Reposted from: https://www.floortrendsmag.com/articles/112728-ahsg-commercial-usa-kicks-off-every-step-counts-annual-convention?v=preview
Date: Tuesday, September 27, 2024
Author: Beth Miller
American Home Surfaces Group (AHSG) and Commercial USA hosted their annual convention at The Ritz-Carlton in Naples, Florida.
AHSG and Commercial USA President Tony Wright reported that AHSG has added 60 new members and Commercial USA is up 36 members since the last meeting.
The purchasing power of the groups combined grew by 22% in 2020/2021, grew again by 21% in 2021/2022, and another 12% in 2022/2023, according to Wright. They welcomed a number of suppliers since the last convention, including Southwind, Guru, Lions Floor, AHF Products, Milliken, Anderson Tuftex, Johnsonite, Johnson Hardwood, MAPEI, Happy Feet International, Quantify North America, Spec ID and Floorcloud.
This year’s keynote speaker and commercial panel moderator, Jon Petz taught members how to reimagine the moments they spend with their customers, making that connection count and ultimately building trust and loyalty through what he refers to as the “Rules of Amazement.”
To illustrate his point (and entertain), Petz performed magic tricks and combined them with stories of successes and failures, ultimately challenging the audience, “What can we do to reimagine some of the stories that we tell? How can we draw people in and bring that uniqueness and intrigue to what we do?”
Petz offered valuable advice applicable to any situation but certainly important to reinforce in a business where “Every Step Counts”—this year’s theme. He referenced the moments in which everyone suffers from doubt and feels the impact they are having on their customers isn’t moving the needle.
“I want you to reimagine the moments in your day, the moments in which you touch your customers and how we can look at it a little bit differently,” Petz said. “How can you deliver to create a “do it again” moment of amazement? What can you think of that other people haven’t thought about?”
Commercial Business
During the Commercial Panel discussion, panelists identified ways in which they have diversified their businesses over the past 10 years, including adding ceramic tile, a single-family new home division, polished concrete, large-format tile and taking on more project types.
Real Floors Commercial in Marietta, Georgia, has been focusing on the multifamily new construction market for years but decided they needed to expand their business to continue their growth. They found themselves at a point where they would have to diversify or raise pricing.
“We decided to take on more project types,” said Real Floors CEO Scott Wierson. “We go from multifamily new construction to doing, eventually, hospitals, medical office buildings and now we’re doing stadiums and arenas. We’re doing some of the harder jobs, more niche, where there’s a little bit less competition, and we found some success in that.”
Adding moisture mitigation services was another opportunity to grow business.
“Revenue-generating spaces like hospitals can’t afford to be down so the client is typically willing to spend the extra money,” he said. “We not only identified it at that time, sort of organically, but then we realized we better get good at it, and so we really leaned into it, got a lot of technical training. We wanted to be good at identifying and calculating how much prep might be used. We’re doing 1,800- to 2,400-bag pours sometimes. That’s been organic growth for us and a great revenue stream with very high profit margins.”
Diane Ouzounian, manager of Alpine Floor Coverings in Salt Lake City, Utah, said they adopted the “adapt or die” mentality. “Everything’s always changing so you have to find new avenues especially with COVID so like quarry tiles—who knew there’d be a shortage? So, you change to commercial kitchen. You use Protect-All. You use Forbo. You use Altro just trying to adapt.”
In terms of new products and services, commercial contractors are being pushed to become a one-stop-shop. Wierson sees this as the future for commercial contractors. His customers are asking for cabinets and countertops, which he feels is not within their wheelhouse at the current moment, “Talking about that proficiency earlier, we don’t feel very comfortable trying to do things that aren’t really our scope so that’s been our cautionary experience.”
Ouzounian, on the other hand, admits Alpine Floor Coverings has already made this move. “We found a lot of contractors want one contract, one warranty, one phone call,” she said. “It wasn’t scary, but I do have a partner that was already doing drywall, metal stud framing, acoustical ceiling and painting, so flooring just fit right into the Division IX.”
Residential Business
Business owners on the residential panel discussed the various ways they are working to generate new leads and get more customers into the stores. Some of the methods mentioned are offering up giveaways, working to do a better job of tracking potential customers and ensuring they follow up. Others are looking at turnaround times on orders.
“Depending on what the shopper’s looking for, we try to have it there and then do what we can to create a sense of urgency,” said Nik Burdette, general manager, Atlanta Flooring Design Center in Suwannee, Georgia.
Steve Wright, with Flooring Direct in Dallas, Texas, pointed to the growth they have experienced over the last five years from $4 million to $16 million thanks to an increased focus on the customer. “They may not remember the flooring long-term, but they’re gonna remember how you treat them,” he said.
TJ Schwartzel, general manager with Flooring Express in Lafayette, Indiana, advised members to partner more often with vendors to offer promotions and look at more creative ways to reach customers. The team also took a hard look at their inventory and decided to revamp their product offering as well as their showroom. “Our top-line sales are down slightly this year,” he said. “Our margins are up pretty significantly, which has made up for that.”
Shaw reinforced the power of direct-to-consumer advertising during its presentation. According to Lee Safrit, senior national account manager for hard surfaces, the company spent $40 million on advertising on Instagram alone in 2024, resulting in a 35% increase in sales.
Preventing the race to the bottom by removing or limiting discounts on sales is another way retailers are protecting themselves. Andrew Owens with Owens Flooring and Interiors in Wilmington, North Carolina, and Flooring Express’ Schwartzel said they are providing flooring packages that don’t allow for a great deal of discounting.
“Something we’ve done this year is allow our sales staff to sell within certain parameters,” Schwartzel said. “I don’t micromanage what they’re selling stuff for. They just know where they need to be. But when you take advantage of some of these products that you have coming in, whether it’s regular stock, closeouts, whatever it might be, I can look at that and I know what we should be able to sell it for. I can let the sales staff know. When we bring in new products, [I tell them], here’s what this costs us. This is going to be at a higher margin, take advantage.”
Finding qualified flooring installers continues to be an issue for flooring retailers. Burdette and Atlanta Flooring Design are major supporters of the Floor Covering Education Foundation (FCEF) and its basic flooring installation program designed to produce a highly skilled helper. However, Burdette points out that the issue lies in what to do with the graduates once they have completed the program.
“The reality is our flooring installers are subcontractors, so when we get a graduate, it’s hard for us to place [them],” he said. “We’re looking at some avenues. We have QCs that we run on our crews. We’ve talked about the possibility of taking some of those positions and [putting a graduate] in a QC position for a year or so, so they can get some hands-on experience.”
To remedy the installer shortage, some members are doing in-house training, taking advantage of certified training with organizations like the Certified Flooring Installers Association and participating in manufacturer training events with companies like Schluter. According to the panelists, tile continues to be problematic—there are not enough qualified tile setters.
Economic Outlook
Joe Seydl, senior market economist, JP Morgan, gave a report on the current state of the U.S. economy.
- The U.S. economy is still healthy.
- Economists are not calling for a U.S. recession.
- Growth will slow; U.S. GDP growth is about 3% over the last year and is in the process of slowing down to the 1.5% to 2% range over the next 12 to 18 months.
- Capital markets will continue to grow, but we’re emphasizing balance with our clients because the 20+% gains that we’ve seen in the stock market in recent years will not be repeated.
- Economists expect interest rates to remain much more elevated for the foreseeable future than in 2010 2010.
- The outstanding gains in the markets that the market has seen in the last 12 to 18 months are likely going to slow.
- Markets will continue to go up but not likely at the pace we’ve seen in the last 12 to 18 months.
- New housing construction accounts for 1% of the total housing stock annually.
- The remodeling index of 50 represents normal conditions; the index today is at 65 so the remodeling sector is doing well in this environment.
- Multifamily starts have turned down over the last six to 12 months; they are expected to be weak for the next year or more.
