Retail outlook: Robust sales to persist
By Ken Ryan—Nsomething – not a global supply chain slowdown, labor shortages or a delta variant – has lowered sales for floor dealers as they head into the fall season with gale-force winds at their backs. Multiple retailers say they are up double digits in 2021 from 2020, and for many, 2020 was their all-time high for sales. That is, until the calendar flipped to 2021.
Floor dealers reporting 20%, 40% and even 50% increases in 2021 are not outliers in this market as the COVID-19-driven rally that started in earnest in May 2020 continues unabated. And it’s not just sales that are rising. Across the board, higher tickets have led to an increase in gross profit margins for many of them.
“Our numbers for 2021 versus 2020 — or even 2019 — are up by a big margin,” said Lauren Voit, president of Great Western Flooring in Naperville, Illinois. In fact, business activity at Great Western was so vibrant that Voit was forced to halt all sales of tile installations to the public in July because they simply couldn’t keep up with demand.
Some dealers, like Casey Dillabaugh of Dillabaugh’s Flooring America, have even commented that “business is so good it’s bad,” meaning they can’t keep up with the huge demand out there. It’s no mystery what drives this winning streak: housing. In the spring and summer of 2020, homeowners forced to take shelter in place spent money on home improvements, including flooring, rather than on entertainment and travel. However, once the economy picked up again and people started spending money on entertainment and travel again, the flooring trade didn’t dry up, as some feared. For that, retailers can thank the red-hot home sales for keeping the rally alive.
“The housing boom has a major impact [impact] on our new construction sales,” said Josh Elder, president of Gainesville CarpetsPlus ColorTile in Florida. “In the meantime, our retail sales have also picked up. I think that is largely due to the high new house prices. Consumers are reinvesting in their existing home instead of investing in a new home at the increased market prices.”
In southwest Florida, the real estate market has been very hot, with a high demand for flooring products. “We don’t do a lot of new construction, but the home remodels have been through the roof,” said John Taylor, president of Taylor Carpet One Floor & Home, Fort Myers, Florida. “It was whole houses rather than just one room or smaller jobs. We saw a slowdown in September, but that’s typical for us for a variety of reasons, including kids going back to school. When business reopened last May “It seems like everything was erupt and business was consistently strong. The new delta variant is real and obviously a concern, but so far I haven’t seen it affect our overall business.”
For Abbey Carpet & Floor/Floors To Go, Anniston, Ala., 2020 saw record sales. However, until the end of August, sales were 9% higher than in 2020. “We expect sales to remain strong throughout the year,” said Ted Gregerson, president. “There still seems to be a wave of customers remodeling their homes.”
Houston-based Venetian Blind Carpet One Floor & Home is up about 40% from 2020, also showing a nice improvement in gross profit margin for the year. Venetian excelled despite being incredibly difficult to find sales associates. “We can’t even get any answers to job listings we’ve had on various paid search sites,” said Gary Touchton, general sales manager. “We’re hearing the same thing from some of our customers who own several other types of businesses. It’s an extremely frustrating situation.”
And yet Venetian is on track for another great year.
Adjust to deliver stalemate
Massive global supply chain delays that ravaged schedules for more than a year have forced flooring retailers to find temporary solutions. When in Selinsgrove, Pa. established 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 try to be very proactive with our communication to our customers by updating both good and bad news. We are also working with our suppliers to find alternatives, if possible.”
Others have ramped up stock levels to stay ahead of the game. That strategy has worked well for Abbey’s Gregerson, who noted, “We don’t promise anything until it arrives in our warehouse. Making sure customers are aware of potential delays at the point of sale seems to help them be more patient and be 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 large amounts of inventory and being efficient. “As a result, we have been able to keep our installation turnaround time at around six weeks, which seems to be mostly well received by our customers at the moment.”
Most dealers say their customers are more understanding about back orders than they were a few months ago. “We tell them the status of their material and preliminary installation windows from the start,” said Marjorie Benson, president of Friendly Floors in Port Charlotte, Florida. “I’d rather check availability before someone signs on the dotted line.”
In the case of Friendly Floors, the supply chain conundrum hasn’t stopped the retailer from thriving – as sales are up 50% in 2021 compared to the same period a year ago.