By Ken Ryan—Following what for many was a record-setting 2021 for top-line sales, flooring dealers say another memorable year can be attained despite rising inflation.
Indeed, nearly two years since the beginning of the COVID-19 pandemic helped usher in the home improvement spending bonanza—a boon for the flooring market—dealers report retail traffic remains healthy as consumers continue to spend. The bigger picture bears that out as U.S. retail sales rose in January by a seasonally adjusted 3.8%, according to the Census Bureau.
“Through six weeks of the year, we see only a significant increase in business,” said Casey Dillabaugh, president of Dillabaugh’s Flooring America in Boise, Idaho.
Brian McGee, vice president of sales and marketing for Ambassador Mid-West Floor, Chesterfield, Mo., had similar results. “The new year started off very strong for us—we are up in showroom visits, sales and installations over the same time in 2021,” he said. “In fact, we saw a significant spike in showroom visits and sales starting in mid-January, and the trend is continuing in February.”
Farther East, winter weather has only slightly put a crimp in Craig Phillips’ three Ohio-based flooring businesses. “We had a couple of large snow events and then extreme cold that I believe had a pretty big impact on walk-in traffic,” he said. “Despite this, business-wise, we ended up about 13% in January, and our projection for February shows a similar increase.”
For scores of flooring dealers, 2021 was the best year in their history in terms of sales, surpassing a surprisingly strong 2020, which was impacted for weeks by the COVID-19 shutdowns. As we enter the third month of 2022, retailers say they expect their businesses to grow between 5% to 10% on average for the year, albeit some would take a smaller percentage gain and call it a success. “I do think the combination of robust wage increases, strong home sales, low interest rates and intense FOMO [fear of missing out]-driven consumer urgency are going to outweigh inflation concerns,” said Kevin Frazier, president of Frazier’s Carpet One Floor & Home, Knoxville, Tenn.
Among the issues confronting flooring dealers, inflation concerns them the most, followed by fear of rising interest rates, with most acknowledging that rising prices would make business more difficult. “Flooring is a put-off item for the residential consumer,” said Eric Langan, president, Carpetland USA (The Langan Group), with nine locations across Iowa and Illinois. “She’ll only decide to purchase when she feels she has the finances to do so. If everything is more expensive—gas, groceries, utilities, etc.—the consumer may choose to put off purchasing flooring in lieu of basic needs.”
Some flooring dealers say they are forecasting a spending slowdown for the second half of 2022 while others say it may occur much sooner. “Inflation and the potential for higher interest rates are big concerns as we move closer to the spring selling season,” Phillips said. “Our retail business could be hit hard as people find discretionary spending monies facing stress due to rising costs in fuel, home heating oil, natural gas, groceries and just about everything they buy.”
Bill Zeigler, co-owner of Charles F. Zeigler & Sons, Hanover, Pa., noted that while “sales have been good and steady, inflation is totally out of control and will sooner or later have a detrimental effect on business. The Federal Reserve is also planning interest rate increases. The second half of this year should be quite interesting.”
And yet, even with soaring inflation, consumer demand and their willingness to spend remain powerful forces in the market today, according to dealers like Palmer Johnson, vice president of Johnson Floor & Home, Tulsa, Okla. As he explained, “We continue to see demand in the housing market at an all-time high, and while new construction continues to represent a substantial portion of our business, I anticipate the increasing costs of building a new home will drive many prospective home buyers to select an existing home and remodel.”
Similarly, in Fort Wayne, Ind., 3 Kings Carpet is benefitting by continued robustness in new home construction. “We have a lot of new homes that were started in the fall of 2021 that are now ready or close to being ready for flooring,” said Jeremy Wirges, co-owner. “As of right now, traffic is strong and my phone is constantly ringing, so I feel good. Home inventory is the biggest problem in our area. We don’t have enough homes to keep up with the demand and builders can’t build them fast enough.”
And then there are those whose business is so rock-steady that inflation seems to have little impact. “For us, 2022 is starting out the same as how 2021 left off—fast and furious,” explained Don Cantor, owner, Lake Chelan Interiors, Chelan, Wash. “We are not too concerned with inflation and higher interest rates slowing down sales at this point as we are in an area that is exploding with growth of new homes and a lot of remodel work. Customers seem to have a lot of money and want to spend it.”