading distributor group. A new beginning begs for a new name. Therefore, we have recently changed the association's name to the North American Association of Floor Covering Distributors (NAFCD). This name more accurately speaks to the scope of our membership which is not limited to the boundaries of the United States. We value our Canadian members and welcome interested companies from Mexico as well in addition to our growing international membership. The name change also reflects the course the association carefully plotted in 2005 when a new strategic plan was launched.

Our biggest accomplishment of this new direction was the successful launch of our inaugural NAFCD Distributor Marketplace held in October 2006 during our annual convention in Indian Wells, Calif. This venue offered a value-added opportunity for both our manufacturer and distributor members to gather without the disruptions and lack of privacy experienced in a non-exclusive venue. Our first event was a tremendous success with a total sell-out of exhibit space and 70+ exhibitors. More than a third of these exhibitors have already reserved space for next year's event to be held in Austin, Texas. The NAFCD Distributor Marketplace will continue to be an exciting opportunity for distributors to gain exposure to new products and services, which in turn, we will share with our retail partners.

Looking forward to 2007, we will continue to connect with our membership through the development of a new robust Web site and a colorful and informational new membership communication publication called Strategy. These new communications avenues will allow us to quickly broadcast association and industry news in diverse formats that best meet our members' needs.

Our educational initiatives for 2007 will begin here at Surfaces where NAFCD will present an educational sales seminar facilitated by Tom Reilly, a highly recognized author of many books on value-added selling. March sees the introduction of our new sponsorship of the University of Industrial Distribution program, a four-day conference with an extensive menu of topics and top trainers covering every job discipline imaginable. The second half of the year continues the educational path we set in 2005. Our annual convention in October will include our traditionally acclaimed line up of top educational speakers as well as activities for future leaders of our industry – who lead the companies that are your suppliers and business friends. These educational initiatives help our distributor members to be better prepared to bring you a more qualified, professional and consultative sales force to support your needs as a retail partner.

It was nearly 25 years ago when I had the privilege of attending my first NAFCD annual convention in Coronado, Calif. I was only 22 years old and eager to develop my professional skills. My exposure to the best practice concepts shared at this convention as well as networking with industry leaders certainly improved my opportunity for a successful career in the floor covering distribution industry. It was this convention that sparked my interest in participating in the educational and professional development programs offered by our association. I am now honored to have the privilege to serve as President for this coming year. As your business partners, NAFCD members are united to help you initiate successful change for your business. We stand ready and well equipped to take on the challenge.

Christophe J. Freed is president of J.H. Freed & Sons in San Diego, Calif. He is also President of the North American Association of Floor Covering Distributors (NAFCD). To speak with him, please call 858.292.6901.