CCA Global looks to future with Retail 2.0

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Nashville— CCA Global’s 2022 summer convention, themed “The Future is Next,” emphasizes the co-op’s bright future, and nothing illustrates that more than Retail 2.0. Now in pilot phase, Retail 2.0 was the talk of day one here at Opryland Hotel. Retail 2.0 speaks to a simpler shopping experience for consumers with a less cluttered showroom offering fewer products and integrating the online/in-store experience. According to CCA, early results from select pilot members show that Retail 2.0 has resulted in higher profits.

CCA executives said the goal with Retail 2.0 is to make the customer journey as simple as possible while ultimately keeping customers out of other stores. “At this convention we are boarding the Retail 2.0 plane, ready to take off,” Keith Spano, president of Flooring America/Flooring Canada, told the estimated 1,600 members in attendance at Opryland Hotel. “This is the future of CCA retailing, and the future of Next.”

Three CCA retailers who agreed to take on Retail 2.0 as a pilot said there was initial blowback from the retail sales team but that everyone ultimately came around to embrace it. Mike Nichols, sales executive for Carpet One Floor & Home in Jacksonville, Fla., said he had doubts about the efficacy of the program in the beginning but has come full circle after seeing what it has done for his business. “The program works,” he said during a panel discussion. “What I like is that a customer can go to four stores in our market and three of them will look the same. Ours will look completely different.”

Matt Silva, general manager for Peabody, Mass.-based Bradford Carpet One Floor & Home, said his takeaway is that Retail 2.0 reminded him of all the opportunities his business previously missed. “With 2.0 we saw increased sales in higher-end products almost immediately. We have no intention of going back to the old system. Our profits have increased. We now have a visually impactful showroom that differentiates us from the competition.”

Joey Zenger, president of Top Notch Flooring America, Bel Air, Md., added, “For us, [Retail 2.0] was a quick buy-in. Once our first sales associate had success with it, the others followed. With 2.0 I realized how much time we wasted with a sale previously.”

What CCA calls the “launch wave” of Retail 2.0 commences in March 2023, with rollouts occurring in subsequent quarters culminating Q1 2024.

In other news, on the first full day of the CCA summer convention—its first meeting in over a year—Carpet One introduced to members Room by Room, a new merchandising platform that is about simplifying the shopping experience for consumers. Categories like carpet, for example, will be curated by styles (patterns, loops, tonals, multi-color) rather than by fiber type or supplier.

John Gilbert, president of Carpet One Floor & Home, said while members are not forced to take on Room by Room fixtures—and the associated costs—he noted that at some point Room by Room will be the only merchandising system supported by CCA.

ITR Economics: We’re in recession now

One of the highlights of CCA conventions is the presentation from ITR Economics, the economic forecasting firm that boasts a 94.7% accuracy rating. Given that record, Connor Lokar, ITR economist, gave a presentation here on Tuesday that was a bit sobering as he delivered the news that the U.S. economy is already “technically” in recession, as per ITR data.

Lokar said ITR does not subscribe to the government’s definition of recession, which is two quarters of negative GDP growth. ITR’s data shows an economy that has already met the definition of recession. What’s more, he said things will get “a little worse” before they get better. However, he assured CCA members that the sky was not falling.

“We’re in a more challenging landscape,” he said. “2021 growth rates were unsustainable; it was like we were all driving 120 MPH on the highway and now we’re back to 65 MPH. We’re going to ease back to normal.”

The good news, according to Lokar, is the supply chain is improving, inflation is on the precipice of getting better and the labor market—a bugaboo for the flooring industry—will be less challenging, with retention issues easing. “You will have more horsepower to work with,” he told retailers.

Lokar pointed out that the economic slowdown is occurring on a global scale and, by comparison, the U.S. is faring much better than Europe, which Lokar said is in for an “ugly” period.

For the U.S., Lokar said ITR sees flat to slow growth in the next two to three quarters with improving conditions in the second half of 2023; however, he cautioned that inflation will still be higher (about 3.5%) than historical norms. “We are entering a period of ‘disinflation,’ which is a slowing of rising prices.”

On the housing front, a critical benchmark for the flooring industry, single unit housing starts are down in 2022, and permit issuance for new homes is also in the red. Consequently, builders are pulling back, Lokar said. “We’ve had an unsustainable rise in housing prices where buyers were getting $50K above the asking price and 30 offers. This fall, we’ll see perhaps three offers and homes selling at list price.”

The silver lining? Lokar said there are scores of young people who have been “on the sidelines waiting for the insanity to leave the market” and are poised to jump into the housing market. “And that’s good news,” he said. “We need churn in the market.”

Here are highlights from the event:

The Future is Next

Rick Bennet, co-CEO of CCA Global Partners, opened the proceedings on Tuesday at the 2022 Summer Convention by talking about the group’s bright future. The event, themed “The Future is Next,” is playing up the many young leaders rising through the group’s ranks.

Co-op executives touted the group’s new Retail 2.0 program that is designed to simplify the shopping experience for consumers. Retail 2.0 is still in a pilot phase, but has shown promising results. Three members of the pilot program—Joey Zengel; Matt Silva; and Mike Nichols—discuss their findings with moderator Mark Jeffries, far left.

The Future is Next

Flooring suppliers and CCA members gathered Tuesday evening for a vendor trade show at Opryland Hotel. The action was particularly brisk at the Mannington booth where Jay Kopelson, VP of corporate accounts (second from left), met with members of Carol’s Carpet Flooring America, Montgomery, Ala. From left; Drew Courson, Lisa McCarty and Tony McCarty.

Unlike previous years when Flooring America and Carpet One retailers had separate trade shows on different days, the combining of the two groups into one show was a big hit for suppliers.

Connor Lokar, economist with ITR Economics, speaks to retail members of CCA. Citing ITR data, Lokar said the U.S. economy is already “technically” in recession but that flooring professionals should not take that to mean the sky is falling. ITR predicted a period of flat to slow growth with inflation and labor challenges starting to ease.

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