The Home Solutions division of FloorExpo is a national network of the finest residential flooring contractors in America. These businesses represent 2.2 billion in business and install flooring in more than one out of every four single-family home.

Home Solutions gives its members a sharp edge in the competitive homebuilder market by providing buying power, product merchandising, technology tools, Affinity Business programs, advanced training and networking opportunities. Jay Smith, president of FloorExpo, sees continued strength in the housing market, coupled with growing consolidation and competition. We asked Smith to tell us what challenges and opportunities he faces as a pioneer organization in this fast-paced, high-pressure market.

 

Q. How has the residential builder business changed over the past five years?

A. The past five years in the housing arena have been record setting, which has changed our members. They have grown in size, with contractors averaging $35 million per player. There’s also been a lot of consolidation in the builder business. A little less than 10 years ago, the top 10 builders did 7% of the business. Today, that same group is doing 25%. As builders and suppliers get larger, there is pressure to bring more value to the builder outside of price. The level of expertise and operational excellence is getting higher everyday and that is where Home Solutions tools make a difference.

 

 

Q. As the first organization to form a group in the residential building arena, what challenges have you faced?

A . We learned right away that we needed to operate differently than traditional groups. We don’t dictate to our members how to use our value-added tools and are very respectful of their level of sophistication. We like to say that we will lend a hand to our members; we don’t hold their hand. That is, we work closely in many areas, but we also respect the independence of the FloorExpo members.

This is a fast-paced, high-pressure business. As such, we’ve learned to make our tools very easy to use. We provide a lot of hands-on service—going to our members to install programs and, often times, with them to the builder to show why, through FloorExpo, they are the preferred provider in that market.

 

Q. Who do you see as your competition?

A. Home Depot is our biggest national competitor. Through their Home Depot Supply business, they are going after the professional business in both the builder business and the apartment/multi-family segments. We see Home Depot as healthy competition because they inspire us to raise the bar. A lot of our time is spent getting to know our members. We have regular conference calls and talk with them about what we can do together to bring value to their end-user. Then, we turn those ideas into tools that help them partner with builders rather than just sell them product.

 

Q. How are your members competing against Home Depot?

A. Our members are responding to Home Depot by expanding their product offering and becoming more “full service”. Builders want things to be more efficient and want to work with fewer suppliers. As such, our members are expanding their product selection and providing homebuyers with more opportunities to trade up. FloorExpo design centers carry some of the most exciting products and have the most phenomenal showrooms in our industry. We are selling better goods today—more than ever before—and providing more upgrades as a segment. We are also sponsoring a flooring specific version of the NAHB National Housing Quality certification program for our members. This certification is becoming critically important to contractors and builders.

 

Q. What are the benefits of being a FloorExpo member?

A. FloorExpo’s purpose is to help drive value through group purchasing, training, homeowner experience products, and other tools that increase efficiency, productivity, and upgrade satisfaction. For example, we offer 150 online training courses for staff, designers, and field personnel. Another popular tool is our Home Solutions Interactive (HSi), a Web-based program that prepares the homebuyer for their first design appointment by educating them on the benefits, features, natural characteristics, and limitations of different flooring types. By giving our members tools—like HSi—that educate and increase upgrade sales, we help members become more valuable to their builder customers.

 

Q. What is the builder forecast for 2006?

A. Predications are that the industry will experience a 7-8% pull back. Even so, we will still operate at robust levels—equal to, if not greater, than that of 2004. I anticipate continued consolidation, driven by land position and land holdings, and wouldn’t be surprised to see a couple big builders come together to top 100,000 units a year. Owning a home is still the American dream and that is not going to change. Demographics look good for new home construction over the next 10 years so we’re bullish on that front. .