J.J. Haines’ Bruce Zwicker Looks Forward to the New Year in Flooring
Originally published in NAFCD Distribution Digest, January 11, 2017
Bruce Zwicker is currently celebrating his 13th year with J.J. Haines & Company, Inc. and his 12th year as its President and CEO. In that time, Zwicker has seen his share of change in the business. A humble man, he describes his decade-plus stint at the helm of the nation’s largest floor covering distributor as a “really nice ride,” but credits his executive support team, board of directors, and Haines’ associates as the biggest reasons for the company’s success. Nevertheless, Zwicker was a great person to kick off our round of 2017 interviews with, discussing a wide range of industry-related topics. What follows is our chat:
NAFCD: Mr. Zwicker, what is your opinion of the current state of distributor-manufacturer relations?
BRUCE ZWICKER: I think it’s good, but still in need of improvement. One of the things that’s happening is consolidation of distributors and consolidation of manufacturers. With that consolidation, there are fewer viable distributors depending on the manufacturer and the manufacturer’s needs. There are fewer choices for both the distributor and the manufacturer. The thing that drives the two sides is the customer, what the customer needs in terms of products and services. What’s happened in the last decade has been a proliferation of product types, whether it be LVT [luxury vinyl tile], or how laminate has continued to evolve, and so forth. Meanwhile, the cost of doing business rises and the prices don’t rise enough. So, we all need to get along a little bit better so that we can change the ways we do business and work together more to better service the customers.
NAFCD: Agreed. The product assortment has indeed grown astronomically.
BZ: And the number of imports has grown astronomically. No manufacturer can possibly keep up with every product type that needs to be manufactured. If you look at the size of tiles or the width of wood and the number of different finishes that are going on wood, it’s incredible. If you look at LVT, it’s still evolving. There are multiple types of LVT, different kinds of locking systems, and so forth. As a distributor, you want to serve your customer and bring them the best assortment of the hottest products. This means you have to align with the manufacturers who can do that. You have to put together a powerful package of merchandising and products. And there is a need to have that evolve, as well, over time. Nothing stands still. At the same time, manufacturers want exclusive arrangements with distributors, and distributors like to have exclusive relationships with their manufacturers, and therein lies the dilemma. How do you do that when customers want everything hot and “hot” keeps changing?
NAFCD: What are some of the biggest challenges you foresee for the industry in 2017?
BZ: Number one is profitability. The cost to a distributor continues to rise. Fuel costs are inevitably going to rise again. Increases in wages will accelerate with fuller employment. At the same time, you have margin pressure and price pressure because there is an oversupply of many products. There is not hyper-competition in our industry. But, there is strong competition. That keeps prices down. At the same time, manufacturers are trying to get as much as profits as they can, and the distributor is often the one that winds up getting squeezed on margin while costs are rising.
At the same time, the customer’s requirement for services — like delivery service, claim service, merchandising, and so on — haven’t changed in decades. They still demand next-day or close-to-next-day delivery and emergency shipments. They want the inventory there when they order. So, the distributor is in a bit of a squeeze on profitability and return on investment. They have to keep the inventory, and they have to keep these stringent delivery requirements.
NAFCD: Any other challenges?
BZ: A second challenge is slow growth demand and the loss of market share by the independent floor covering dealer. Demand in 2013 grew 7 percent. Every year thereafter, the market has grown a bit more slowly. In 2016, the market probably grew only 3 percent. New residential has been the main reason for growth. But new residential is probably going to slow in the next two years. As that starts to slow, the market is going to slow further. Meanwhile, you have the big-box retailers, you have specialty retailers like Floor and Décor and the Tile Shop, and you have the encroachment of the Internet. Those things are taking share from the independent floor covering dealer, which is the primary customer of the distributor. If you’re in a slowing market and your major customer is losing share, you’re going to have a challenge. You’re going to have to redeploy, and you’re going to have to find out where the demand is and then get there. Plus, you’re going to have to use scale and technology to optimize your operations to provide top-notch service at the right cost.
NAFCD: What makes your company stand out from the competition?
BZ: Well, besides being over 140 years old, the things that make us really stand out is that we have the best and broadest product portfolio in the industry combined with outstanding delivery and other services to customers. The combination of those two is what the dealer wants. In addition to that, we have very strong relationships. At the end of the day, our customers are small business people. We can relate to them as such because we think of those relationships as critical to how we do business.
NAFCD: Are there any trends coming up in the new year that our readers should be aware of?
BZ: On the product side, we have not seen the end of LVT. Also, if you think of typical floor covering, it comes in three types: tile, roll, and strip. I think what we are seeing is the tile format becoming the most popular, followed by strip and, lastly, roll. That has all kinds of implication for manufacturing, installation, and for the consumer. I think we are in the early stages of the evolution of floor covering products and tile format with different kinds of installation systems.
NAFCD: What drives you? What do you consider to be the favorite part of your job?
BZ: The people, for sure! Whether it be our customers or the suppliers or our own people, we are in an industry that has good values and hasn’t consolidated to the degree where it is dominated by giants. We still are relatively fragmented, and there are still a lot of small business people. That lends itself to a business in which relationships are so very important. There really aren’t a lot of industries left in this country that are predominantly small business people-focused. That’s a very special spot to be in, and it may not last forever.
NAFCD: Finally, how has NAFCD been of value to you personally and/or to your company, in general?
BZ: Haines has a long history with the NAFCD. If my memory serves me, we’ve had three NAFCD presidents over time. We have had four people receive the association’s Lifetime Achievement Award, and four receive the Leadership in Action Award. We appreciate the recognition. It’s extremely important to support your industry’s association, and it’s crucial that our industry maintain and continue to improve the NAFCD. It’s helped us create a lot of relationships. The networking, the relationships, the education, all of those pieces lead to opportunities. All of us in the flooring industry must not ever lose having the NAFCD as a forum in which one can develop those opportunities. Once it is gone, it does not come back. We must keep it healthy and robust.