Funny just the other day I was having a conversation with someone in the industry about how the more things change the more they remain the same. This had to do with the claims we see today, many of which remain the same despite the changes in the industry. But we’re not going to focus on just the category of claims remaining the same but the changes that we’ve seen in the last twenty years from my perspective to share with you.
Consolidation in the industry started long ago, in fact prior to the advent of Floor Covering News. One of the first things to happen during the initial phases of consolidation was the purging of technical people from the industry. The fiber producers had the lock on the technology segment of the industry and since these folks were not relevant to marketing they were the first to see the door. Some remained and some still do but nowhere near what they were twenty or more years ago. The fewer technical people in the industry the less help you can get.
Relative to fiber we’ve seen an exodus and assimilation of fiber producers from the industry. Not long ago, and over the last two decades, they were the driving force of the industry – the tail that wagged the dog. They had all of the technology, marketing and money to drive the industry and the consumer. Stainmaster revolutionized the carpet industry, not only with stain and soil resist chemistry but by making the consumer aware of carpet. They drove buyers to the retail stores and also increased the number of claims for manufacturers. Now there are few independent fiber producers left. The prognosticators predicted that the carpet manufacturers would integrate by producing their own fibers. They started with the production of polypropylene driving out the likes of Amoco and others and have come to buying and owning some of the big names like BASF and Honeywell. The carpet manufacturers have become expert at integration, lead by Shaw who wrote the book on it, and in fact, dominated the market because they perfected the expertise of this craft.
Speaking of fibers, there were bright colors and long yarns then and they’re back again today. Not so much the bright colors but Shag and Frieze styles. Nylon still dominates but now we’ve got Corterra and Sorona, very simply put fibers with all of the best attributes of nylon and polyester. They won’t eliminate the use of nylon but they’ll carve out a new niche and induce increased sales. We’ve seen the use of 100% synthetic backings and the advent of new and technologically advanced backings. Systems for dyeing carpet have changed dramatically as well. Twenty years ago most carpet was dyed with batch processes such as beck dyeing. Today more and more carpet is dyed with continuous processes. Continuous processes in manufacture have overtaken batch processes such as the heat setting of carpet yarn. Continuous filament nylon has overtaken staple nylon – twenty years ago staple was king.
Warranties have become and increasing large part of marketing floor covering product over the last 20 years. Some are good, some are bad and not worth the paper their written on. Remember that warranties cannot change the law of physics and words can’t change science. No matter how long a period of time elapses, this is a scientific fact.
The industry has gone from over four hundred mills to less than one hundred and “The Big Three,” Shaw, Mohawk and Beaulieu, control almost 85% of the market. We came close to losing Mohawk less than 15 years ago when their demise was predicted by many in the press. At that time they were doing less than $300 million dollars. Needless to say, the prediction was premature because Mohawk has come to be the largest floor covering manufacturer in the industry doing in excess of $6 billion dollars. Beaulieu also faced precarious times not long ago. Beaulieu is a company originally made up of the accumulation of acquired smaller mills now melded into a high quality producer. Shaw never wavered, they wrote the book, knew how this game was played and diligently forged to the lead. Shaw and Mohawk now continually vie for position. Twenty years ago, mills that we said to be leaders no longer exist. Today we have a very different industry. There is still, in my opinion, a great deal of opportunity. As the industry has consolidated it has opened up niches that did not exist before. Most of the opportunity is in the commercial market but it still exists in residential segment as well. Though there are fewer manufacturers of residential carpet, dealers lament about putting all their eggs in one basket. This opens the door for an excellently run residential manufacturer with good quality product and astute marketing to make inroads into the market place. There are a few of these companies around.
Installation is still an issue. All of the excellent efforts of CFI, INSTALL and FCICA and others, none of whom existed 20 years ago, have still not relieved the industry of the challenges of installation. The problem of installation lies primarily with the retail community which has fought the fair and equitable compensation of well qualified installers. Further, manufacturers have not enforced qualified or certified installation as a prerequisite to the enforcement of warranties. We may yet see this some day. If automobile dealerships have to have factory authorized mechanics why can’t the floor covering industry do the same? The precedent has already been set.
Distributors used to control the supply of carpet to retailers now the manufacturers do. The strength of the retail dealer as stand alone has evolved to the strength of buying groups and affiliations in both the residential and commercial market. Manufacturers learned, in the last two decades, actually less, that they cannot be all things to all people. They don’t know the retail or commercial business well enough to operate it but they can align with successful dealers that do. In the commercial market manufacturers have created havoc by selling direct which leans heavily in taking the real experts, the commercial flooring contractor, out of the mix. The commercial flooring contractor knows his market best and it would behoove the manufacturer and better serve them if they realized this and worked more closely with these experts to truly service the commercial market as opposed to frustrating it.
Much, if not all of the “family” relationship mills had with employees is now gone. Over the last twenty years they’ve become giant corporations doing millions and billions of dollars of business. The comradery of the industry is obviously gone; it’s still exhibited to a degree at some levels inDalton, the Carpet Capitol of the World, but it’s nothing like it used to be. Twenty years ago you couldn’t go anywhere in this town without seeing throngs of carpet people from hundreds of mills, those days are gone. Even the famous Oakwood Café, once the hangout, meeting place and deal making spot of the industry, was closed. It has been reopened but it’s a different place with new owners. The place still packs ‘em in at lunch but not the movers and shakers as it once did. There are far fewer movers and shakers in the industry today to pack any place.
The industry is much bigger by far than it was twenty years ago, in volume and dollars but it is also much different as well. Now hard surface flooring is the rage. Perhaps the biggest change in the industry is that twenty years ago there were no Home Depots or Lowes; there was no Carpet One or Abbey, no StarNet and no mill affiliations. Department stores, such as Sears, sold volumes of carpet as did stand alone independent retailers. The biggest retailer in the country was Marv Berlins New York Carpet World; this was the force in the industry. At the old Atlanta Carpet Market you could see the royalty of the industry with their entourages, parading around the packed floors. I used to relish the stories being told sitting around the “campfire” in the Floor Covering News showroom at the Atlanta Market, it reminded me of the family and friend home gatherings of the “old Italian guys” I enjoyed as a kid listening to the wisdom being imparted. Those days are gone as are many of the guys who made up those groups. The industry is far less colorful than it used to be and much more corporate and sterile but that’s a change that has occurred everywhere in American business.
Today we have an influx of young people who don’t have the mentors that once existed in the industry. We have advanced technology that dictates change be made on a daily basis. We have a mix of mature members of the industry and youthful beginners, one group that sometimes struggles with technology and one that can’t exist without it. There are huge fleets of trucks, and massive distribution centers owned by the manufacturers that deliver their products, feeding the marketplace, something regional distributors used to do with carpet. We have next day delivery of flooring materials from the manufacturer and an onslaught of foreign wood and ceramic products entering the market.
Since Floor Covering News began the industry has changed dramatically at all levels. Unfortunately what has not changed is the brand recognition of carpet, Stainmaster is still thought to be the number one carpet by consumers and it’s a name not a manufacturer or a carpet. This goes to show the power of marketing and advertising. Retailers still want to beat up manufacturers for a nickel and manufacturers still think they know how to market. Neither trusts the other completely. The mindset for carpet and hard surface product pricing and installation is directly opposed, it’s an anomaly. Hard surface materials have taken the lead in exposure, you can see this in any trade press publication you read and we’re reading more of this stuff online. The Internet has made the consumer as smart, or in some cases, smarter than the people who sell them flooring materials. All kinds of technologies have made everything we do, in the floor covering business and life, immediate. No one has to wait for any kind of information anymore and we expect to get answers the same way and the same day.
Future changes will occur with exponential speed. The industry will continue to grow, expand and profit and the cycle will repeat itself. Looking back, it’s been a fast 20 years, filled with wonderful memories, stellar events and dramatic changes. Though it may be denied my association with Floor Covering News over the last 20 years made my career and helped my business and it made me a lot of friends and sometimes a few enemies. Thank you for your loyalty and acknowledgement of our efforts. It is continually appreciated. It’s been great fun and it’s not over yet.
Author: Lewis G. Migliore
LGM and Associates – The Floorcovering Experts