In the last two articles we covered the common mistakes that installers and retailers can make that lead to a wood flooring failure (see “Drive Your Own Bus: Avoid These Five Common Mistakes Installers Make” in the January/February 2014 issue and “Retailer ‘Anomalies’ That Lead to Flooring Failures” in the March/April 2014 issue). This time we’re looking at the other side of the equation – at the common issues flooring distributors face which oftentimes place them in a difficult position between the manufacturer and the retailer/contractor. These are the five most common concerns a flooring distributor deals with in today’s market.
Concern #1: Competition. Distribution has changed dramatically over the past decade. Since the decline in the economy and the housing bubble in 2005, the distributor is faced with fierce competition and can lose market share to Internet sellers and manufacturers who sell direct to retailers/contractors. This has forced distributors into cost-cutting to try to become more attractive to retailers and flooring contractors. In turn they can often forget the important position they play in the industry, and their buyers (the retailers/contractors) can forget why the distributor’s service is worth the reasonable price tag.
Distribution must remain competitively priced on the products they carry, yet they must keep in mind their target audience of retailers and contractors. Yes, they may get beat up over a dime or two per square foot on pricing, but the advantage is the distributor makes personal connections with their clients.
Distributors need to do their due diligence of handling the products appropriately, such as confirming flooring moisture content (MC) upon receipt and upon shipment to their buyers. Many distributors provide a material delivery service that may include taking ambient condition measurements along with subfloor MC readings and documentation. This small yet vitally important procedure sets distributors apart from their Internet competitors and direct sellers.
Many retailers/contractors do not realize the distributor goes through great pains in selecting the products they carry by filtering out the good products from the bad. Their business model is to ensure the best for their customers. They also know the discounted or low-budget items are usually the highest on the claim ratio; therefore, many distributors will not carry those lines of flooring to protect their buyers.
If and when it comes to a claim, the distributor is an extension of the manufacturer to the retailer/contractor while also being their representative to the manufacturer. This is an important part of any claim, and the type of support that you won’t get with a buy-direct program or Internet sales. The voice and presence of the distributor plays a very important role. Retailers/contractors must realize this personal connection between them is a great benefit, with a very small price tag.
Concern #2: Education. With the need to belt-tighten, many distributors have cut back on their services, including education to their buyers. Not only do the representatives of distribution need to know every detail/standard of the products they carry, but they need to pass that information along to the buyers.
To ensure the flooring will be installed and perform as promised, distributors must take it upon themselves to retain or develop educational programs. Many other hard surface distributors (stone, ceramic tile, etc.) supply an education service/certification program to their buyers and dedicate an education room which is used often throughout the year. The distributor can get manufacturer support not only to promote their product line, but to ensure proper use and purpose of the products sold. This is a huge part of the customer support we discussed earlier. Remember, the goal is to reduce claims and increase profits for all involved.
The distributor can benefit from a checklist I mentioned as helpful to retailers in the last issue. This project checklist is broken down into four categories: Sales, Pre-Installation, Installation and Post-Installation. I will reiterate the checklist here, with special consideration to the distributor’s role.
· Distributor Salesaddresses the discovery process, ensuring the buyer (retailer/contractor) has successfully inquired about the homeowner’s lifestyle, expectations and environment, and that these are in line with flooring manufacturer requirements and warranties.
· Pre-Installationis to ensure the project’s HVAC is correct, wood/subfloor moisture tests were performed, wet trades are complete, etc. and the project is ready for delivery. This is an important part of the distributor’s connection between all parties involved.
· Installationconfirms proper site conditions are met and ready for install, including flooring and subfloor moisture content, etc. The distributor should help the flooring professional understand the importance of documentation to ensure all required parameters and guidelines have been followed.
· Post-Installationis a tough position for distributors because they have no control after the sale. Distributor can only encourage the buyer (retailer/contractor) to pass along all proper maintenance/warranty documents to ensure flooring performance. The current trend is retailers/contractors supplying a generic, one-size-fits-all approach to floor care and warranty guidelines, which may exclude very important coverage.
Concern #3: Leverage. Many times the stress for a distributor comes when being caught in the middle between the retailer and manufacturer. The distributor is looking out for his client, yet they are the extension of the manufacturer and need to follow protocol. The client may spend a half million or more with the distributor yearly, yet the retailer may have a faulty installation. Now it comes down to the business relationship we discussed earlier. Do we – or how do we – make exceptions?
As a consultant, I often see instances where the retailer has a faulty floor inspected, only to find it is an installation-related concern, yet the retailer forces the hand of leverage. The distributor is put in the position of having to make the decision to play along or stand their ground and lose possible future business.
We have all heard of these cases, where the retailer threatens to throw out the distributor’s floor samples and buy flooring elsewhere as a mechanism to press for settlement. This leverage may work once in a great while depending on circumstances, but in the long haul this concept will take the retailer down the road of self-destruction and possible bankruptcy.
This is where it comes back to the importance of educating the retailer’s installers through the distributor working together with the manufacturer to provide certification of flooring professionals, or at the bare minimum providing continuing educational opportunities. This can be advantageous to all parties.
Concern #4: Claims. “What’s Covered and What’s Not?”This is a big question a distributor faces when a claim is filed. The claim process begins with extracting the history, delivery date, install date, acclimation time, the MC at time of install, subfloor MC ... and the list goes on.
Now is when retailer/contractor education pays off. Did they properly test and document everything? If the retailer/contractor followed protocol, they have little to worry about. However, if testing and data is not documented, it can become an escape route for certain parties involved. Distributors should guard against this with education training and even handing out a job tracking form to clients to ensure all procedures have been followed correctly.
Another problem is the delay the buyer experiences with their claim. Oftentimes there is a large timespan in the claim process from the first report through when the claim is settled. As an inspector I’ve seen this stretch out to one and a half years or more. One can only wonder what frame of mind the buyer is in when the claim lingers on for months or years.
Consequently, when an inspector receives the claim there is a tremendous amount of tension in the air, and the buyer is looking for immediate settlement. No one likes conflict; however, the claim process needs to be handled clean and swiftly to reduce these tension factors. This is where I see many distributors needing to improve their claim process, to better expedite and avoid lingering on this painful part of business.
Concern #5: Flooring Types. “Prefinished vs. Unfinished - Which is the Best?Solid or Engineered - What Should I Sell?” To answer these common questions depends on the environment to which the flooring product is going to be installed. Oftentimes I see salespeople using a boiler plate template when talking to the buyer, stating “engineered is best,” when in turn engineered has its limitations, too.
The quality of products sold plays a huge part in the distribution role. Not all engineered products are created equal. Some of the products are manufactured to perform in 45 to 55% RH, while others are 30 to 50% RH, meaning some products won’t perform in lower RH environments. The distributor needs to have great knowledge of the products they carry, the various finishes on the market, best applications and provide retailer/contractor education to ensure the right product is chosen for the right project.
As for prefinished flooring, it is no secret its use has increased dramatically over the past decade and will continue to grow. Why, you might ask? One of the reasons is the market and retailers do not have the ability to provide for full-service flooring needs such as having sand and finish crews on payroll. The prefinished market will rapidly grow as manufacturers continue developing unique ways of custom staining and finishing at affordable pricing.
Distributors face many challenges each business day, and it’s easy to lose sight of the big picture. There are many trade groups out there designed to help this specific market, including the Floor Installation Association of North America (FIANA) and the North American Association of Floor Covering Distributors (NAFCD). Both offer education to their distributor members through annual trade shows as well as tailored educational programs.
There are also plenty of outside flooring consulting firms who specialize in flooring applications. Consulting firms can be co-commissioned by the involved parties (distributor, builder, retailer, etc.) for as little as $200 to $300 per commissioning party to ensure all requirements are outlined and met – a small price to pay when you can have 30,000 square feet or more on the line.
|Contractors and retailers need to realize that distributors meticulously select the products they carry by filtering out the good from the bad. Since low-budget and discounted items are often the highest on the claims ratio, they will usually only carry lines they feel are high-quality and reputable, to protect themselves and their buyers.|
Roy Reichow brings over 40 years of experience in the wood flooring industry as a wood floor contractor, consultant and educator. Roy is founder and principle of Reichow Parquet Flooring and National Wood Floor Consultants. He holds National Wood Flooring Association Certified Professional certification in Wood Floor Installation, Sanding, Finishing, Sales Counselor, Inspector and Commercial Inspector. Roy also serves on the National Wood Flooring Association’s Certified Professional Board of Directors and Marketing Committee.
Roy has authored articles published by the NWFA and the International Fraud Update, a publication of the International Association of Insurance Fraud Agencies. His wood flooring projects have been featured in American Woodworkers Magazine, Better Homes and Gardens, and Mpls/St. Paul magazine.
Roy has led educational seminars for the NWFA, wood flooring distributors, contractors, and home builders, and has been a featured speaker at the MPLS Home & Garden Show.