More than 1,000 dealers, 3,600 people attend biennial event
By Matthew Spieler
Volume 26/Number 19; February 4/11, 2013
Orlando, Fla.—With a record crowd of more than 3,600 people—including 1,000-plus individual dealers—on hand for its biennial Shaw Flooring Network convention, Shaw Industries gave attendees plenty of reasons to feel good about the coming year—from new, innovative products across all categories to why the industry will see growth over the next few years.
“The last six years have been tough,” said Randy Merritt, Shaw’s president. “And each year we’ve started by saying it will be better. It’s been more a projection of hope. But this year we have more than hope; we are convinced the industry is in store for not just a better 2013 but beyond.”
Vance Bell, Shaw’s CEO, added, “This is the first time [since the recession began] that we can say with absolute certainty things are looking up and will get better for the industry—and we don’t think D.C. politics will impact it.”
Even Warren Buffett, CEO of Berkshire Hathaway, Shaw’s parent company, chimed in. Telling the audience in a pre-recorded video interview, he said, “We had a tremendous bubble that burst, but we have been recovering. It’s taken longer for the housing market to recover than we would have liked, but it, too, is recovering and will continue to get better. I guarantee you will have a better life than your grandparents.”
All the optimism is due to the housing market and what is projected for the coming years. Bell said there are various factors people look at regarding the economy and it makes them wonder why flooring has not picked up like other areas. “But the only real driver is housing.” He noted there is a 95% correlation with new home completions, and if you track the industry against net residential investment, there is a 98% correlation. “We’ve looked at this metric over the last 20 years and floor covering has stayed aligned with it.”
Both net residential investment and new home completions are projected to increase in each of the next two years and there are strong indicators as to why they will actually grow for the rest of the decade.
Bell pointed to a number of other data in the housing market and why it has company officials confident of better times ahead: Housing inventory is at a 30-year low, the average price of a new house has started to increase and mortgage rates remain at historical lows.
One other key driver he highlighted is household formations. “Normally they averaged about 1.2 million a year but had dropped to 500,000 in 2011. It is now back up to 1.1 million and projections are for household formations to be about 1.4 million for the rest of the decade.”
Factor in about 400,000 house demolitions each year, and Bell said it means housing demand will be between 1.7 million and 1.9 million a year. “The housing recovery has begun and with it the floor covering recovery has begun,” he declared.
Paul Imwalle of J&J Carpets in Bend, Ore., said it was good to “see all the positive data because that’s what we’re witnessing. Last year we made money for the first time in a number of years.”
George Rohan of Home Carpets in Boardman, Ohio, agreed. “Business has been good for the first time in years. There’s more foot traffic and consumers are buying better goods.”
Jim Mudd, owner of Sam Kinnairds Flooring in Louisville, Ky., said business in January was “booming—even Sundays were strong. And it didn’t matter if we advertised.”
With business starting to come back, the question then becomes, “Is your company better prepared for the upturn than when the recession started—not better off, but prepared?” Merritt asked. “It requires a different strategy and way to manage than when you are fighting to stay in business during the downturn. [That’s why] more businesses actually fail during a recovery than during the slide.”
To ensure they are not a casualty on the way up, he told FCNews retailers “must have the proper tools and processes to succeed in every aspect of the business.” While having new, innovative products are at the top of the list, there are many other areas that require just as much diligence in this post-recession world. “We have worked hard for this group to create other touch points for them to differentiate themselves, but they have to grasp it. We can create all the tools necessary but if they don’t use them it is a wasted opportunity.”
Steve Boardman of MMM Carpets in Santa Clara, Calif., agreed. He was one of eight retailers who took part in what Merritt referred to as a “real working lab” by going through Shaw’s newly developed Total Business Transformation (TBT) program. The dealers represented different sizes and levels of success; came from different parts of the country, and came to the program with different problems concerning their businesses, but combined embodied something to which just about every retailer could relate.
Based around four key initiatives, TBT aims to teach dealers such things as how to utilize the many tools Shaw has developed specifically to help retailers—including the new Smart Target marketing that provides a dealer with important consumer demographics down to as little as a 5-mile radius from the store—as well as how to think about their business in a different way.
The result? “I’ve increased my business,” Boardman said. “I’m a better manager, I’ve built a better team, I have a better understanding of the different financial aspects of the business and how they interrelate.” Put simply, he noted, “Now I own my business; before it owned me.”
Troy Wonnacott of Bassett Carpets in Longmont, Colo., said, “Shaw brought the weapons to the fight I either don’t have or have a hard time getting. I have Shaw at my back.”
What makes TBT so effective, Boardman said, is it is never about selling floor covering or pushing dealers to buy more from Shaw. “We can have blinders on as we try to run our businesses day-to-day and Shaw got us to take them off. TBT is about making us better managers/owners—actually better people overall. The leadership skills apply to both business and life.”
Beyond coming out with one of its largest product introductions, with literally hundreds of new SKUs spread across every product category (including Caress, Shaw’s nylon answer to the ever-growing soft carpet phenomenon), the mill rolled out an array of marketing programs and other services all designed to help retailers gain market share.
Ross Cherry of Cherry Carpets & Flooring in Portsmouth, Va., who was learning about SFN vendor My Flooring Warranty, a value-added service dealers can offer customers to protect their flooring investments, said, “This is something that helps a smaller dealer compete against the boxes. It’s really a no brainer, especially since I know Shaw is behind it.”
(Editor’s note: FCNews will focus on Shaw’s extensive introductions next issue as well as online at fcnews.net)