Floor Covering Weekly — May 6, 2013
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Hard surface carries retail out of slump
Raymond Pina

Specialty flooring dealers are reporting significant and sustained increases in both store traffic and store sales across all categories. Growth, they said, is being fueled by rejuvenated new home construction, residential remodel business and Main Street commercial.

"I haven't been this busy in years," said 30-year industry veteran Jeff Kaspin, owner of Monroe Township, N.J.-based A.B. Carpet. "The amount of traffic coming through my door is reminiscent of the good days before the economy went bad. And what's really amazing to me is how strong business was in January, February and March. Usually we get that kind of push in April through June. I'm already ahead of last year. That's very encouraging."

With the exception of an occasional dip, monthly increases in new home sales and a trend among homeowners and property managers to remodel with better quality goods is driving sales growth residentially.

"We think we're set up to have a good three year run," said Bruce Zwicker, president and CEO, Haines. "Housing is rising and when interest rates go up it will be like throwing rocket fuel on a fire with more people trying to buy in while rates are still relatively low. We're coming out of a depression into a pretty strong recovery."

Construction and renovation of commercial spaces such as healthcare facilities, schools and government offices continue to rise but the return of retail space on Main Street is proving to be the latest opportunity.

"With new housing comes new retail construction," said Diana Borders, principal designer for commercial flooring, Armstrong. "We're seeing the retail environment driving a lot of commercial business. But we're also seeing a lot of hospitals renovating. America is building again."

Hard surface categories have led the charge of increased sales, up some 8 percent the first quarter of 2013 in comparison to the first quarter of 2012, according to Catalina Research.

And while hardwood and ceramic tile are enjoying increases, the growth of luxury vinyl tile (LVT) has been most dramatic.

"We're selling more of everything but the growth of LVT is exponential. It's off the chart. People that would once have gone with carpet or laminate are going with LVT because it's durable but also stylish, waterproof, quiet and easy to clean," said David Snedeker, floor division merchandise manager at Nebraska Furniture Mart.

LVT is having a significant impact on carpet sales, but it is also eating into sales of traditional felt-backed sheet vinyl in the commercial marketplace — and not because it's cheaper.

"When we're going into a medical office, we tell them LVT costs a little more up front but it's lower on the back end because you're not going to have to strip and wax it. Plus it won't wear like carpet or sound like a laminate or wood floor," said Ed Keller, executive vice president and general manager of Tampa Bay, Fla.-based Bob's Carpet Mart.

Dealers all agree that today's consumer demands value-oriented price points. "The retailer is still fearful about price. The big boxes continue to advertise on price. But the consumer now wants to buy a better product. She loves Home Depot's price but hates its quality," explained Harvey Johnson, owner of Miami-based Mastercraft Flooring.

Specialty flooring dealers, in fact, began experiencing periodical bursts of strong sales in late 2011 only to have their expectations shattered by weeks of slow or no traffic. Now, business has been increasing steadily for three quarters, according to Tom Solomon, owner of Placentia, Calif.-based T&S Carpet & Design Center.

"I opened in 2007 and the trend has been a few good weeks of traffic followed by a few weeks where traffic completely fell off," he said. "But in the last couple of months I've seen business rise to heights I haven't seen before. I'm up over 30 percent the last couple of months."

And with the return of strong growth comes new challenges, particularly related to maintaining key personnel and other resources, added Zwicker. "Everyone is bidding for the same labor pool. There are going to be shortages and related compensation issues to hang onto the best people. We're also already having a hard time keeping up with demand for wood. The demand went from being soft to now competing with other industries domestically and abroad," he said.

Challenges and all, industry executives said they've emerged from the depths of the downturn prepared for what comes next.

"It's not the Gold Rush days but there's a real, true feeling that business is coming back. We've been faced by challenges and we responded to them. We all had to dial back during tough times. We've been conservative and it's paid off," said Art Layton, vice president of marketing, CMH Space Flooring.