By Ken Ryan
When the national nightmare that is the COVID-19 pandemic is in the rear-view mirror, and some semblance of normalcy returns to the American economy, what will the flooring retail landscape look like?
The consensus among dealers is that most will make it to the other side but will need a helping hand. During this crisis, manufacturers have supported their retail partners in many different ways, and no doubt will be there to help pick up the pieces when it’s over.
So, how can manufacturers help ease a retailer’s transition from shutdown to reopening? FCNews reached out to retailers both large and small to help answer that question. Here’s what they had to say:
“I’d like to see a continuation of what some of the suppliers, i.e., Shaw, Mohawk and Engineered Floors, for example, have already done in regards to extended terms for payment,” said Eric Langan, president and owner, Carpetland USA (The Langan Group), Davenport, Iowa. “I appreciate that they have decided to extend terms on the front-half of this crisis; it would be beneficial to continue it when we’re on the backside of it for a period of time until the industry can get a bit of traction again. Retailers, distributors and manufacturers are all going to have to work together in order to protect the overall health of the industry.”
Steve Weisberg, president of Crest Flooring, Allentown, Pa., has several items on his wish list. “The first is already in progress, and that is extended terms on net invoices from 30 to 60 days,” he explained. “I would also like to see discount terms extended as well. Another would be some awesome consumer finance options. My company utilizes financing to a great degree, but offering 36-month terms to the public with reasonably low rates to dealers will do two important things: 1) provide the consumer with a vehicle to make a purchase considering they will be in cash-flow problems as we will be; and 2) approved financing gets the dealer the funds into their accounts right away—and that will help with cash flow.”
By and large, retailers ranked extended payment terms and consumer financing options high on their lists as being the most beneficial given the fact cash flow will be tight in the short to medium-long term. Adam Joss, co-owner of The Vertical Connection, Columbia, Md., said he is eager for extended payment terms. “At this point, that’s the most critical and important thing vendors can do. I believe our industry has a very bright future on the other side of this horrible nightmare. We just have to get to the other side.”
Michele Batye, president of Dave Griggs’ Flooring America, Columbia, Mo., hopes her manufacturer partners understand what a hit independent retailers have taken. “For the most part, we have chosen to close or reduce operations for the safety of our employees, clients and communities, but that hasn’t been the case for our box store competitors,” she explained. “I would hope the manufacturers show us grace on the part of extended terms for up to six months.”
The other side of this equation is that many consumers—despite cashing their stimulus checks—may be hesitant to get back in the market. This, observers say, will require some aggressive incentives to get consumers to feel confident in making big-ticket purchases again. “Consumer finance will be a must for people to invest after not receiving ample income over the past four-plus weeks,” said Cathy Buchanan, owner of Independent Carpet One Floor & Home, Westland, Mich.
Phil Koufidakis, owner of Baker Bros., with multiple locations in Phoenix, agreed, adding, “Over the short term, extending consumer finance options would be a good idea. We will be happy to go back to business as usual when this is over.”
Needs run the gamut
Indeed, retailers’ needs vary depending on both short- and long-term objectives as well as dealers’ current predicaments as they face off against this pandemic. Take Syosset, N.Y.-based Country Carpets, for example. With prescheduled installations and projects on hold due mainly to clients’ having reservations about inviting strangers in their homes—coupled with temporarily shuttered showrooms and idle workers—there is a need to educate those employees currently working from home.
“Most of our salespeople—aside from the managers—aren’t coming in,” said Harris Cohen, Country Carpets owner. “So, what I’ve decided to do is institute online training. We’re part of CCA Global, so the members are all required to take part in training via the co-op’s Online University. I’ve also required them to do their Hunter Douglas window treatment training. It would be very helpful to us if manufacturers offered more online courses and web-based product knowledge training sessions. Salespeople—both those who have been laid off or still on staff—have a lot of downtime right now. It’s really important to keep them engaged.”
Over the long term, Cohen said manufacturers need to ensure an ample source of supply when shoppers eventually re-enter the market. “It’s important that manufacturers not deplete their inventories,” he stressed. “Once business comes back, people are going to want their flooring immediately—that’s not going to change.”
The last item on Cohen’s list is cash discounts on orders. While some vendors have already extended terms to 60 days—which, he said, has been “helpful and extremely important,” for the long-term recovery, he feels the implementation of cash discounts will improve the retailer’s bottom line. “Plus, it helps the manufacturers because they will be able to get paid quicker.”
Then there are those like Deb DeGraaf, co-owner of DeGraaf Interiors, Grand Rapids, Mich., who is primarily seeking patience from her manufacturer partners. She feels some of the cash-flow pinch might not resonate until May or June, and the lack of staff due to employee layoffs will become an additional strain when demand comes back full force.
“We are all going to be faced with tough decisions as we navigate through this, but more importantly as we navigate through the other side,” DeGraaf explained. “I have reached out to many of our suppliers for resources regarding online training and Zoom meetings with our sales reps, and many of them have delivered and answered those needs.”
DeGraaf has also requested longer term financing to be incorporated into the spring sales when they do finally launch. “Remember, we will be competing against the car manufacturers and furniture companies who are all already offering five-plus years for people to pay,” she explained.
Beyond extended payment terms, one retailer floated the idea of asking manufacturers for consideration toward the rent/mortgages that retailers are paying during a time when their doors are shuttered and yet are housing samples and displays for their vendors.
“Manufacturers seem to be in the business of selling displays more than selling flooring sometimes, and we have all invested a lot into our merchandising equipment,” said Lauren Voit, owner of Great Western Flooring, Naperville, Ill. “This is an eye-opener for how much overhead it takes these small businesses to sell a product on a manufacturer’s behalf. So, I would ask that if they want to make a display for a new product, and they want that product placed throughout the country, then don’t charge for a display. If they believe in their product and in the sales ability of their customer, they should provide the displays at no charge and remember how much they go out of pocket for that display to sit on a floor whether the lights are on or the lights are off. I’ll tell you what—after this, I’m not paying for any displays again … the world is changing. I’m excited to move toward a virtual platform.”
Maintain marketing momentum
Conventional wisdom shows that advertising in a recession is actually a smart business move to grow your business both now and for the future. According to McGraw-Hill Research study of U.S. recessions from 1980-1985, out of the 600 business-to-business companies analyzed, the ones who continued to advertise during the 1981-1982 recession hit a 256% growth by 1985 over their competitors who eliminated or decreased spending.
To that end, retailers suggest manufacturers could help with national advertising across TV and the Internet to drive demand. “Anything the manufacturers can do will help, because flooring dealers are not going to come out of this with any money to spend on advertising,” said Elisabeth Stubbs, owner of Enhance Floors & More, Marietta, Ga. “I see Floor & Décor commercials on TV every day. The big manufacturers need to be doing this, too. HGTV is a great place to advertise.”
(Megan Salzano and Reginald Tucker contributed to this story.)