It wasn’t always like this. In fact, for more than 15 years consumer demand for the product was soaring and the industry was answering the call with new finishing techniques, the latest exotic looks and upgraded performance attributes.
Consumer demand is still there, but her mindset and shopping habits have changed. From researching sites on the Internet to visiting more stores, she is doing an “immense” amount of shopping, according to Mark Woods of Ideal Floor Covering in East Falmouth, Mass. “She’s coming to us after doing some research online and is confused. She then goes to the mass merchant who destroys all the work we did through misinformation. The problem is people want more for less and are willing to believe the mass merchant if the story is believable.”
Sam Roberts, president of Roberts Fine Flooring in Houston, added, “You can avoid talking price, but in most markets you are going to be punished, knowingly or not, for having prices that are not competitive. Customers are obsessed with value. They think they can get anything at near or below cost if they can only find the right source.”
In addition to this new consumer attitude, the wood industry has had to deal with a slew of international and domestic— federal and state—regulations that have both affected the overall supply of raw materials and the cost to produce and distribute a finished product. On top of that, lower-grade products have flooded the market as mass merchants and other large retailers import cheaper goods hoping to capture the new end user.
“It is all about better styling and lower prices,” explained Aaron Pirner of CAP Carpet in Wichita, Kan. “The new, innovative visual effects in oak and other less expensive woods coupled with the drive at the consumer level for more value have hurt the sales of exotics.”
This has created a sector that is being pinched at all ends with the net result being slimmer margins and retailers having to seek alternative ways to create profitable sales.
“One of the most amazing things in wood is how people price it,” Woods said. “By all accounts, wood is a permanent installation; it’s not like some of the other products that will be replaced in five, seven, 10 years. Yet you have mass merchants— and independent dealers— looking to lowball the floor just to make the sale.”
Creating a profitable strategy
According to Roberts, the challenge is to formulate strategies that enable retailers to be profitable despite the extraordinary challenges. “Easy to say; hard to do.”
So what have retailers done to make their wood departments profitable? From the East Coast to the Pacific Northwest and America’s heartland, a number of trends emerge among the successful dealer:
- an educated sales staff;
- taking advantage of the latest merchandising units manufactures have designed;
- working with mills— domestic and foreign—on exclusive programs and deals,
- changing product mix to reflect what consumers are now seeking.
“Our hardwood sales are up significantly in 2010,” said Scott Walker of Walker’s Carpet One Floor & Home in Bellingham, Wash., “and we experienced an increase in 2009 over 2008 as well. I attribute the overall sales increase to four factors: improved selection, extensive use of hardwood vignettes through- out our showroom, extensive training in the category, and significant and well-displayed hardwood stock.”
While Woods is selling more of a lesser quality—“more common grades of red and white oak—than we had been,” his strategy has not changed. “We sell by lifestyle—not product or price. Our goal is to find out what her needs, wants and likes are and then deliver the right product for her home. That can be done only by gaining her trust; that you’re working for her to give her what will work best. And that only comes from a professional, knowledgeable, educated staff.”
As a member of the CCA Global Partners family of buying groups, Pirner said his company has “wholeheartedly embraced” CCA’s strategy for hardwood. “It is a comprehensive plan that covers everything from value grade to top quality for the home. And, it couples amazing product visuals with a unique selling proposition.”
This was done, he added, as a result of “our supplier partners working together very closely with both the members and CCA to make a winning strategy.”
Roberts said both a trained staff and a good relationship with suppliers are keys to being successful. “Salespeople are always important. Every imperfection and inadequacy is magnified and exacerbated when subjected to the unforgiving microscope imposed by a terrible market.
“My approach,” he added, “has been to build and maintain a close relationship with—and offer a wide variety of product from—leading manufacturers coupled with inventory positions that include direct container purchases to offer quality products that allow me to maintain reasonable margin.”
Walker cited his location as a benefit because “the cost of freight to our store from the port of entry is very low. We have available to us values that are not common in other regions of the country. We have some degree of exclusivity overall. We certainly look for such when choosing which products to stock and feature. Our stock suppliers have been excellent in presenting very good values to us.”
Going through a rigorous training program has also paid dividends, he added. “In 2009, we hired a very knowledgeable individual to manage our hardwood refinishing division. With his participation and assistance, we embarked on an extensive hardwood training program for all members of our sales force, which significantly improved their level of knowledge and confidence. The net effect has been to increase our hardwood sales in all areas of the prefinished category while increasing our presence in the refinishing market.”