If the first two months are any indication, flooring retailers may be in for a pleasant surprise in 2024, with early returns showing home improvement/remodeling activity picking up in several locations.
Retailers entered 2024 with some trepidation, citing the uncertainty of a presidential election year coupled with persistently high interest/mortgage rates. However, there are positive developments at play as well: builder confidence is on the rise and new home sales gained ground in January.
Some retailers are seeing evidence of an uptick in their business results. “The new year has brought us consumers who are eager to buy, and we are optimistic that this upward trend in sales will continue as we move through the first quarter and into the second quarter,” said Bonnie Fenwick, owner of Carpet One Floor & Home, Jacksonville, Fla.
All signs point to a strong 2024 for Marshall Flooring, according to Matt Wien, partner in the Mayfield Heights, Ohio, business. “We’re starting off very well. Home improvement activity is chugging right along. We’re seeing homes in the older neighborhoods being updated and modernized at a consistent pace.”
Other retailers see more of the same in 2024—a challenging environment that will require their best effort. A case in point is Tom Heffner, co-owner of About All Floors, Douglassville, Pa., who sees “2024 as basically a continuation of 2023. We have to work for our retail business. However, our builders seem steady, and we have seen a bit of an uptick in Main Street commercial in the new year.”
While builder optimism has been on the rise for three consecutive months, it remains below the important 50 benchmark, indicating more builders view conditions as “good” rather than “poor.” To offset sluggish new home sales, some builders have set up separate operations for renovation/remodeling.
“We have several of our builders that have developed renovation divisions within their businesses,” said Craig Phillips, president of The Flooring Edge, with three Ohio-based locations. “It helps the builders be more diverse. Home improvement and remodeling will have a solid year in our markets. Higher interest rates are keeping people in their homes and will negatively affect new home sales until probably the second half of ’24 when hopefully the rates start to fall.”
In neighboring Indiana, the residential replacement business has grown as new home sales have stagnated somewhat. That’s according to Jeremy Wirges, co-owner of 3 Kings CarpetsPlus ColorTile, Fort Wayne, Ind., who added, “The lower price point in new homes is down but the high-end stuff is still moving. The reason is that people with money are spending.”
With light store traffic dragging down retail sales, some dealers have been able to pivot to other areas for revenue. At Ted’s Floors & Beyond, Anniston, Ala., retail sales have fallen 15% year to date vs. 2013. Yet overall sales are up 8%. “It’s because our commercial sales have been really good the first six weeks of this year,” said Ted Gregerson, president. “We were expecting retail sales to be a little bit of a struggle for the first quarter and so far that is what we are seeing.”
Being well positioned has benefited others, too. “Retail store traffic is very similar to Q4 of 2023,” said Scott Browne, president of Macco’s Floor Covering Center and Subsidiaries, Green Bay, Wis., and Hadinger Flooring in Fort Myers, Fla. “Fortunately, our residential replacement business is still strong as consumers appear to prioritize their home remodel projects. And our commercial business is leading the way in our markets, specifically healthcare and education.”
For The Vertical Connection Carpet One’s Adam Joss, the year started off slower than anticipated but has seen a turnaround recently. “Traffic and set appointments have picked up the past few weeks, so we’re expecting sales to follow,” Joss said.
Coming off a disappointing fourth quarter, Hadinger Flooring of Naples, Fla., was happy to see the calendar flip to 2024. “Business increased in the first quarter; not huge increases but heading in the right direction,” said Chris Cosentino, president. “One bright spot is the rug business—it’s doing quite well. We believe the first half of this year should be steady, but no wild swings.”
And while winter weather has generally been milder than normal in the Midwest, January saw some of the harshest conditions Iowa has seen in decades, with record cold and blizzards.
“We did have a couple of weeks of some pretty inclement weather, so we’re hopeful that it will not be a precursor to what’s in store for the year,” said Eric Langan, president/owner of Carpetland USA (The Langan Group), with nine locations. “As weather has improved recently, we have seen an uptick in traffic and business.”
After seeing a dip in sales in January, the first quarter is rounding into form for The Car-pet Exchange, with 17 locations in the Denver market. “Order entry saw a slight increase compared to 2023, and I’m quite optimistic about 2024’s prospects,” said Bruce Odette, president/ owner. “Yet, the fourth quarter of an election year always presents unpredictability, serving as a wild-card factor.”
