Retail outlook: Robust sales to persist
By Ken Ryan—Nothing—not a global supply chain slowdown, labor shortage or delta variant—has put a crimp in sales for flooring dealers as they enter the fall season with gale-force winds at their backs. Multiple retailers say they are up double digits in 2021 vs. 2020, and for many 2020 was their historical high-water mark for sales. That is, until the calendar flipped to 2021.
Flooring dealers who are reporting 20%, 40% and even 50% increases in 2021 are not outliers in this market as the COVID-19-induced rally that began in earnest in May 2020 continues unabated. And it’s not just sales that are up. Across the board, higher tickets have led to a bump in gross profit margins for many of them.
“Our numbers for 2021 vs. 2020—or even 2019—are up by a large margin,” said Lauren Voit, president of Great Western Flooring in Naperville, Ill. In fact, business activity at Great Western was so brisk that Voit was forced to shut off all tile installation sales to the public during July because they simply could not keep up with demand.
Indeed, some dealers like Casey Dillabaugh, Dillabaugh’s Flooring America, have remarked that “business is so good, it’s bad”—meaning they can’t keep pace with the sheer volume of demand that is out there. It’s no mystery what’s driving this winning streak: housing. Back in the spring and summer of 2020, homeowners who were forced to shelter in place spent money on home improvements—including flooring—instead of entertainment and travel. However, when the economy opened back up and people started spending on entertainment and travel again, flooring business did not dry up as some feared. For that, retailers can thank red-hot home sales for keeping the rally alive.
“The housing boom has had a large [impact] on our new construction sales,” said Josh Elder, president of Gainesville CarpetsPlus ColorTile in Florida. “Meanwhile, our retail sales have also picked up. I think that is largely due to inflated new home prices. Consumers are reinvesting in their existing homes rather than investing in a new home at the increased market prices.”
In Southwest Florida, the real estate market has been very hot, with great demand for flooring products. “We do not do a lot of new construction, but the residential remodels have been through the roof,” said John Taylor, president of Taylor Carpet One Floor & Home, Fort Myers, Fla. “The jobs have been entire houses rather than just one room or smaller-scale jobs. We have seen a slowdown in September, but that is typical for us for numerous reasons that include kids going back to school. Once things reopened last May, it seems that everything broke loose and business has been very consistently strong. The new delta variant is real and obviously a concern, but so far I have not seen it affect our overall business.”
For Abbey Carpet & Floor/Floors To Go, Anniston, Ala., 2020 saw record sales. However, through the end of August, revenue was up 9% for 2020. “We anticipate sales will remain good through the year,” said Ted Gregerson, president. “There still seems to be a surge of customers remodeling their homes.”
Houston-based Venetian Blind Carpet One Floor & Home is up about 40% over 2020, with a nice improvement in gross profit margin for the year as well. Venetian has excelled despite having an incredibly difficult time finding sales associates. “We cannot even get a single response to employment listings we have had on various paid search sites,” said Gary Touchton, general sales manager. “We are hearing the same with some of our customers who own various other types of businesses. It’s an extremely frustrating situation.”
And yet, Venetian is on track for another stellar year.
Adjusting to supply gridlock
Massive global supply chain slowdowns that wreaked havoc with schedules for more than a year have forced flooring retailers to find workaround solutions. At Selinsgrove, Pa.-based Fike Bros. Carpet One, Denise Fike, CFO, said they have developed new procedures to monitor back orders on a daily basis. “We encourage customers to make a second or even third selection if time is an issue. We are trying to be very proactive with our communication to our customers in updating both good and bad news. We are also working with our vendors to find alternatives, if possible.”
Others have ramped up inventory levels to stay ahead of the game. That strategy has worked well for Abbey’s Gregerson, who noted, “We do not promise anything until it has arrived in our warehouse. Making sure customers are aware of possible delays at the point of sale seems to help them be more patient and willing to wait however long it takes.”
Ben Case, president of Carpet Collection in Lockport, NY, said two things have worked in their favor—buying copious amounts of stock and being efficient. “As a result, we have been able to keep our install turnaround time to about six weeks, which, at this point, mostly seems to be well received by our customers.”
Most dealers say their customers are more understanding regarding back orders than they were a few months ago. “We tell them from the beginning the status of their material and tentative installation windows,” said Marjorie Benson, president of Friendly Floors in Port Charlotte, Fla. “I prefer to check availability before anyone signs on the dotted line.”
In Friendly Floors’ case, the supply chain conundrum has not kept the retailer from thriving—as its 2021 sales are up 50% over the year-ago period.