Dealers find ways to navigate amid tariffs

HomeCommercialDealers find ways to navigate amid tariffs

October 14/21, 2019: Volume 35/Issue 8

By Ken Ryan

As the U.S. and China continued to discuss a potential trade agreement, flooring dealers say it’s business as usual.

More than a year after the first salvo in the ongoing U.S.-China trade war was launched, flooring dealers have managed to stay above the fray and maintain a business as usual posture despite rounds of increases on many flooring products including the LVT category.

The latest news has the U.S. scrapping a planned tariff increase to 30% from 25% that was to take effect on Oct. 15 in exchange for Beijing drastically increasing imports of American crops. The agreement, which is still pending, is meant to provide a brief economic reprieve for both nations as they seek out a broader deal.

In the meantime, flooring dealers have weathered whatever storms come their way. One advantage, they say, is that flooring is an infrequent purchase and, as such, most consumers don’t really know pricing. In that camp is Steve Weisberg, president of Allentown, Pa.-based Crest Flooring, who said, “I don’t believe consumers know what the price is at any given time except if they’re shopping online.” He added that tariffs have not really impacted LVT sales in his store.

Other dealers echoed that sentiment, including Craig Phillips, president of Carpet Country and Barrington Carpet & Flooring Design, Akron, Ohio, who suggested the popularity of the LVT category and its fast-growing WPC and SPC subsegments mutes the impact of price hikes. “We have raised our prices on all products affected by the tariffs and have seen little or no downward pressure on the category,” he explained.

Some dealers told FCNewsthat hardwood flooring has emerged as the category most likely to benefit from tariff increases. “We do see LVT creating buzz in our market, but the comparison of price points once in the showroom and enhancements of other product categories (i.e. hardwood, etc.) with the additional tariffs on LVT has pushed category sales downward while hardwood has gone up,” said Carlton Billingsley, owner of Floors and More, Benton, Ark.

Others have also seen upgrade opportunities in hardwood and, in some cases, laminate flooring as well. In this environment any product that was made in the U.S.—and offers waterproof properties—stands to gain. “As two of our key distributor lines have started coming out of Vietnam, and as Mohawk has finally launched SolidTech Plus (which is U.S.-made), we have actually seen some key products begin to decrease in price over the last quarter,” said Kevin Frazier, president of Frazier Carpet One Floor & Home, Knoxville, Tenn. “Both of these factors have helped us a good bit. Given the fact that we have so many non-Chinese options in hardwood and laminate (even in value products), the tariffs have had zero impact. In regard to LVT, without question the administrative burden is an annoying headache, but our numbers—quarter over quarter: Q2 of 2018 through Q3 of 2019—clearly show a non-stop increase in our LVT sales. And while the rate of increase isn’t huge, given the fact that LVT had already surpassed hardwood as our No. 2 overall category by Q2 of 2018 (behind carpet), a steady, unyielding increase across the lifespan of the various tariff implementations has to be saying that LVT is still pretty much business as usual.”

Frazier’s as well as other dealers say they have actually benefited from the ongoing tariffs—and threats for more—by encouraging consumers to buy now rather than wait. “I would say the tariffs have motivated our customers to make their purchases instead of delay, so that has been beneficial,” said Lauren Voit, president, Great Western Flooring, Naperville, Ill.

Kelby Frederick, co-CEO/owner, My Flooring Texas, LLC, Denton, Texas, has been putting out notices for customers based on vendor input on pricing. “We’ve let customers know that our pricing is good for the day and is subject to increases based on the federal government tariff announcements. So, if they want to ensure they get pre-tariff pricing, they need to buy the same day they are quoted. If they wait, they risk being subject to whatever tariff is implemented at that time. It has helped create some urgency on large orders.”

Throughout this “new normal” of uncertainty, some retailers have found effective ways to work with their suppliers on minimizing price increases. In some cases, suppliers have not passed along the entire cost of the increase, which hurts their margins but helps their dealer partners. In other cases, dealers have pushed back. “We have been relentless in our use of leverage-oriented negotiation, which is a polite euphemism for grinding hardball,” Frazier said. “It has allowed us to keep our average cost increase among our five biggest LVT suppliers across all three tariff implementations at only 13%—and just 10.5% on stocking goods. So that means a product we were retailing for $4.39 a square foot back in August of 2018 we’ve only had to increase that retail price to $4.79 a square foot as of October 2019.”

Although flooring retailers, for the most part, have battled through this tumultuous period, that is not to say it hasn’t cost them considerable angst as they re-price inventory and explain all the confusing changes to customers. “I believe the tariffs have affected retail sales negatively,” said Kevin Rose, owner of Carpetland USA, Rockford, Ill. “The public hears the word tariffs and now think that they are overpaying.”

Must Read

Dealers descend on NRF Distributors market

Ledyard, Conn.—It has been billed as “the Surfaces of the Northeast,” and for many retailers located in New England, upstate New York and parts...

Mohawk Builder + Multifamily promotes Made in USA portfolio

Calhoun, Ga.—Mohawk Builder + Multifamily is aiming to build a more sustainable world with a diverse portfolio of carpet, laminated wood and resilient flooring...

Johnsonite named Top Product in Fuse Alliance Supplier Awards

Solon, Ohio—Tarkett’s Johnsonite family of rubber tile and finishing accessories was named Top Product in the Fuse Alliance Supplier Awards during the group’s annual...

WFCA launches SEAL Academy

Dalton—The World Floor Covering Association (WFCA) has launched the SEAL (Seeking Excellence As Leaders) Academy, a leadership development and certification program billed as a...

Mannington hires award-winning carpet designer

Salem, N.J.—Mannington has appointed Jeanette Himes as manager of residential carpet design. With her extensive experience in carpet design, Himes is set to bring a...

Underlayment: Padding products tout form and function

Underlayment is a crucial part of the flooring installation process. Its benefits include sound absorption, moisture protection, substrate leveling and more.  Choosing the right underlayment...

As seen in

October 14/21, 2019: Volume 35/Issue 8

DOWNLOAD
Some text some message..
X