An interview with Alan Beaulieu, international economic analyst
On Feb. 5, Dr. Alan Beaulieu, president of the Institute for Trend Research, and advisor to the National Association of Wholesaler-Distributors, is scheduled to deliver a presentation at DOMOTEX USA. Below is a summary of a recent discussion with Alan, where he discusses economic trends in the American retail sector, the impact of these trends on the flooring industry, selling to millennials and his personal connection to the flooring business.
Q: From your work as an economic analyst and advisor to the National Association of Wholesaler-Distributors, what economic trends do you foresee over the next few years that are likely to affect the retail climate in North America?
The forecast for the American retail sector over the next few years is looking good. Some of the indicators that lead me to this conclusion include rising wages (which translate into consumer ability to spend) and increasing rates of home sales, both in the resale and new-build segments.
In the short term, the first half of 2020 is looking good. Medium term, the second half of 2020 is looking even better than the first half, while 2021 is shaping up to be a very good year for the American economy.
Q: How might these trends specifically impact the flooring industry?
A growth in housing sales typically translates into more spending on remodeling and home improvement projects, which is good news for the flooring industry.
It is worth noting that this trend is likely to continue for the foreseeable future, thanks to the rapidly growing spending power of millennials. Millennials are defined as those born between 1981 to 1997, meaning that many millennials are already well into their 30s. There are currently 79.4 million American millennials, edging out the 75.5 million baby boomers — those individuals born between 1946 and 1964.
Even the youngest millennials, who are in their mid-20s, will be joining the middle class in the next decade. And, while rates of home ownership have been historically lower among millennials, we can expect this trend to change as many millennials are not interested in living in small apartments, especially as they begin their own families. Even if it requires financial assistance from their parents, I expect to see millennials acquiring homes in larger numbers over the next ten years.
In response, businesses need to understand millennials. In some cases, this may mean changing the way you look, and sell, to appeal to their unique sensibilities.
Q: Are there some lessons that you can share from your recent book, “Make Your Move: Change the Way You Look at Your Business and Increase Your Bottom Line,” that might be applicable to flooring retailers?
I think that one important lesson is that retailers need to adjust their message and their value propositions, based on both their target market and prevailing economic factors. Let me explain.
Many media outlets are reporting slow retail sales. Some have even thrown around the word ‘recession.’ I don’t agree that the American economy is heading in that direction, but for some consumers, perception is reality.
In the current economic environment, I would advise retailers and manufacturers to focus on messages that will resonate with these (perceived) market conditions, using terms like ‘value,’ ‘quality’ and ‘durability’ to describe their products and services. Some companies might also want to consider focusing on lower-cost products, as opposed to those on the high end of the price range.
Another important message to share with modern consumers is that investing in home renovations tends to increase the value of their homes. I suggest that it is important for retailers, manufacturers and all of the trades involved in the flooring sector to publicize this point when speaking to consumers that are making decisions about how to invest their savings.
Finally, it is worth noting that interest rates and the cost of materials are not likely to decrease any time soon. In fact, if consumers wait two years, and the economy improves (as I predict it will), the costs associated with borrowing money, hiring labor and buying materials is only going to increase. If I were in the flooring sector, I would be asking my customers one important question: ‘What are you waiting for?’
Q: On Feb. 5, you are scheduled to deliver a presentation at DOMOTEX USA in Atlanta. Can you give us a sneak peek into what you are going to talk about?
Absolutely. I am going to dig a bit deeper into some of the areas that we have already discussed, in addition to three important topics:
- How to position and operate your business more efficiently.
- What you need to know to ensure that your business can profit in the coming decade.
- How companies can capitalize on existing and future market opportunities to improve their prosperity.
Q: Finally, on a personal note, do you have any ties to the flooring industry?
As a matter of fact, yes, I do. When I was in college, I worked in a store that sold paint, wallpaper and flooring. I spent many years installing carpet all around Manchester, NH. I like to tell people that I know all about carpet, from seeing it up close and personal.
Source: ‘This is how millennials are shaping the new economy.’ Steve Chiavarone, CNBC, September 2, 2019; https://www.cnbc.com/2019/09/02/this-is-how-millennials-are-shaping-the-new-economy.html