In January, Shaw elevated Jon England—formerly senior vice president of brand—to the position of senior vice president of sales, builder, multifamily and specialty markets. This includes the manufactured housing, modular, marine and other tertiary markets. The primary objective was to leverage his knowledge, experience and relationships to build business and explore new opportunities in those key markets.
Reginald Tucker, FCNews executive editor, sat down with England at the recent SFN Conference to discuss the state of the builder and multifamily channels as well as Shaw’s plans to address the emerging needs of those separate and distinct markets.
Following are excerpts of that discussion.
What are some of the challenges inherent with those specific market segments as opposed to the umbrella residential sector?
The single-family, new construction business is the kindling that sparks the rest of that business, and it’s been a bit pent-up. Interest rates aren’t doing what we expected them to do, nor do we see that happening as quickly as we thought it would this year—so there’s been a little bit of a shift in that. I think the market is well poised when it bounces back. But the interest rates are what’s really holding it up because nobody’s selling the house that they have a 3.5% or 4% mortgage on.
How do you tackle the different market segments?
They all fit together and play an integral role, but in different ways. Take single-family—it tends to come in long periods, meaning you have to win the contracts. They’re usually two or three years, so you get to factor that into your plan. If you miss them, you’re out for two or three years, so it’s kind of a big win-lose situation, but that’s consistent business for us. We know what’s going to happen with that. We know the products. We know the demand.
Multifamily is a little bit different in that they want the specification, they want to drive their own piece of that, but the compliance part is very hard to follow. It’s beige carpet and it’s brown whatever. However, we’ve been doing a lot of work with our dealer base in both of those segments to make sure that we’re in lockstep.
What’s the ultimate objective?
To be able to connect the builder, the end user, whether that’s single-family or multifamily and the manufacturer, and create a three-legged stool that’s open, that’s honest and that is a win-win-win situation—that’s what everybody’s after. I think, through the years, there have been some missteps in that scenario that have caused some conflicts, but that’s why our compliance is so well on this side, especially in multifamily. The products that we’re looking to specify with those end users are different than what others are trying to do.
It’s been said that some specialty retailers are leaving money on the table by not pursuing the multifamily business aggressively. Have you seen evidence of this?
Everybody’s all about lowering costs, but we’ve kind of shifted the conversation to more experiential. I personally think that multifamily has had a negative impact on the specialty retailer’s business. My opinion, not validated, but oftentimes a consumer’s first experience with carpet is in an apartment, and when you drive that cost out, when they go to move on their first home or second home, they don’t want that experience again because it’s the worst they could ever have. Our belief is you don’t have to put the cheapest, ugliest, worst-performing product in an apartment. There are some that will never see that, but the right ones are seeing that a different experience is more valuable than saving a penny, so we’re beefing up some products with a little bit higher weight, higher twist, high-performance yarns, better twist, better performance. We were seeing a lot of our end users start to really gravitate toward that.
Some even look at multifamily as a sub-segment of the commercial sector because it is a specified product. At the same time, you have residential retailers who do Main Street work who also service those clients as well.
Absolutely, and we’re going through that a little bit ourselves right now—trying to define those lines where it’s commercial and commercial contractors, and where it’s residential and our residential dealers. The relay business that happens continuously in those units that are constructed, which is where the residential piece really thrives and lives. The commercial side of the business—from our perspective, and even from the commercial contractor perspective—is not built for that relay business. It is a machine. It is in and out. It’s like the Redi Carpets of the world—those guys are built for that. It’s what they do day in, day out. They blend over a little bit into new construction, a little bit of Main Street. It’s new construction and relays kind of outside of bounds, so that’s where we’re starting to define those a little bit more, even internally.
Shifting gears to the single-family side of the business. Last year everyone was closely eyeing interest rate movement. For the first half, two-thirds of the year, there was no movement, and then we saw three rate reductions. The Fed now seems to be hedging a little bit in terms of moving those rates down. Have you projected where you think that will go?
Late last year, we thought that it would happen sooner. Telegraphing, it’s probably a second half impact of what will happen maybe in the first. We’re not necessarily building for that moment. We’ve been building the entire residential strategy for about two years. If it stays constricted or if it does release and move, it starts to really put the flywheel in play.
We can’t have a segment of business ready and two not ready, or two ready and one not ready, so that’s been a big part of the play here—getting all channels or all segments ready for that surge if that happens. I think a lot of that has been around just our internal mindset. If we get that kindling started a little bit, which would be the interest rates, I think we’re ready in all channels to really move with that.
In general are you optimistic?
Yes, I’m optimistic. For the second half, even without that movement, we’re positioned for growth in all of those channels, and we couldn’t say that two years ago or even last year. We were doing things in-house to get ready. We have a growth mindset. Our salesforce knows that. They know that because we’ve gotten things aligned internally, which hasn’t been the case before. Their compensation is built on growth.
What will be the key drivers for that growth?
We’ve invested both in carpet and our hard surfaces to achieve differentiated growth. So, that plays really well into our space. We’re aggressive and we are looking for not only growth, but balanced growth with a mix. Every yard that we sell in single-family or multifamily gives us more opportunities, even at specialty retail and higher-end goods like Anderson Tuftex.
That’s part of the reason we’re bringing laminate back. We’ve defined what it’s going to be for us: to make sure that we can be a solutions’ provider no matter the situation. Do we want to go take over the world with it? No, but it helps us to be able to be a great partner and have everything in our chamber to be able to help those customers.
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