NeoCon 2012: Exhibitors see quality, optimism in attendees

Home Inside FCNews NeoCon 2012: Exhibitors see quality, optimism in attendees

Chicago—Against the backdrop of an inconsistently recovering commercial market, Neo-Con 2012 attracted nearly 41,000 design professionals. But that number was only a small part of the story. Just about every exhibitor with whom FCNews spoke extolled the quality of attendee at the country’s largest contract furnishings market.

This was particularly illustrated in the carpet showrooms, many of which boasted overflowing crowds throughout the first two days. Continuing the trend from last year, architects and designers were doing more than just browsing and executives were happy with the increasing number of projects in the works.

Case in point was the Aquafil showroom, where Roy Hick-man, manager of marketing and product development, saw a consistent flow of customers from 9 a.m. to well past the 5 p.m. close on day one. “Traffic was much greater than last year, and the people coming in are decision makers and not tire kickers.” These people also brought with them a renewed optimism. “Design firms are hiring again because they are seeing an increase in the number of projects.”

Hickman said more mills are introducing more products constructed of Aquafil fiber than ever before—Mannington Commercial is new and Fortune Contract stepped up its game. “We filled some gaps in our palette; these color additions have gotten a great deal of attention.”

It was a similar story in the Bentley Prince Street showroom, where Anthony Minite, president, could not have been happier. “The show has been excellent. We had people wanting to see product at 9 a.m. on Monday and traffic remained consistent throughout the first two days.”

Like Hickman, Minite saw a degree of optimism and energy that had been lacking for the past few years. “The designers have been excited that business is truly getting better. There has been a break in the pipeline of projects that had been held up but are now in the design phase. This translates into business in the short term.”

Future looks bright

Mark Falanga, president and CEO of MMPI, owner/operator of the Merchandise Mart, which hosts the show, said NeoCon is all about innovation. “Across the board, this industry has become very product focused. Product is defining how a company performs and that message is sent out here. NeoCon is a trade show where products are introduced, and a very high bar has been established. In the flooring industry, if you don’t have the product, you get left behind.”

While the contract furnishings business is doing “pretty well, nothing extraordinary” right now, Falanga anticipates an uptick soon. “There is a disconnect right now between corporate earnings and employment. When corporations start reporting positive earnings, there is always an uptick in employment that parallels earnings. However, over the last two years, even though S&P earnings have been meeting and beating expectations, the hiring has disaggregated from the earnings, which has never happened before.” However, he believes companies are sitting on a lot of cash, and there is pent-up demand for products sold through NeoCon showrooms. “Money will be spent on this. As hiring increases, there will be competition to retain good employees, and a lot of these environments have not been updated in four, five, six years.”

Falanga said this bodes especially well for carpet mills. “Traditionally, office space has been defined by walls. Carpet was homogeneously designed to define the entire space. Now what’s happening is there is all this open space. You don’t even see walls. So there has to be a definition of space in an office, and that has to come from the flooring covering. And the designs coming out of the category are extraordinary. Carpet is becoming a canvas for art.”

Segment strength

Segment success has been across the board for flooring manufacturers, and all agree business is up from 2011. At Shaw Contract Group, John Stephens, vice president of marketing, told FCNews business is up double digits. “Corporate is still leading the way in growth—vacancy rates are shrinking and inventory is being absorbed. Hospitality is coming back very strong. Many of the flagship brands see travel coming back. There is pent-up demand to renovate rooms that have blown past their normal cycle, so there is much more renovation work.”

Mohawk is also pleased with the first half of the year, according to Tom Lape, president of both the commercial and residential divisions, al-though he is seeing a slowdown on the commercial side right now. “We had some pullbacks in building indexes late in 2011. That precedes our market six to nine months.”

Mannington was touting growth as well, particularly with its LVT and in the healthcare segment. “The demographics continue to require healthcare facilities to improve to increase capacity, so there is a lot of renovation going on,” said Jack Ganley, president. “We are even seeing some new construction. In fact, it’s the only channel where there is new construction.”

Zach Zehner, the company’s vice president of commercial hard surface said much of Mannington’s efforts in 2010 and 2011 are bearing fruit this year. “We revamped BioSpec, our main homogenous line, in 2010, so we saw it grow in 2011 and the first half of 2012. We doubled the line in terms of color, drove in recycled content and put in a no-wax urethane aluminum oxide wearlayer with antimicrobials. So it has features and benefits that resonate with the healthcare channel.”

He added many of Mannington’s product stories resonate with this segment. “We are the only company to offer a 9-foot width, which provides cost savings in healthcare. We also have the Made in the USA story, being the only domestic manufacturer of homogenous and heavy heterogeneous sheet goods. So we have a service story as well.”

Mannington’s recent purchase of Amtico is also finding favor with healthcare, according to Tyrone Johnson, the newly appointed head of Mannington Commercial’s hard surface division. That’s because healthcare is a segment whose needs do not necessarily relate to consumer confidence or consumer spending, he said. “We have an aging population and there is a need for care. Many facilities in the U.S. are in desperate need of renovation. So the need for cleaner and safer facilities is there and we believe it will be there for years to come.”

Retail has also been a bright spot for Amtico. “We still have large retailers revamping their spaces,” Johnson said. “Part of it is pent-up demand; when the economy tanked, they weren’t spending any money. Also, Made in the USA gives us the ability to quickly turn around product. It’s helped us gain a lot of customers.”

Over at the Tandus showroom, Glenn Hussmann, president and CEO, classified the first half of 2012 as something of a roller coaster. “We saw a great start to the year, then we experienced a little slowdown, and now we have seen strong orders the past seven weeks. The market does not seem to know where it wants to go.”

Hussmann agreed with the masses in that corporate is most robust, but unlike other mills, Tandus is experiencing good activity in government and education.

“Education has been our strongest segment for decades,” he said. “Our unique hybrid resilient product, Powerbond, is playing well. You get the best of both worlds from resilient and carpet standpoints. Power-bond offers highly desired acoustics, a liquid impermeable surface, ease of maintenance and repairability, cushion underfoot and good air quality characteristics. And during the last five years, the hybrid resilient product has been chosen for its aesthetics.”

Corporate, education and hospitality are growth areas for InterfaceFlor. “Corporate has been good after a slow fall and has really started to get active,” said John Wells, president and CEO, Interface Americas. “Education—both K-12 and higher—will be a growth area this year and there will be bigger growth in hospitality.”

Why? “Carpet tile is gaining a bigger acceptance in hospitality. It’s a remodel market, and remodel markets are great for us.” Carpet tile—K-12 in particular—still has a low penetration, so we are taking share. The product doing well here is the i2 random mergeable dye lot product line. Then we add innovations like tactiles.

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