NFA Spring Meeting: NFA members are optimistic about business conditions this year - May 2017

LOOMING ISSUES
As the industry evolves, retailers are looking for ways to hold business and margins in flooring, as well as looking at new categories to boost their business. It’s getting tougher, they say, for a variety of reasons, including finding qualified labor.

For Ambassador Flooring, for example, WPC products have helped tremendously. “We supply material and installation,” Taylor says. “On the install side, it’s helped the bottom line tremendously.” WPC’s ease of installation is an advantage, and it’s driving change for the industry. “One of our focuses as a company is to look for products that are easier to install,” Taylor says. “We continue to go in that direction.”

Others echo his comments. One of the key problems retailers face today is labor-qualified labor. “Younger people don’t seem that interested in becoming installers,” Contract Furnishings Mart’s Bechtold says. Others agree and say that carpet installation faces an even greater challenge. “Hard surface is perceived more as a trade,” says Macco’s Walters, “so it will be easier to attract people.” He believes the answer will lie not in the traditional path of finding and training carpet installers but in technology.

Flooring 101’s Newton adds that an additional challenge lies in the fact that carpet installers today have much smaller jobs. As carpet has lost share to hard surface, installers make less money and have to do multiple jobs in a day. “You are looking at 50 to 60 yard jobs,” Newton says. “For an installer to make enough money, he has to do multiple jobs.” That doesn’t lend itself to great customer service.

The labor problem just isn’t an issue on the installation side. “It’s on the employee side, too,” Snedeker says. “Growing and grooming sales staff is a challenge.”

NEW CATEGORIES
Even for large retailers, getting customers in the store is also an issue, as is fighting online shopping. As retailers mature in their businesses, they turn to other product categories to help grow sales and margins, and even to survive. “In my opinion, if you’re not looking for other opportunities, you’re in trouble,” Snedeker says. To that end, Nebraska Furniture Mart is looking at getting into a new category: cabinets.

“In the flooring department, we’re taking a product you used to trade out every seven to 12 years [carpet], and we’re converting a large percentage of our business to a product that trades out every 20 to 25 years [hard surface],” Snedeker says. “We’re putting ourselves out of business, and we don’t even know it. As an industry, we have to find some way to stay relevant ten years from now.”

He reached out to members who are already in that business to gain insight. One of those is Jon Pierce, general manager of Pierce Flooring and Design in Billings, Montana. Pierce got into the cabinet business about three years ago when a neighboring cabinet firm went out of business. The company was able to keep the sales staff, Pierce notes, which was an advantage because the cabinet business is more complex than flooring. Still, it’s a good complementary business.

“The margins are a little lower, but the jobs are high dollar,” says Pierce. Orders of $60,000 to $70,000 are not uncommon. “People who are getting cabinets often need flooring and vice versa.” What’s important is having the right lines, the right relationships and the talent. He adds, “We do not let our flooring staff sell cabinets or our cabinet staff sell flooring. They partner.”

Pierce expressed interest in Dal-Tile’s countertop division. The company has partnered with Sage Fabricating, to handle logistics. That dovetails nicely with Pierce’s cabinet business. “That perked our interest,” he notes.

LIMITED MEMBERSHIP
Some groups seek to get as many members and vendors as possible. The NFA takes a different approach, limiting the size of the members and the vendors it allows to participate. The ability to get everyone around a table is one of the limiting factors in where the group chooses to meet, as well as the decision to add new members.

Membership in the NFA is not for everyone. The group looks at volume, relevance in a market and a lot of other attributes. And there is a strict policy that one no-vote means a potential does not get in. Membership has held right in the low 40s for some time.

The group lost one member in the past year, Fitz Flooring in Canada, which closed its doors. But beyond that, the number has stayed fairly steady. The newest members, according to Browning, are Sterling Carpet and Flooring in Anaheim, California and The Floor Store in Richmond, California.

“There is no advantage in the NFA adding a bunch of members,” Browning tells Floor Focus. “We pass 100% of our rebates back to the membership.” The administrative cost of adding members would cost the organization, she notes.

The NFA board agrees. “I think the general consensus is that we are probably about there as far as numbers of members go,” Snedeker says. “What it’s really about now is what the member can offer us,” he says.

“How much bigger can the table get, and how much more important are we going to become to the mills?” Bechtold asks. “It’s all about pulling your weight and contributing.” Close relationships with vendors is very important to the group, which has orchestrated some key programs with vendors like Armstrong, Shaw Industries, Invista, US Floors and many others. While not a typical buying group, the NFA nonetheless brings great volume to the table when establishing vendor programs.

Likewise, the board believes that the number of core vendors is just right at 26. “We will not be bigger than 26 tables,” Snedeker says. Member-vendor meeting day runs from 8:00 a.m. to 5:30 p.m., with each session lasting 18 minutes. There are two breaks and one lunch break.

However, the group entertains about 40 specialty vendors once a year at a meeting in Las Vegas around Surfaces. That’s the opportunity to vet new companies and product offerings. “It’s potentially an incubator for the next core vendor,” Walters says. Members say they find two to three new vendors a year from that group.

NFA MEETING NEWS
While the NFA membership meeting is closed to the media, members report that topics of note included presentations from Google and a discussion of Yelp.

McDonnell tells Floor Focus he thought the member meeting offered a lot of good information. “There was a nice presentation from Google about how people are using the Internet and the future of Internet marketing. We had a really good group discussion about the pitfalls advantages and disadvantages of Yelp, which I enjoyed immensely.”

According to McDonnell, he and a lot of members feel that Yelp ratings are weighted towards those that advertise with them. In a show of hands, McDonnell said only about four members were pleased with their Yelp rankings. Those same four also advertise. “Unless someone is part of the Yelp community, their reviews don’t get the same weight. Even if a customer goes on and gives us a five out of five, the review won’t show up. The thing that makes it unfair is that it’s inaccurate.”

Roberts was impressed by best practices presentations. “That part of our meeting over the last few years has improved significantly,” he says. “People are driven to work hard at coming up with something worthwhile.”

In addition to the Google presentation, Snedeker said Jeff Fenwick, Tarkett North America’s president and COO, also spoke about the company’s global direction and opportunities for partnership. “We are trying to move the needle with Tarkett,” Snedeker says.

According to Snedeker, the group also extended a finance program with Shaw Industries that both he and Roberts report has grown tremendously in the past few years. “That remains a good thing for the group,” Roberts says. “And we are moving forward with that.” According to Snedeker, they added three to four new members in just the last week and now over half the group participates.

VENDOR BUSINESS
Over the course of three days, members met with the 26 core vendors. They viewed new products launched since Surfaces, reviewed products and discussed group-specific programs and deals created just for the membership.

Roberts notes that vendor relationships remain strong. “Armstrong has reengaged with us in a positive way,” he says, and has made some aggressive efforts to bring new products, like Woodland Relics, to the table. “That was good looking and interesting,” Roberts says. The Coretec product from US Floors, in a display system created exclusively for the NFA, is also a big deal, Roberts adds.

In general, WPC products are coming on strong, with almost every hard surface manufacturer, and even some soft surface manufacturers, in the fray. “WPC products are going bonkers in my market,” Akin says. McDonnell agreed, but hopes that the proliferation of products doesn’t start a drive to lower price and lower quality.

As noted by Macco’s Walters, WPC products are taking share from wood. Roberts believes they are taking share from tile, laminate and wood, adding, “Not at the high end, but at the midrange, there’s no question in my mind.”

One trend Roberts points out is a move back to producing products in the U.S. “A lot of manufacturing is coming back to the States,” he notes. “That’s interesting. It’s also important, because that’s where retail is going.”