Tile Industry 2013: Primed for Recovery, Part 2
 
January 11th, 2013

By Jeffrey Steele

 

In part 1 of this feature on the industry in 2013 (ASHLEY, PLEASE LINK HERE TO PART 1), industry resources affirmed that the continuing housing recovery could mean a good year for ceramic tile and stone. However, after several years of belt-tightening, the industry faces some interesting challenges in an evolving marketplace.

 

A technology crossroads

Mitch Dancik, chairman of the board of Cary, N.C.-based Dancik International, a 27-year-old, 44-employee software firm specializing in ceramic tile, flooring and natural stone products, is also predicting growth.

Dancik feels pent-up demand and money sitting on sidelines should profit ceramic manufacturers, distributors and dealers.  “In general, through exposure to my clients, I believe an upward trend is going to start,” he says.

To ensure the rising tide lifts their own boats, tile companies must grasp they are at a technology crossroads.  “For the last five years, people have been delaying any technology investments,” Dancik says.  “There is going to be a real demographic change in their customers, so whether you’re selling to consumers, contractors, dealers or distributors, all of those players are going through a technological change, and their expectations of their suppliers are going to be different.”

For years, software companies like Dancik’s have had distributors tell them, “You don’t know how technologically behind my customers are.”  That provided an excuse for them to go on sending paper invoices and operating in the traditional ways.

But now new generations are taking the helm at these businesses, and very soon, a contractor will expect more technology than the distributor can offer, Dancik asserts. They will expect, for instance, to place and track orders from their mobile devices and also expect that all services short of fetching donuts will be handled over their iPhones as opposed to over the traditional counter.

“It’s not that the contractor is becoming a computer genius, it’s that the contractor is more interested in technology,” he says.  “That contractor will be using an iPhone and iPad to access everything, and therefore will be expecting to access a distributor’s business that way too.To put it differently, a contractor will expect every buying experience to be like Amazon.com.”

Dancik acknowledges he is seeing distributors using iPads and other tablets, instead of bulkier laptops, and finding them used in showrooms and outside sales.  “However, we’re not seeing that all the applications being used have been optimized for those tablets,” he adds.  “At Dancik, we are involved heavily in optimizing all of our software for tablets and mobile devices.”

Many distributors, but not enough, have websites that display their marketing material.  Some allow order entry and order tracking from their websites.  And some distributors have started to allow mobile devices to access that information.  “But the future is when all types of devices can access all of this information in a consistent manner,” Dancik says.

All tile distributors and manufacturers should be aware that there is a standard emerging for mobile access to information, and this standard is being developed by the Floor Covering B2B Organizations (www.fcb2b.org).  In 2012, a universal stock check, or inventory, application was developed and demonstrated by J.J. Haynes & Company, Jaeckle Wholesale, Shaw Industries, Dancik International and Qfloors.  What does that mean for tile distributors?

“What it means is that contractors and retailers will be able to access inventory and pricing information from all of their suppliers, using the same methods,” Dancik says.  “In other words, they don’t have to download a separate app for every company.  Future applications already scheduled for development include universal order application.”

The bottom line is that there is both good news and sobering news for tile companies.

“The good news is the tile industry will make leaps forward in technology,” Dancik says.  “But the sobering news is this is just to get us competitive with industries already using this technology.”

View from front lines

Tile manufacturers and distributors range from very optimistic to slightly upbeat about the near future. At Lexington, Ky.’s Florida Tile, a manufacturer and distributor of mid- to high-end porcelain tile, director of quality assurance and technical service Dan Marvin reports the company has put two excellent years of growth in the books since 2010, averaging about 20% growth a year.

“We attribute that to a pickup in home building, and to enthusiasm for our products following a product revamp,” he reports.  “In 2010, we introduced wood-look tiles that have really taken off in the market.  [In 2013], it looks like home building is coming back, through not back to its best levels.  A lot depends on the fiscal cliff and a number of economic factors that are still uncertain.  We’ve been going through a budgeting process, and anticipate substantial growth.”

Not so optimistic, but not pessimistic, is Robert Henry Sr., chief executive officer of Robert F. Henry Tile Company of Montgomery, Ala.  The 70-year-old company handles everything from inexpensive tile for rental buildings to highly decorative, $25-a-square-foot tile, and serves remodelers, home builders, commercial builders, tile installers and retail buyers. Henry himself has been in the business for more than 60 years.

Residential construction has not been going gangbusters in his area, but substantial military, school and medical construction has taken place.  “We work hard to develop that kind of business, starting with the architects,” Henry says.  “The remodeling area has helped us a lot.  Those projects involve upgrading the house, and people want higher quality, distinctive materials.  Instead of plastic laminate backsplash, they want glass and decorative tile to make things more distinctive.  In a number of cases, people waited to see what would happen, and nothing wonderful happened.  So they said, ‘Let’s fix up our house.’”

Henry worries about what he believes will be rising costs of operating businesses, noting, “The medical care requirements for employees, those are real headwinds, and I believe they’ll discourage some new investment in buildings.”

Still, hope springs eternal, especially for one who’s seen many ups and downs since the early 1950s.  Henry speaks for many when he says things seem to have stabilized.  “With the sudden and swift decline in business, we had to lower our breakeven point, but we kept our marketing program and salespeople,” he says.  “We feel things are slightly better, and we’re guardedly optimistic.” ###

 

 

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