In a recent virtual address to employees at Haines—the industry’s No. 1 ranked distributor—Ray Mancini, CEO of Belknap White Group (which owns a controlling interest in Haines), summoned a quote from the late motivational speaker, Zig Ziglar. His message: “Expect the best, prepare for the worst and capitalize on what comes.” Mancini then added in his own words: “We are survivors.”
U.S. flooring distributors are in the midst of a sudden and unprecedented crisis that has impacted business significantly but also steeled their resolve to keep pushing. “I keep telling our team: ‘The toughest thing youwill ever do in business is surviving the storm to live and fight another day,’” Hoy Lanning, CEO of Glen Burnie, Md.-based Haines, told FCNews. Echoing Mancini’s line, Lanning said, “We will survive.”
Distributors who have been in the flooring industry for more than a decade have certainly survived storms before—most recently the Great Recession that wiped out many businesses and changed the landscape. The coronavirus arrived without much notice and might not last as long as the previous recession, but there is no doubt its impact will be long felt.
“Like 2007-2010, this recession will completely change the game,” said Jeff Hamar, president of Galleher LLC, a top five distributor headquartered in Santa Fe Springs, Calif. “New rules, new players, new winners and losers. However, housing-related businesses have a great chance of outperforming over the next 18 months. Be bold and go big is a bit scary, but those that figure it out will be much better positioned for the next five years.”
Hamar added that sales are down, but less than he anticipated. “Our supply chain of incoming materials is still working well,” he explained. “We adjusted the cost side of our business to better position ourselves for the long term, and we have taken many steps to keep our employees and customers safe.”
Other distributors have been impacted as well, but perhaps not as negatively as they once feared. Jeffersonville, Ind.-based GilfordJohnson Flooring has a large and varied geography coupled with strong positions both residentially and commercially to help ease the pain somewhat. “We’ve been impacted in sales, and on the more personal side, employees,” said Bill Schollmeyer, president. “Like any other company, our employees have fears for their health, their families’ health and in the case of commissioned sales reps, financial fears due to decreased sales and commissions. But we’ve been able to maintain full employment levels with no layoffs orsalary cuts. Also,several of our vendors have been very helpful to us.”
For some distributors, the myriad government shutdown orders are disrupting business, particularly in the northern states where governors have often imposed orders earlier and with greater restrictions. “Michigan is especially tough because the governor’s order is extremely restrictive and beyond what the other Midwestern governors have issued—and beyond the federal guidelines,” said Scott Rozmus, CEO of FlorStar Sales, Romeoville, Ill. “However, we will work through all of this. We feel fortunate that we have such great people, and we have also qualified for some of the federal programs such as the PPP, which certainly will help bridge the period of government-mandated business interruption.”
Haines has used its vast network to provide its retail customers with online educational programs on the PPP and CARES Act programs, along with how to manage cash, apply for SBA loans and other programs to help its dealers. “Two of these programs were sponsored by AHF Products with excellent speakers and a lot of questions and answers from the groups,” Lanning said. “One of our seminars was exclusively for our Haines Loyalty Club dealers. We feel we must offer our customers all the help we can as they are ourlifeblood. We are also messaging our employees daily on business changes and assisting them with ways to stay healthy and safe.” Location has a lot to do with how distributors are coping with the crisis. In the hard-hit Northeast, for example, businesses have been closed longer than other areas, and the resultsreflect that. Derr Flooring, based in Willow Grove, Pa., has been severely limited during the outbreak.“Our business has fallen off dramatically,” said Rick Holden, COO. “With the New York metro area being forced to shelter in place, and Pennsylvania closing all non-essential businesses as well as all forms of construction, there is very little activity in our footprint.”
The North American Association of Floor Covering Distributors (NAFCD) and the North American Building Material Distribution Association (NBMDA) recently teamed up to bring resources and programs aimed at meeting the specific needs of the distribution channel. Since the start of the impact of COVID-19 on the distribution channel, both associations have focused on providing members with relevant content on human resource management best practices, tapping into federal loans and relief offerings, monitoring state-by-state limits on construction trades as well as tracking economic trends. Additionally, guidance has been provided in the area of adjusting sales and marketing strategies amid these unprecedented times.
The associations also hosted webinars addressing key topics. “Our members have been hungry for guidance, and they have been very pleased with what has been made available,” said Kevin Gammonley, NAFCD and NBMDAexecutive vice president.
Pat Theis, vice president of sales and marketing for Herregan Distributors, Eagan, Minn., said he finds value in the programs and services NAFCD offers. “Kevin [Gammonley] and his team have done an outstanding job of disseminating extremely important information through their website and webinars,” he said. “This has provided distributors tools to navigate the current market conditions and help us make the best decisions for business. We have participated in several of their webinars and found them very useful.”