Flooring Leaders Eye ‘Best Years in a Generation’ Beyond Current Market Challenges

The American dream of homeownership is currently locked behind a 7% mortgage rate. While millions of homeowners remain frozen in place by their existing 3-4% loans, the nation’s top flooring executives aren’t just waiting for the thaw. At a recent industry panel at The International Surface Event in Las Vegas, Nevada, leaders from Engineered Floors, Mannington, Mohawk and Shaw revealed how they’re using this market pause to revolutionize everything from AI implementation to consumer purchasing journeys, preparing for what they believe could be an unprecedented surge in demand.

Scott Humphrey, president and CEO of the World Floorcovering Association, moderated the panel discussion, which included Will Young, director of national accounts, Engineered Floors; Zach Zehner, president of residential, Mannington; Paul De Cock, president of Flooring North America, Mohawk; and Benjamin Liebert, executive vice president residential business, Shaw Industries. The following are highlights taken from the full panel discussion. 

Scott Humphrey: What’s the biggest challenge facing the industry?

Paul De Cock: People change their floors when they move, and people are not moving. Why are they not moving? They’re not moving because they’re locked in a low mortgage rate…The combination of very expensive home prices and mortgage rates locked in at 3%, 4% with current rates has close to 7%.

Will Young: Everything comes down to affordability right now, and it’s a supply model. You start talking about existing home sales, and 90% of all home sales are existing home sales. So we need a bounce back in remodel in the retail side of the business. That’s where it’s falling be generated and that’s the engine that’s going to move our industry.

Benjamin Liebert: The purchasing journey is way too complicated… up to 40% of those who participate journey to first, they exit, they defer. So I think these three things are the problems that collectively our industry has to solve in a big way.

Humphrey: What’s needed for success in this market?

Young: I think right now is the best time to be partnering up with the right folks… I think it’s the best time to look at the folks that you can from a service standpoint, from a quality standpoint because when things do start to improve you have less time to take care of those issues.

De Cock: Focus on the fundamentals, take care of your customer, you be operational, excellent and you have to be ready for when it pops and like you guys have put on the screen there you we will not be constrained. All us have plenty of capacity to supply.

Liebert: Fewer, more meaningful partnerships… fewer more meaningful product selections and brand specials. There’s a paradox happening in our industry where literally the more products you put on the floor, the more [you] confuse the consumer.

Humphrey: How will technology impact the industry?

Zach Zehner: We’re at the beginning of a technology revolution, a new stage of a technology revolution, and no doubt that we’ll hit our industry. We tend to take some time to adopt new technologies in our industry. But within that five-year period, I think we will see the impact of the technology revolution with AI impacting the consumer experience without a doubt impacting our productivity businesses in all steps of the chain.

Young: The amount of money put in to reaching the consumer to pull it through… the ability and the ease or the lower cost to reach that consumer is going to change… But again, we’re very slow to do that. There’s a lot of capital invested in this business.

Humphrey: What’s your long-term outlook?

De Cock: The path of demand has never been higher… the household formation is going to peak in 2030. So there are more people entering the market that need homes. And so when this catalyst comes, whenever it comes… we could be up for possibly the five best years that we have in a generation or two generations. So I think you have to be patient, and I think you have to be ready.

Young: Last year, we had no real momentum going into the new year… for October, November, and December, we saw long sales, and existing home sales finally started to see year-over-year gains… Although we still have very, very low supply of homes, we saw increasing supply coming into the market.

Zehner: Running businesses to be ready for when that catalyst occurs, I think, is critical, and that volume does come in. So I think that’s the biggest opportunity for us to be ready for when the deal breaks.