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Distributors size up growth opportunities in 2012


Originally posted on 10/24/2011
By Ken Ryan

Bob Eady, senior vice president of sales and marketing for Houston-based T&L Distributing, saw something in the fourth quarter of 2011 that he hasn’t seen in three years: positive sales growth. And according to him, it was not just a slight uptick. Sales for T&L increased 7% in the fourth quarter and 16% in December.

Not surprisingly, Eady is taking the news in stride, for like other distributors, he has witnessed sudden increases during this long economic drought only to see a sharp decline follow it.

“Is it a blip on the radar screen or something we can get excited about? We’ll have to wait and see,” Eady said. “But we haven’t seen that kind of growth in three years. To see that is really encouraging.”

Eady isn’t the only distributor who is upbeat heading into Surfaces. Several wholesalers FCNews spoke to are similarly optimistic.

“Clearly there are pockets of strength out there following a multi-year downturn that has been the worst in decades, and that’s a good thing,” said Jeff Striegel, president of Owings, Md.-based Elias Wilf.

Hoy Lanning, CEO of CMH Flooring Products, Wadesboro, N.C., said he is more upbeat now than he was a
year ago. “We are seeing increases in our business and in the attitudes of our customers and salespeople.
The sales are happening a little at a time, like watching my kids grow. Slowly, but growth.”

Others, such as Scott Rozmus, president of FlorStar Sales in Chicago, and Terry Gray, senior vice president of sales and marketing at NRF Distributors in Augusta, Maine, agree that conditions are improving compared to early 2011.

But Bruce Zwicker, president and CEO of Glen Burnie, Md.-based J.J. Haines, the industry’s largest distributor, provided a note of caution to which all flooring distributors can relate: “Although there are some positive economic signs right now, we have been here before.” 

Hot spots
It is no surprise that the resilient category—in particular luxury vinyl tile (LVT)—will continue its strong growth in 2012. “Without question, LVT is the darling of the industry right now,” Eady said.

Jeff Garber, vice president of sales and marketing of Ohio Valley Flooring, said, “We have seen a lot of new products and new technologies that we are watching and focusing on. LVT is the obvious; it has been a growth leader for distribution for the last several years.”

Rozmus added he thinks LVT will continue to lead in terms of growth, design and technical innovation. “LVT is versatile and relatively easy to maintain. Its ease of installation relative to ceramic, stone or even sheet vinyl has helped fuel the growth of the category and will continue to provide traction. Likewise, enhanced design attributes such as the realistic finish and texturing on products ensure that consumers and end users are not merely satisfied but are excited by the visual.”

Striegel said Elias Wilf is experiencing double-digit sales increases in the product. “LVT continues to knock the ball out of the park. The main click products can infringe on laminate and low-end wood products. It feels real solid underfoot and yet offers softness that you don’t get with other hard surface products.”

Another hot product for 2012 will be sheet vinyl as the soft economy has drawn discriminate consumers who seek value-oriented products. “Sheet vinyl continues to grow with this economy,” Lanning said. “Congoleum’s AirStep has been big for us.”

Similar to LVT, Elias Wilf’s sales of sheet vinyl have grown 30%, according to Striegel. “There is probably no product that provides more value for your money than sheet vinyl, and with the value proposition it offers I don’t see that changing. Sheet represents an excellent growth opportunity in a down market.”

While some distributors have de-emphasized the category, others say the new looks in laminate could rejuvenate the segment due to the look and price point. It will continue to be a value category, insiders
said, but with a high-value look.

“For several years there wasn’t a lot of differentiation in the category, but the recent proliferation of 12mil has created a tiering of good/better/best that retailers can easily position,” Striegel said. “12mil has some
spunk to it. It’s thicker and has really helped reinvigorate the category. You look at some of these 12mil handscraped products and you would be hardpressed to tell the difference between it and wood.”

Eady sees T&L’s domestic wood market is gaining traction, thanks largely to recent Mannington introductions, including a robust Mountain View Hickory line. “This is what we’ve been waiting for from
Mannington, and the good thing is the products are not from China.”

Derr Flooring is looking at specialized woods as a growth area, particularly “unique visuals or style, different looks from manufacturers, in the medium and upper price range,” said Rick Holden of the Willow Grove, Pa.-based company.

Striegel said the collapse of the new construction/builder market—a catalyst for hardwood sales in the mid-2000s—prompted changes in the marketplace, which has shifted to residential replacement/remodel.
“Wood was ready to be redefined and we see that transition continuing. There is some positive traction going on in wood. There’s a whole new approach at retail.”

Market opportunities
John Anderson, vice president of Memphis, Tenn.-based BPI, said the distributor’s goal this year will be to enhance its business “by selling everything we have and knowing everything that is happening in our

Echoing that approach is Derr Flooring’s Holden, who said, “We’re going to work as hard as we can to get as much business as we can out in the field.”

J.J. Haines’ Zwicker said while multi-family is a hot segment and LVT is strong, there is no magic bullet. “Only an acquisition or other bold step will move the meter big time. Instead, the growth opportunity [in 2012] is gaining share by doing everything right while reducing cost.”

According to Zwicker, “everything” means promotion, loyalty programs, new products, sales service, delivery service, inventory, credit and morale. “The company that still has the energy, vision and cash, wins. Probably, the real opportunities are strategic. Positioning for the future can pay off big later on. At Haines, we keep our eyes downfield while scrambling in this miserably tiring market.”