By Ken Ryan Flooring retailers remain optimistic that the record sales achieved in 2021 will carry over into the first part of 2022, suggesting that demand for flooring continues to outweigh supply chain disruptions, inflation and COVID-19 variants.
Since the spring of 2020 the flooring industry has greatly benefited by the stay-at-home-economy ushered in by the pandemic and the subsequent stimulus money that was pumped into the economy in 2021.
As for 2022, while no one can accurately predict the impact COVID-19 variants will have, it is certain that supply chain disruptions and inflationary pressures will be around, much as they were this year.
“I suspect that 2022 will be another solid year, just not to the tune of 2021,” said Eric Langan, president/owner, Carpetland USA (The Langan Group), with nine locations in Iowa and Illinois. “I believe we’ll start seeing sales and traffic returning back to 2019 levels, plus inflation, for the first quarter of 2022. Most retailers will be very busy shipping/installing their back-logged business during this period, but I believe we will see a little bit of a pullback from late 2020 and 2021 levels with regards to sales.”
Others sounded more guarded about future prospects given recent developments. “We are ending 2021 very strong with 20%-plus growth—top line and bottom line,” said Olga Robertson, president of the FCA Network Shorewood, Ill. “[However], we are now approaching 2022 with a new variant and the possibility of more lockdowns and restricted travel that would add even more pressure on economic growth and inflation in particular.” Most retailers have seen growth, according to Robertson, if for no other reason than the number of price increases this year—which she estimated added up to more than 25% assuming they passed it on to the consumer. The good news, she noted, is the consumer still has an appetite to spend money as many are flush with cash or have made some smart investments in the stock market. “However, inflation may be the outlier,” Robertson warned. “Inflation is a tax on the consumer, and right now the people at the bottom are suffering the most with gas and food prices. But when it starts to affect middle- and upper-middle income folks you will see them pull back.”
Update on the backlog
Based on current activity and what’s pending in their product pipelines, many flooring retailers say business momentum will continue through at least the first quarter of 2022, perhaps even well beyond that. As Greg Loeffler, COO of Pierce Flooring, with three locations in Montana, explained, “We have really strong business in the pipeline heading into the new year, and current sales activity has only cooled slightly as we generally expect in December. We are very optimistic regarding our expectations for Q1 of 2022 and have great optimism for all of 2022. New home starts are still very strong in our markets, driven to a degree by the migration of folks looking for that primary or secondary residence in Montana. Existing home remodel projects continue to be a large portion of our business, along with strong sales in property management and commercial work. Our diversity should keep our numbers up and business strong through 2022.”
Where the real estate market remains hot you will likely find flooring retailers that are percolating. That was true in Montana and is also the case in southwest Florida, where Montgomery’s CarpetsPlus ColorTile covers Lakewood Ranch and Venice, two strong builder areas. “We have several pending contracts with our retirement communities that we fully expect to go through in the first two to three months of next year,” said Mike Montgomery, vice president. “We already have two big projects on the books for January. Everything so far points to a robust first quarter with new projects. The high demand for real estate in our area has also allowed us to already schedule and project for an uptick in retail sales. The real estate market is very positive and remodels as well as staging of houses on the market have been very positive. We work with several real estate agents as well as custom home remodelers that have projected jobs already through March of next year.”
Some flooring retailers said they are so busy they can’t keep up with the demand. “We have more work under contract than we have installers to install it,” said Lauren Voit, president of Great Western Flooring in Naperville, Ill. “We continue to limit our sales in order to keep pace with our rate of production capacity. This has been extremely frustrating, but we are grateful for the current demand.”
The still-encouraging news, retailers report, is that despite all the adversity caused by limited product availability and several rounds of increases, consumers are still buying. “Based on both business in the pipeline and current demand, I fully anticipate business to remain robust through at least June of 2022,” said Kevin Frazier, president of Frazier’s Carpet One Floor & Home, Knoxville, Tenn. “We had our best ever year in 2021, but I do expect ’22 will be better than ’21—not by much, but by a few pennies.”
Not every flooring retailer is ready to make such a bold prediction about 2022. Some are concerned that rising inflation, among other factors, may dampen business at some point in the future. “Between the new COVID-19 variant, inflation, interest rates and supply chain issues, it will be a tall order to beat the highs of 202,” said Raffi Sarmazian, managing director at Sarmazian Bros. “But I remain confident.”
In some instances, the lag in production and shipping has actually motivated consumers to buy now rather than wait and possibly face delayed projects. Jeremy Wirges, co-owner of 3 Kings Flooring, Fort Wayne, Ind., has customers who are waiting longer and paying more for product and are not at all discouraged from buying.
In nearby Rockford, Ill., Carpetland USA is poised for a quick start in 2022. “We have some large commercial projects that have been in the pipeline for over a year finally being released for contracts,” said Kevin Rose, president/owner. “I am hopeful that the retail sector will remain strong while we continue our extensive advertising to promote flooring and continue to gain market share of the disposable dollars folks still have.”