Distributor Insights: Stone’s Potential

January 6, 2004

The fact that more fabricators are doing more of their own importing is, not surprisingly, an area where the two sides differ, but it’s not the only one. Some fabricators might be having fits over the presence of stone in home improvement centers, but many suppliers see it as just another way to expose the public to stone’s benefits – and increase their sales in the process.
Those differing opinions aside, there’s quite a bit where distributors side with fabricators, from a real optimism about the present stone market to concern about how low-quality stones and installations are impacting the industry. And, there’s a firm conviction on the need for more educated consumers.

HOT TIMES
It’s difficult to find a stone supplier who thinks the market for natural stone is anything but strong. However, not all of them are happy about where they see those strengths, nor are they convinced it’s a boon to the industry.
Talk with Scott Primmer of the Cedar Grove, N.J.-based Dente Trading Co. Inc. for any length of time, and it becomes clear he’s pretty happy about the state of the industry, and with good reason.
“Our company basically sells stone for the residential and commercial market for countertops and flooring, and we’ve seen an increase in the last three years of about 25 percent each year,” he says. “Of course, compared with other parts of the countertop market, stone is still a small percentage of the industry, but we see our company growing and the stone industry growing as more people become aware of natural stone.”
Primmer backs up his argument by noting that in the 40 years since his father-in-law started Dente, the number of stone distributors in the United States grew from a handful to several hundred, and the range of products distributors are offering expanded in much the same way.
David Havens of St. Louis-based Global Granite and Marble certainly echoes Primmer.
“The granite market is growing, mainly because people want stone in their kitchens,” he says. “The commercial market has always been stable with office buildings having some stone in the lobby and some cladding on the outside, but people are putting money into their homes rather than the stock market, and that means granite in the kitchen.”
Granite is still the hot product, both men agree. And, with more than 400 different colors available all from all over the world, Primmer says buyers aren’t just stuck with the same salt-and-pepper looks of a few years ago.
“Today, people want something different – something their neighbors don’t have,” Primmer says.
Jonathan Mitnick of CCS Stone in Moonachie, N.J., agrees. While he compares predicting the next must-have stone being akin to identifying the next fashion trend, he has noticed a move away from some of the old standards.
“There seems to be more interest in what I’d call the more-exotic granites,” he says. “People are putting a little more value into what they’re doing, and there are so many more granites in the market for them to choose from. It seems like the more difficult the material, the more challenging the material, the more desirable it is.”
Mitnick says he’s also selling stone for some surprising purposes, and not just with residential jobs. He says recently CCS was asked to supply windowsills for use in a commercial building. Originally the plan had been to use wood, but the property’s owner and builder decided stone offered a cost-effective alternative.
Not that granite is the only stone out there, of course. Havens, for example, reports some growth in different stones, as well.
“There’s a heavier trend toward limestone,” he says. “People are still using granite countertops, but limestone and travertine for trims in bathrooms have become very popular. Once people see them and see the variety they offer, we’re putting in more limestone and travertine.”
Mike Nafziger of Scottsdale, Ariz.-based World Wide Stone Corp., and Kevin Murphy of Alpha Granite and Marble Inc., in San Leandro, Calif., certainly concur with Havens that the use of travertine is on the rise. However, they’re not too happy about it.
“I think that people are backing off on their consumption of granite tiles,” says Murphy. “I see a big shift in demand from tiles produced in Europe and Brazil toward travertine from Turkey and granite from China.”
The reason for the shift: price.
“They’ve created a wonderful market for themselves because their product is so low in cost that many people are using it,” says Nafziger of the Turkish travertine. “Even some custom home producers are putting this low-end stone in their homes.”
Murphy says he’s even aware of commercial builders who are ignoring the recommendations of their architects to go with the travertine.
“The end users are salivating over the opportunity to save a bunch of money by making one little change,” he says. “They’re changing their stone sourcing from traditional channels to where the prices are so much cheaper.”

OUTSIDE FORCES
There are always outside forces impacting any business in a capitalist economy; with today’s global economy, there are just more of them. And, depending on whom you talk with, they’re not all having a negative impact on stone suppliers.
One area of competition that’s certainly generated concern among many fabricators and installers is the impact of workers in some related trades edging into the market. And, Murphy, at least, expresses some concern about tile installers who are horning in on the natural-stone market.
“The ceramic people have been able to make a range of product that looks like stone, and I’ve seen a lot of tile installers who are switching people from stone to ceramic,” he says. “Say that the total installation for a stone job is $4,000, and it’s $2,500 for ceramic. These people are steering buyers away from stone.”
Nafziger says even when the client sticks with stone, that ceramic-tile installer may be hired to do the job, then use a thinset mortar instead of a medium-bed mortar and leave the client with a mess – and a bad impression about stone.
“It’s important that consumers know the investment they’re going to make is a substantial one,” Nafziger says. “They can’t have people approach stone installation like they’re installing vinyl floor covering.”
On the other hand, when it comes to natural-quartz surfaces, CCS’s Mitnick says that’s been a real boon for his business, although he didn’t expect that to be the case.
“Sure it’s competing with the natural stone, but it’s also promoted growth in natural stone and for me, that’s a very positive impact,” he says. “It’s bringing solid-surface people and engineered-stone people into the natural-stone market. It invites their customers to look at their ability to fabricate granite, and some are asking for the granite.”
The presence of natural stone in some of the larger do-it-yourself chains such as Home Depot is producing pretty much the same effect, stone suppliers say, particularly those who may be supplying the outlets in their areas.
“It’s given the stone industry a very big boost in the way that it’s gotten natural stone to the average consumer,” says Dente’s Primmer. “Today, it’s not unheard of for someone to put granite in a moderate-sized home or a small condo. Home Depot has helped that, and a lot of times people won’t buy from Home Depot. They’ll see the stone, inquire about other colors and upgrades and end up going to a kitchen dealer.”
In fact, he says that uniformly the kitchen dealers and fabricators he supplies near Home Depots have seen their workloads increase.
Mitnick calls the chains “the deep pockets” the industry has needed to let the public know more about natural stone, its uses and affordability.
“As a relatively small importer, we don’t have the resources to let people know in a broad sense that stone is available to them,” he says. “I think Home Depot is doing a great job letting everyone know about stone. Some of my best customers are also people who’ve gone to Home Depot and either done their homework or had a bad experience with them.”
On the other hand, those bad experiences do make people such as Alpha’s Murphy and World Wide’s Nafziger a little nervous. Murphy says he appreciates the fact that it promotes the use of stone, but at a cost.
“I think it’s taken the quality of stone to an incredibly low level, even though I admit that a poor grade of stone beats the heck out of a high-grade ceramic,” Murphy says. “Still, it’s taken the value out of stone and turned it into a fad.”
Nafziger agrees. He relates watching shoppers opening crates of stone at the stores to select only the pieces they want, often breaking others in the process.
“You have a consumer mentality that stone should look like ceramic and be consistent,” he says.
And, the stone suppliers certainly aren’t sweating what might appear to be some big impact items on their end of the business, such as increased security issues related to shipping, and recently the decline of the dollar against the euro.
Global’s Havens says it’s mainly a matter of planning ahead, since the same security and U.S. Department of Agriculture inspections apply to all shipments, regardless of origination. As for the increasing value of the euro, he says it’s certainly causing him to buy less stone from Italy, but the Italian producers and the importers themselves are hurt more by the fluctuation than fabricators and end-users.
“It’s costing us 20-percent- to 25-percent-more to buy from Italy than it did when the dollar was strong, but we don’t really change our prices based on the fluctuations of the euro,” Havens says. “You can’t call everyone ever day to say the price is changing, especially when fabricators are selling jobs six months in advance and using today’s prices.”

FIRM FOUNDATIONS
Regardless of where they see the strengths and weaknesses of the current market, there is one umbrella idea that stone suppliers use to sum up their hopes for the future: more-educated stone consumers, both fabricators and end-users.
There’s little doubt that end-users are more knowledgeable about natural stone than ever before, simply because they’re being exposed to it in restaurants, offices and the homes of their friends, as well as on cable television and the Internet.
“This isn’t rocket science,” says Dente’s Primmer. “You don’t have to get into the particulars of the different types of stone. You do need to tell them that each stone is different and the characteristics of each stone are different.”
Because Dente doesn’t sell directly to end-users, Primmer says his company finds the best way to help provide that education is through doing seminars for fabricators and large builders on how to sell stone.
Nafziger agrees that education is the key. He says while buyers working with architects or designers are likely to be exposed to information on what separates a good stone and a good installation from the not-so-good, he’s sure some fabricators and installers have been burned by selling low-grade jobs at low prices.
“The most important thing that anybody in this industry can do is to continue to educate the consumer through magazines and sales presentations,” he says. “It’s important that consumers know the investment they’re going to make is substantial.”
Of course, that also assumes that the fabricators and installers are selling quality, rather than selling cheap stone at a cheap price or – even worse – selling a cheap material at a high price, Alpha’s Murphy says.
“The real goal should be giving people a sense of value for a good price,” he says. “If you make $10 on a $10 stone, it follows you should make $20 on a $20 stone. Since the same amount of surface area is being introduced into the home, you should make more money selling a higher cost product.”
Ultimately, it goes back to Primmer’s contention that people want something their neighbors don’t have – and something, coincidentally, the suppliers don’t believe fabricators can offer if they’re importing their own stone.
From a strictly practical standpoint, Global’s Havens doubts the average fabricator can match the fieldwork an importer does regularly, from having someone inspect the stone before it leaves the quarry to maintaining the depth of selection most suppliers can offer.
“This is really an inventory business, and while you can order a container and get five or six colors in it, that’s not enough,” he says. “You have to have the popular choices for people to buy. I’ve seen fabricators buy a container and months later they still have it sitting there; they can’t sell it and another fabricator isn’t going to buy from them, either.”
CCS’s Mitnick says just because a company has a forklift and some storage space doesn’t make it an importer. He stresses the growing demand for quality materials and specialized materials, which a company such as his is able to provide.
Primmer agrees, and says that just as fabrication shops and fabrication methods become more sophisticated, so have importers become more sophisticated buyers of the industry’s raw materials.
“A product might come from India, where the monsoon season is bad at some times of the year, or it might come from Norway, where it’s only quarried a couple months out of the year because of the weather,” Primmer says. “To keep up with our purchasing and our supplies is a very demanding job.”
And, he concludes, an important one. Because natural stone doesn’t come with a trademark, it’s literally only as good as the reputations of the people who import, fabricate and install it.
“If the calibration isn’t right or the polish isn’t right and it makes its way into someone’s home, that can really hurt the industry,” he says. “If that end-user gets an inferior product, ultimately they’re not going to be happy with it, and it gives the stone industry a bad name.”