Surviving in a Sinking Economy
January 2nd, 2009

First Quarter, 2009

To put it mildly, these are tough economic times. The residential real estate market is in the tank, retail vacancies in some regions are at 10-year highs, consumer confidence has plummeted, and some economists are predicting already high jobless rates will be swelled by 1.5 to 2 million new unemployed over the course of 2009.

Because it is tied to housing, the tile industry is bracing for one of its worst years ever. But there are still ways for tile dealers to stay afloat in our sinking economy.

In this report, TileDealer turns to some of the brightest minds in the business for suggestions on how to remain buoyant as other companies go under. Here, tile makers and distributors share ideas on such life preserving tactics as returning to basics, cutting costs, targeting the remodeling market and optimizing marketing dollars.

Return to Fundamentals

This will be a “tough, challenging year,” says Frank Douglas, vice-president of business development for Crossville, Tenn.-based Crossville Inc., America’s premium porcelain tile manufacturer. Douglas believes 2009 is a year for tile dealers to go back to the basics they mastered at the very beginning when they launched their businesses.

That means making sure showroom sales staffs are well trained on products, following through on promises and, above all, partnering with trusted vendors.

“Dealers should look to manufacturers to help train their salespeople,” Douglas says, noting that’s a critical way of trimming costs in a troubled fiscal environment.

He also believes dealers must look to trusted supplier partners that can provide quick, reliable logistics functions. “Once a customer has placed an order, being able to quickly fill it in a timely, accurate manner with quality product is crucial,” he says.

Finally, to both reap cost savings and take advantage of invaluable promotional assistance, dealers should look to suppliers that are helping their dealers merchandise showrooms in a consumer-friendly way, Douglas reports.

Also urging a “back to basics” strategy is Thomas J. Kotel, president of Elk Grove Village, Ill.-based Mid-America Tile, a nearly 50-year-old, family-owned importer of ceramic, porcelain, glass, metal and natural stone tile from around the world.

Kotel believes 2009 will present the industry with unprecedented hurdles. “I think dealers will be challenged to compete, because the urgency to buy isn’t there,” he says. “People are going to shop a lot more. Everyone has a budget, so price is important. But the dealers who make it through aren’t going to fall for selling on price.”

A back-to-basics approach, Kotel says, involves upgrading product knowledge, customer service, and customer contact. “You should go back and look at a list of your core clients, and make sure they know you’re still in the game,” he says. “That’s the old 80-20. Eighty percent of your business comes from 20 percent of your clients.”

“The question that should be asked is, ’How can we do better?’ When you take a look at your showroom, make sure you have the products that are going to excite the clientele. Also, I would probably take a look at who you represent, in terms of suppliers. Get the ones that are easiest to do business with and the most creative.”

This is also a time to take a look at your store personnel, Kotel recommends. “You want the friendliest and most knowledgeable people on your staff,” he says.

Fine Tuning Marketing

Ron Williamson, marketing services director for Ironrock, doesn’t like the term “dire’ to describe today’s economy. But he does believe this year will be a struggle.

The way to come out on top in that struggle, he says, is not to do things differently, but to do all the normal, everyday things far better. That’s just the strategy that will be used in ’09 by Canton, Oh.-based Ironrock, purveyor of Meredith Collection art tile, Metropolitan Ceramics quarry tile and MetroBrick architectural thin brick.

Williamson urges dealers to take a cue from Ironrock and ratchet up the creativity and focus of their marketing efforts. “You have to be cognizant of all the things that go into marketing your products,” he says. “You can’t take anything for granted.”

Williamson says Ironrock will focus marketing efforts in two key areas this year. First, it will target institutional or commercial builders of schools and healthcare facilities, which he says will continue doing well. Second, it will put more stress on green building, whose ongoing ascendance is reflected in the estimated 50-percent attendance growth at the 2008 Green Building Expo vis-à-vis the 2007 turnout, he says.

Recognizing budgetary constraints are likely to be the order of the day in 2009, Williamson also believes dealers should examine alternative ways to market that may be a little less costly, but still effective in reaching target audiences. “I would tell them to try and update the customer databases as much as they can, and also to use the inexpensive tool of email marketing to get the message out,” Williamson says.

Dealers might also want to take a page out of Ironrock’s book and consider using their websites as the foundational backbones of their marketing strategies.

“Everything ties into our website,” Williamson says. “For instance, when we send an email blast, we won’t try to give them every bit of information in that email. Instead we’ll have a link to the website and from there they can contact us and follow up. With architects, for instance, we’re informing them of new products, such as Enviroquarry, our new green 60-percent pre-consumer recycled product.”

Since Ironrock believes its distributors need to focus more on specific target groups to achieve greater effectiveness, the company has also designed four specific vertical market sell sheets, Williamson says. These four focus on commercial kitchens, healthcare, hospitality and schools. “They can have a focused tool to take into the architects’ offices, and provide as a leave behind. We’re doing that as an email blast to our distributors and making it very easy for them to get their hands on.”

Ironrock even utilized its website to showcase an eight-minute YouTube video it created, centered on the production process used to produce Meredith art tile. Ironrock made that video available to its dealers, asking them to use it to help sell consumers.

Williamson urges dealers and distributors to focus on chances to market for low or no cost, including using free listings provided to architects. “I wonder how many send press releases to their local newspapers and broadcast outlets,” he says. “A full-page article is usually worth more [in generating business] than a full-page ad . . . I would be reaching out to the media, and holding open houses and special events designed to reach my customer base, whether it’s the consumer or builders and architects.”

Use Downtime To Boost Training

Vice-president of sales Brian Petit and marketing manager Nick Duve of Akron, Oh.-based NAC Applied Construction Products, a 25-year-old manufacturer of “floor protection systems from the ground up,” are also convinced 2009 will be a year of challenges. But along with challenge comes opportunity, they say.

“This year, because it could be slower for some companies, it’s a good time to educate yourself about evolving industry standards, and how various products meet those standards,” Petit says. “Everyone is looking to cut costs. So some manufacturers may be cutting stone a little thinner than they have in the past. That means installing that stone properly becomes even more important. Where you might have had some leeway in the installation process before, you don’t have that anymore.”

For education, enlist organizations like the Ceramic Tile Distributors Association, National Tile Contractors Association and Tile Contractors of North America, he says.

“Some of the organizations we belong to have great educational programs, where they train people on best practices in the industry,” Petit says. “The dealers could have contractors come in, and give them the chance to learn about changes in setting materials, practices and products. Some of our distributors come in with a trailer, set up tents, and have industry experts provide seminars on setting materials and proper installation practices. This helps with your costs as you expand knowledge.”

In other words, they say, dealers should use available time this year to learn and master new products, solidifying themselves as the go-to experts for the years ahead.

Agreeing with other experts who urge a “back-to-basics” approach, Petit and Duve add that knowledge enhancement will likely lead dealers back to the most time-honored and trusted products. “The reason we’ve been around for so long and stood the test of time is our product works,” Petit says. “There are no gimmicks and no cost cutting. It’s just a solid product. There have been a lot of new companies come in with lower quality, lower-cost products over the last few years, as business boomed. Those companies may fall off as dealers look to consolidate with established brands.”

Target the Remodeling Market

Today’s one bright spot is that many homeowners are focusing on what they can do to upgrade the homes they currently own, Williamson points out. “Whatever way [dealers] can think of to reach that audience, including teaming up with remodelers and restoration architects, would be a great way to approach the market,” he says.

He’s got a good point, if the recent Cost Vs. Value report by Remodeling in conjunction with National Association of Realtors’ Realtor magazine is any indication.

The National Association of Realtors reports home values have declined by an average 7 percent nationally over the past 12 months. But in that same period, the value of homeowners’ investment in remodeling projects declined only 3.86 percent.

Homeowners can expect to recover 67.3 percent of their investment in 30 popular home improvement projects, not that far below the 86.7 percent back in boom year 2005.

Pan American Ceramics’ president Tom Carr, who says his Industry, Cal. firm is generating “decent” business from the remodeling sector, is in complete agreement.

Carr has found many homeowners have resigned themselves to spending years in their current homes, because the residential real estate market has declined so profoundly. That’s changed the kinds of products people are having installed. A couple of years ago, they might not have paid much attention to quality, because they were going to turn around and sell their homes anyway. But now that they know they will be the ones occupying the house a half decade or more, they’re upgrading quality levels.

“What we’re telling our customers [is] to concentrate on the mid- to higher-range products for remodeling projects,” Carr says. “These products really add value to the home, and that’s what people are looking for. They want to have stylish, high-quality products they’re going to feel good about for the next three to five years.”

Some Final Thoughts

Just as it makes sense to be creative in ensuring marketing dollars stretch further, it’s also a wise move to look at new ways to cut other costs, Carr says.

“To gain the staying power for the next four to six months, try to lower your expenses, but without compromising service levels,” he urges.

“If you fire all your showroom people, it’s not going to please your customers. We’re looking at flexible or rotating hours, so we still maintain the same open hours for our customers while trying to avoid laying people off during the slow times.”

Carr also believes dealers can improve their chances of weathering the economic storm by partnering with distributors that, like his company, are actually increasing inventory on new items, and maintaining inventory on current products.

“That’s one of the opportunities for us,” he says. “We’ve been able to add new items. Before, you needed a lot of inventory on new items, because if they took off and dealers and builders were buying them, you could run out quickly.

“But now that sales are slower, when we introduce new items, we don’t have to begin with as large an inventory as we did in the past. So a tip for dealers is to identify distributors who are adding new inventory and maintaining service levels during this downturn. They’re more likely to survive and help you survive.”

Finally, Carr agrees with other experts that dealers should use this moment in time to pare down their vendor lists. One mistake some dealers have made in the past is trying to be all things to all people by showcasing every product possible. That approach makes it tough to effectively spotlight any one product, Carr believes.

“Use this time to sort out whom you want to do business with,” he advises. “When dealers support those distributors and assist them, it in turn enables them to develop alliances that will help them make it through the downturn.”


Tom Carr, president

Pan American Ceramics, Industry, CA


Frank Douglas, vice-president

business development

Crossville Inc., Crossville, TN


Nick Duve, marketing manager

Brian Petit, vice-president of sales

NAC Applied Construction Products, Akron, OH


Thomas J. Kotel, president

Mid-America Tile, Elk Grove Village, IL


Ron Williamson, marketing

services director

Ironrock, Canton, OH


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