Retail outlook: Flooring dealers exceed goals
FFloor dealers certainly faced strong headwinds in 2022, from inflationary pressures to labor shortages to fears of an impending recession. And yet many dealers are in a good place at the end of the year, with some reporting numbers eclipsing the record year of 2021. Even those that failed to experience record growth often outperformed expectations.
Clearly, most flooring dealers would be happy with a flat 2022 in light of the pandemic-soaked sales performance in 2021. However, FCNews found several floor dealers to top last year, fueled by a strong start and higher ticket sales throughout the year.
“Going into the year, I felt that single-digit growth was probably in order based on several factors, including our record performance in 2021,” said Craig Phillips, president/CEO of The Flooring Edge, which has three Ohio-based flooring stores. “For the first five months of the year, our business was up 20% year over year. It seemed that nothing would slow him down. Price increase after price increase had little or no effect. All bins of our company showed good growth. In May, retail sales began to cool and this fall has not recovered. We’re ending 2022 up about 12%, driven by nice growth in our commercial and multi-family businesses. We are fortunate to have the best flooring professionals in the industry working with us, from our warehouse and administrative teammates to our sales associates. They all stepped up at an extremely challenging time for our industry and really shined. I am so grateful for that.”
Phillips is not alone in sharing positive results. Regardless of location, many flooring dealers found ways to succeed despite countless obstacles. “Thanks to such an incredibly strong first half of the year, we are still experiencing substantial growth,” said Casey Dillabaugh, owner of Dillabaugh’s Flooring America, Boise, Idaho. “We expect to finish the year with double-digit growth driven by a variety of contributions, including an initially strong residential construction segment, product inflation and internal improvements. We couldn’t be happier as we will once again be setting personal sales records and our business is as healthy as ever from a cultural standpoint.
In Knoxville, Tennessee, there was a similar report from Frazier’s Carpet One Floor & Home, which will surpass the 2021 record by 9%. “2022 has been our best year ever and we are thrilled,” said Kevin Frazier, owner. “Certainly, we all continue to face numerous challenging uncertainties, but the blessings and opportunities really do seem to outweigh the pain points, at least in our market.”
Montgomery’s CarpetsPlus ColorTile in Venice, Fla., bypassed Category 4 Hurricane Ian in September to produce a year of sales that is right on track with 2021. Located in Florida’s fast-growing Southwest, home to many retirees/snowbirds, Montgomery’s benefited from robust operations of the retirement home and two new accounts, including Sarasota Memorial Hospital. “We’re lucky that these retirement accounts are always open and operational,” says Mike Montgomery, co-owner.
Like many flooring dealers, Abbey Carpet & Floor in Anniston, Alabama, suffered a slowdown in retail sales that began in the first half and never really recovered. That’s why a diversified business approach is so important. “Looks like we’ll be about 2% lower than last year,” said Ted Gregerson, owner. “Retail sales have been very weak in the last half of the year. However, our commercial sales have increased; 2021 was a record year for us, so we’re thrilled with only about a 2% drop considering slow traffic over the past six months.”
Rely on best practices
The successful flooring dealers always seem to know how to navigate the inevitable ebb and flow of business. Every year is different, of course, and 2022 saw 40 years of high inflation, forcing retailers to adjust their prices amid rising raw material costs.
An example of this was Montgomery’s, which adjusted its prices as material and labor costs rose. “We did this as quickly as possible to preserve our margins,” Montgomery said. “We also increased labor costs to accommodate all the rising costs of gas, housing, insurance, etc. That allowed us to keep our most valuable asset: installers.”
For others, it was about staying aggressive and being proactive. “Promotions continue to be huge for us because they increase volume, cash flow and customer interaction,” said Frazier. “At a time when everyone seems to be teetering between growth and contraction, promotions have been the nudge to consistently push us over the edge into further growth.”
For Abbey Carpet & Floor, it was about continuing to advertise and reconciling stock levels. “During good years, it always seems like the stock is growing more than it needs to be,” Gregerson said. “We get all retail sales paid in full at the point of sale. Not only does this improve cash flow in slower times, but it also prevents us from having to hunt for money after installation and write off bad debts periodically.”
Nampa Floors & Interiors, Nampa, Idaho, will end 2022 earlier than last year’s record year – no small feat considering the many obstacles in its path. “I am incredibly proud of our teams for focusing over the past year on overcoming obstacles and market conditions that we can combat, without wasting time and effort on factors beyond our control,” said Kyal Wilson, CEO. “We have increased our advertising budget and shifted advertising spend to media that are more relevant to our consumers. We also invested in a CRM tool to increase the efficiency of the sales process. In addition, our strong diversification has enabled us to maintain the trust of dedicated subcontractors as we have seen segments of the market slip away while others grow exponentially.”
Return to normal
For the past three years, consumers have faced the COVID-19 pandemic and resulting restrictions, supply chain delays and now high inflation. And yet the flooring economy continues to grow. “The customers that do come in are definitely buying,” Gregerson said. “They’re also spending more money, so the average ticket size has gone up quite dramatically. Our gross profit percentage has also increased this year, so we focused on that.”
Nampa’s Wilson noted that customer habits may have changed, but they remain resolute and willing to buy. “I do believe that customers crave a semblance of stability and normalcy,” he explains. “They are tired of hearing about diseases, deadly flying insects and how much less the dollar is worth every day. While we have made many changes over the past year, we have maintained a positive customer model with a knowledgeable, compassionate and communicative approach and this has provided the stability and normalcy our customers are looking for.”
Phillips of Flooring Edge has spent the past three years reflecting on what the flooring industry has been through. “Some of it no one could have even imagined,” he said. “But I know we’ll all be fine.”