Retailers see no overt signs of pending slowdown

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By Ken Ryan—Flooring’s bull market continued in the first quarter of 2022 as specialty retailers reported generally strong sales, exceeding or in line with the year-ago period. Expectations point to a robust Q2, with sales activity outpacing inflationary pressures.

Since May of 2020—just after the COVID-19 shutdowns started to ease in many areas of the country—flooring retailers have been riding a wave of momentum that has produced record sales quarters on the strength of home improvement projects and renovations.

Nothing seems to stop the rally, either. The first quarter started with the Omicron variant sweeping through the country, coupled with harsh winter weather that led to a slow start for some retailers. However, it didn’t last long.

“February and March were much stronger [than January], ultimately leading to a 30% increase for Q1 over last year,” said Adam Joss, owner of The Vertical Connection Carpet One Floor & Home, Columbia, Md. “The month of March only grew stronger, so there’s no signs of slowing. We’re planning to continue at a solid clip through Q2.”

Year-to-year comparisons are sometimes unfair measures as to how business is trending. For example, during February 2021 the state of Texas—and adjoining states—dealt with an unprecedented winter out- break that led to tens of thou- sands of broken pipes and dam- aged floors for residences. This led to a flurry of new business for dealers, an aberration that ordinarily would have skewed Q1 2022 numbers. But as Sam O’Krent, president of San Antonio-based O’Krent Floors, reported, “We are only slightly down compared to Q1 2021—but 20% over Q1 2020. Our traffic counts through the front door are still strong, so we’re optimistic about Q2.”

Retailers also suggest that the sizzling housing market ensures that business will remain vibrant for the foreseeable future. “New home construction continues to rise in our market and at this point our local builders have a waiting list for new home starts,” said Deb DeGraaf, co-owner of DeGraaf Interiors, Grand Rapids, Mich.

strong sales
Customers at O’Krent Floors in San Antonio know delaying a purchase today means higher prices later.

Out west, in the resort town of Lake Chelan, Wash., consumers seem to have plenty of disposable income to spend on vacation homes and are indifferent to inflation and shipment delays. So said Don Cantor, president of Lake Chelan Interiors. “They under- stand that their projects are going to be more expensive and take longer to complete, but with the growth in our area, I expect a minimum of a 10%- 15% increase in sales [in Q2],” he explained. “We are continuing to see a strong demand for new builds and renovations with no end in sight. This is not surprising because we are in a very desirable area.”

In Thayne, Wyo., business has been off the charts— months before the busy tourist season kicks in. “Q1 finished up 25% over Q1 of 2021,” said Eric Buehler, owner of CarpetsPlus ColorTile of Wyoming. “Real estate prices keep escalating but we continue to have more and more people moving in and buying and/or building. I have not seen any slowing because of inflation.”

In anticipation of his busy season, Buehler said he is bringing in more installers and employees to keep pace with what he believes will be a surge in business—on top of already- high double-digit gains.

For Hiller’s Flooring America, Rochester, Minn., Q1 was “fantastic,” according to co-owner Rob Elder, and all indications are that Q2 is going to be just as robust. “The biggest surprise to me is how resilient customers are. Surrounded by all the insanity that’s going on around them, they’re still happy and easy to deal with.”

Elder’s sentiment was shared by other dealers who say they are somewhat amazed that despite the invasion of Ukraine, price increases and product delays, consumers still have an appetite for flooring.

Inflation challenges

Coming off a stellar first quarter, Carpetland USA’s Eric Langan expects more of the same in the second quarter, albeit with some wrinkles. “Traffic counts are down versus last year, but the average ticket is significantly up—above and beyond what you’d expect with the rampant inflation,” he told FCNews. “There is still demand for home improvement/renovation purchases, but it has slowed considerably versus what we saw last year. Obviously, the continued price increases on a regular basis have played a significant role.”

Janice Clifton, owner of Abbey Carpets Unlimited of Napa, Calif., has a similar story—a great first quarter fol- lowed by a slight pullback in early Q2. “The pent-up demand is still there but some customers are choosing to wait for a while until things settle down,” she explained. “I think they hope prices will go down on some things if gas prices come down.”

Clifton said that as soon as she receives a price increase, she implements the change immediately. However, her attempts at transparency only go so far. As she explained, “If customers only received their estimate a few months ago they are not happy that prices have to change. We have changed our quotes to only be good for 15 days because of the constant price increases. I’m sure this does not make for happy customers, and it really feels bad to have to operate in this way. However, we cannot keep absorbing the continuing price increases. I know the supply chain costs are something our manufacturers and distributors cannot absorb, either.”

Langan’s strategy is to bring in select stocking SKUs at increased quantities to lock in lower pricing. “We’re trying to anticipate price increases before they come and quote our consumers accordingly. It has been a difficult task and— frankly—it’s getting old real fast,” he said.

According to dealers like O’Krent, the best consequence of inflation hitting all consumer goods “is our customers understand that the best prices are being presented today— because we all know another price increase is coming tomorrow.”

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April 11/18, 2022

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