Tuesday, September 28th, 2010

No Doom and Gloom Here

Here’s an interesting, up-beat forecast for the flooring industry. We have had Jonathan Trivers entertain and enlighten our Membership at a past Annual Meeting. He presented the following at FIANA — and it’s full of good information for all of us.

At the recent FIANA Convention in San Antonio, Texas, we had the opportunity to hear the wisdom and wit of Jonathan Trivers. He is the author of “One Stop Marketing”, and a marketer by training and a teacher/trainer by avocation.

Jonathan is the former President and COO of Abbey Carpet Company, the oldest floor covering franchise in the USA. He is an outstanding communicator with a great personality who shares facts and figures like no one else. He is a contributing editor to Floor Covering Weekly and the author of “MarketWise: The Annual Report of the Floor Covering Industry”.

Jonathan established a summer camp in Nova Scotia for disadvantaged children and another in California where he currently resides with his wife. He is witty, smart, and has given us permission to share the bright side of the flooring business with you.

His presentation, “I Can See Clearly Now,” offers insights into what we can expect tomorrow. This will assist in your business planning. We wish you could have heard this presentation in person, but here it is — news in a nutshell, as they say:

1. On August 18, 2010, it was announced that “it can’t get any worse! The industry has bottomed out!”

2. Market declines 2006 -2009:

a. Residential replacement -28%

b. Builder -68%

c. Commercial Main Street -3%

3. Product Sales Change in $:    2006                2009                 % Change

Carpet                                              17.4                  12.0                   -31.7%

Vinyl                                                  3.6                    3.4                     -7.2%

Ceramic Tile                                    7.4                    4.0                     -45.9%

Stone/Marble                                  1.7                    1.1                      -35.2%

Wood                                                4.4                    3.0                      -31.8%

Laminate                                          2.7                    1.7                      -37.0%

4. Projections:

a. Carpet sales will grow – boomers like softness underfoot and professional installation

b. Vinyl sales will grow also

c. Next 5 years: Carpet market will be the strongest

1. Residential replacement will be around 60% (was 50%)

2. Builder market 14% (was 22%)

3. Commercial market 26% (was 8%)

5. In 1997, there were 16,600 full-service floor covering stores

a. In 2002, 15,300 stores

b. In 2009, 12,000 estimated stores

c. In 2012, it is estimated that the stores will number 12,000

6. This means there are 16% fewer retailers – this opens up $2 billion in sales for someone

a. It was goodbye to the Expo, the Great Indoors, stand alone Home Depot stores, the Internet store, iFloor and other Internet sellers — another $500 million in sales open

b. Wounded, but still here: Empire and ProSource: another $250 million open

7. Flooring sales that will belong to somebody — $2 billion, 750 million

8. There is a pent-up demand for $3 billion in residential replacement. The number #1 home improvement product that customers said they deferred (they will buy later) was floor covering. Read this last sentence again.

9. This totals residential sales of $5 billion, 750 million that is up for grabs

10. Existing home sales: (National Association of Realtors)

a. 2009 – 5.2 million

b. 2011 – 5.7 million

c. 2012 – 6.6 million

d. Residential replacement flooring sales are dependent upon a robust existing home sales market. Within 8 months of home purchase, the customer will make their first flooring purchase and will continue this for 4 years, at which time they will have recovered at least 80% of their flooring space

11. New Home Sales – Average home is 2100 sq. ft. (Single family and condo) NAR

a. 2009 – 375,000

b. 2010 – 425,000

c. 2011 – 460,000

d. 2012 – 510,000

12. NEWS FOR YOU

a. Interest rate is lowest in 45 years: 4.6% or lower

b. Foreclosure market is a fantastic market for flooring sales – 1/3 homes in 2009 were foreclosure — if you know it’s being foreclosed, you don’t take care of the flooring

c. Home values in almost all major market areas have bottomed out and in 2010, the value of homes will increase. When the customer sees this, she will be more willing to purchase flooring. That means installation.

13. Flooring sales expectations

a. 2010 +4% Residential Replacement -4% Commercial Main Street

b. 2011 +7% Residential Replacement +6% Commercial Main Street

c. 2012 +10% Residential Replacement +8% Commercial Main Street

14. Priorities have changed for the next two years

a. Every day in American 10,000 people turn 60 years of age

b. There are now more seniors than teenagers

c. Business is dependent on the older baby boomers (46-64 year olds) they represent 1/3 of old discretionary spending (flooring)

d. Over 60 group is the largest growth market and highest income market

15. The “Tiered” Installation Package (see how smart he is — Jim has been promoting for at least 15 years)

a. Sell Good – Better – Best (The Meineke Muffler Example)

b. Sell a superior installation package — increase service and tell your story — what you do

c. Don’t take for granted that the customer knows what you do — sell it

d. Dialogues of “CHOICE” vs. dialogues of “PRICING”

16. Smart Marketing

a. Tell a story about YOU!

b. The 3rd largest “country” in the world is FaceBook (1st China, 2nd India)

c. Older people are the fastest growing online Twitter group

d. Younger group looks to the manufacturer for information

e. Everyone must have a great website with all the “extras”

There is no doom and gloom here!

It’s time to go to work and think on the positive side. There’s a lot of business out there for the flooring installation professionals. Go get your share!

Here’s to an exciting future,

Jim