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Value is provided through education and networking

11/29/2011

[NASHVILLE, TN] — Talk to the executive board of the North American Association of Floor Covering Distributors (NAFCD), and they agree their mis- sion is simple: Provide value. And that value proposition extends from affording a better experience at its annual conference to the programs it offers throughout the year.

Much of the direction NAFCD takes is steered by member feedback. For example, according to outgoing president Bob Wagner, president, L. Fishman and Son, Baltimore, the organization’s single biggest initiative over the past year was commissioning a member survey. The result: “They want us to provide educational opportunities, specifically ‘how to’ educational opportunities. How do I sell more, how do I merchandise better, how do I collect receivables better, how do I train my sales force better.”

Another finding was that members miss the chartbook, which served as a benchmarking tool. “We stopped doing it because it was the same 6 to 10 distributors reporting every year,” Wagner said. “The information was getting stale. But we had no idea members wanted it back. So now the question is how do we get more members to participate. That’s something we will be working on.”

Needless to say, education will be a key initiative for NAFCD in the coming year. “We have to add back some core educational products,” said Harvey Johnson, president, Mastercraft Flooring Distributors, Miami. “We also have to involve other segments of the industry. Maybe have the buying groups come in and talk about the relationship with wholesale distribution. We need to look outside the box and identify where we need to go.”

Along with ongoing education, it has been requested that the group bring back tracks at its annual conference—a sales track, operations track and finance track. “Our Distribution Management University had more attendees this year than we had the three prior years,” said George Roth, president, Lockwood Flooring, St. Louis. “That’s a clear sign distribution- based companies are seeing the value of education. But many distributors are familiar with the ‘tracks’ format, so that’s what we will move back to next year. We will also look to figure out how we can open it up to more levels within an organization.”

Wagner noted NAFCD is constantly tinkering with the conference format in order to improve the experience for both distributors and manufacturers. “Every member of the executive committee is tasked with talking to every exhibitor showing here. After collecting our feedback, we will tweak this trade show as we see fit.”

One issue that seemed to come up this year more so than in years past is manufacturers that opt to hold court in private hotel suites rather than participate in the Distributor Marketplace. While Wagner would prefer the manufacturers support the group and exhibit on the floor, Roth acknowledged a privacy issue. “Everyone can see which distributors are talking to which vendors. That’s when phones begin to ring. So we have to come up with a value proposition to make that work. We rely on the support of the manufacturers, both in terms of attendance and financial support.”

Value proposition

Flooring distribution seems to be the one segment constantly having to prove its value. “You try to show your degrees of dif- ferentiation and how you can add value to that customer,” Roth said. “We have to help make our customers more prof- itable and build their businesses along with ours. That could include offering new lines and new categories.”

Johnson believes distribution is more important today than in years past. “We are probably the banking resource for a number of retailers who would otherwise have gone out of business. We are the claims resolution. We offer just-in-time inventory. There’s always a sense of immediacy because the retailer is so concerned about losing an order. So it’s credit, service, merchandising and more. Today’s distributor really cares about the retailer. We’re not looking to sell product; we care about keeping that retailer in business.”

Wagner acknowledged the distributor’s role has changed as the selling channel has changed. “For the longest time it was pretty clear cut. But those rules don’t apply anymore. The channel is muddy. There is a series of ways you can connect the dots from manufacturer to end user. And because we recognize this, NAFCD has an obligation to its members to help define what the channel looks like today.”

Conference benefits

While NAFCD membership has held steady for the past three years, Roth admitted attendance at the annual conference has waned. The good news is the same number of companies is represented.

“For my group, the best things about the conference are the educational component and the networking—the sharing of thoughts, the best practice sections, the DMU. You get to meet your peers in an open environment. You are not protective with your business. You realize after coming for a couple of years this is an organization that will help you. We are all trying to succeed in the distribution business. The education and networking are more important today than at any time in this industry.”

Johnson said he is always looking for that one takeaway, something that will save money and improve efficiency. This year he learned there was an idling law in transportation. “Fred Reitz of J.J. Haines told us there is a computer chip that allows the truck to shut off after idling for a certain amount of minutes. That can save so much in fuel.” He also cited the networking opportunities. “I always look forward to having a face to face. Then I can call that distributor throughout the year.”

Wagner agreed. “It’s almost magical what happens here. The cloak of secrecy disappears when you talk to your peers. Over a cup of coffee, I can stand with someone whose opinion I respect and ask, for example, what his company is doing about healthcare, or how he saves money on diesel fuel. People may be hesitant to share that information on the phone, but not face to face.”

Distributor Marketplace

Manufacturers—both first-timers and existing companies—and distributors alike were touting the value of the Distributor Marketplace. Some manufacturers were using the event as a launching pad to market, while others were seeking to fill territory voids or simply reconnect with the troops.

Michael Raskin, the former president of Metroflor, took the wraps off his own brand, Elevations. He told FCNews one of his goals was to gain feedback from floor covering distributors. “These distributors are as knowledgeable a group of people as you can get in one place at any one time on the floor cover- ing market. Their feedback is better than any focus group.”

Raskin said many distributors viewed Elevations as “impressive,” and its gravity grip backing as the next “game changer.” He added that the display and marketing materials were also very well received. “The timing of our product launch could not have been better. My sense is distribution is eager to get a quality luxury loose-lay tile product in place. That is the future of floor covering.” He added that Elevations is both easier and faster to install than other floating tiles and planks.

Another company launching at the Marketplace was Horizon, a new hardwood flooring brand formed by Alex and David Shaoulpour, the former having eight years experience of customizing private label programs for national distributors. “After bringing innovative, competitively priced, quality products to the market, I felt I could bring even more value under my own brand,” said Alex Shaoulpour, president.

The goal in Nashville was to formally introduce the Horizon brand, a collection of solid and engineered domestics and exotics with new finishes and surface treatments. Horizon is stocking 50- 60 SKUs in the Midwest. Ark Floors has an established distribution network but exhibits at NAFCD because Ira Lefkowitz, president, believes it is important to stay in front of your customer. “This is a good forum to bring everyone together. We have been having individual meetings at the booth and previewing some of the products we will be introducing in 2012. This is also a great venue to get a pulse on the market.”

That was also the sentiment at Homerwood, which was making its NAFCD debut. “This is a great opportunity to network and reconnect with our current distribution base,” said Wendy Wescoat, marketing manager. “We also want to fill a few distribution voids. This is where the seeds are planted, and we will continue these dialogs.” She added that one advantage Homerwood has as an established company, distributors are aware of the brand. “We have a line that would not be a replication of their current offering.”

On the distribution side, Ray Prozzillo, president and CEO, A&M Supply, said the networking opportunities presented by the NAFCD Marketplace is invaluable. “You get to see a lot of decision makers in a short amount of time. That’s value in terms of my time. I can take three days, come here and get a lot of sourcing work done. We are always looking to acquire additional distribution territories and pick up additional lines in the areas we currently serve. In fact, we worked out an agreement to expand a couple containers a month with a new hardwood supplier. We are also considering adding a new underlayment supplier. You see a company come here for five years and you know they are legit.”