Education
Two trends are impacting the health of this segment: Unemployment and federal stimulus money. As the job market remains tight, more people are either remaining in school or returning to school. That forces higher education to renovate as they compete for students.
The other driver of this segment has been stimulus money, particularly K-12, but there are concerns the effects of that may soon dry up. “What we don’t know is how long will that stimulus effect will stay in place,” Interface’s Wells said. “Much of education dollars go to state government funding, and that is under pressure right now because of state tax revenues.”
While higher ed has been suffering because endowments are down, enrollment numbers and application numbers are higher than they ever have been. “Parents are making decisions as to where kids go based on design,” Wells said. “And that is an opportunity for our business. Dorms are a major market segment for us—one of our best subsegments and one of biggest opportunities.”
Bentley Prince Street is also seeing growth in higher ed, but it’s not all university driven, Minite said. “People who aren’t working are going back to school. So alternatives to mainstream education are picking up–vocational, trade, etc.” He also sees growth in two-year colleges, which are attracting more people who may have entered the work force out of high school but are finding jobs hard to come by.
The other area where Bentley is finding opportunity is the private K-12 institutions. “They are spending to justify their astronomical tuition rates. They are trying to create images. They are all competing for students.”
Tandus, which has a strong position in K-12, said business is spotty because of the problems states and municipalities are having with their budgets. “If you can’t keep teachers hired, you probably aren’t re-carpeting your floors this year,” Hussmann said. The company has historically found favor in this segment due in large part to its unique Powerbond product. “When they look at their value proposition, performance rates very high. IAQ rates very high. Maintenance costs rate very high. When they come into play, our Powerbond product looks very good. Their value proposition has not changed. What has changed is their propensity to spend money.”
Business has been steady for Shaw, “but we are not seeing a large bump this year,” said Daniel Collins, director, education services. “There was large growth last year because of stimulus money going into school projects, and some bonds that were passed across the country. This year the stimulus dollars don’t appear to be there.” When it comes to higher ed, Shaw is seeing more upscale products because of marketability. “They are trying to recruit the best students and can only do that if their facilities reflect a state-of-the-art atmosphere. They must appeal to parents who are spending the money and students.”
So what does this segment look for in terms of product? It’s all about performance, durability, life-cycle costing and cost of ownership. They are one and the same. “They view the product as an investment rather than a transaction, Shaw’s Collins said. “They can live with the product 10-20 years. They can’t afford to make a wrong choice because the funds may not be there to replace the job.” He added Shaw is seeing a large shift to modular tiles here because of ease of installation, ease of repair and durability.”
Minite agreed that it’s all about performance. “That’s where the solution-dyed story makes a lot of sense. They want a carpet that will give them a lot of years but still want good-looking stuff.”
On the hard surface side, CBC’s Braulick said addressing a lower maintenance approach is critical in addition to life-cycle cost. “Maintenance is probably at the forefront, especially in classrooms. They are looking for a high-performance product that will not require wax. There has been a movement away from floor finish. The upfront cost is still what keeps VCT in the game, but the life-cycle cost opens up specifications for products like rubber and homogeneous sheet.”
Healthcare
The story here also surrounds two trends: the growth of assisted living and, with that, the desire to create a more residential look and feel to these properties. However, price points remain paramount.
“In recessions gone by, healthcare has made it through relatively unscathed; not this time,” Tandus’ Hussmann said. “Reduced spending matters. Budgets matter. With that said, in this segment, more than anything else, we see an emphasis on the quality of interior environment.”
Business is picking up after a sluggish first few months. “Assisted living started off slow, but we have seen some monies released in the last few months, Masland’s Dolan said. “It’s all about a hospitality-like, homey feel. But they are also looking for performance characteristics–that’s where specialty backing and solution-dyed nylon come in.”
Shaw’s Baucom referred to healthcare as “the most exciting segment we have” for a number of reasons. First and foremost is the competition among facilities to attract customers. That leads to business. Second is the belief that the environment has a direct relationship to healing. “It started with the birthing experience and is now carrying over to assisted living. It’s the aging of America. It’s a big area.” He added that there are 100 companies that each control more than 100 properties. “They are starting to create environments to which their customers are accustomed.”
Bentley Prince Street’s Minite agreed that substantial opportunity exists in this segment. “It’s a supply and demand issue; the need for more senior living facilities is allowing more business opportunities.” And those opportunities come with a twist. “We are seeing healthcare more as a hospitality-type product application. It’s become more relaxed, less institutional.” To that end, Bentley is offering more solution-dyed products and backing options that make the product applicable for more acute healthcare.
But it’s not just carpet. Chip Braulick, senior marketing manager, CBC America, said his company is seeing an appetite for more LVT. “They want more design features, but it still has to perform. That’s what’s great about the Halo product [recently purchased by CBC]. It’s a higher performance LVT product.” He added that warm colors and brown tones are popular. “That’s why LVT is such a big player in healthcare. It can warm up the space.” Braulick should know. CBC’s Toli Mature, the leading standard in healthcare patient rooms for 20 years, was just invigorated with 36 new colors and a new polyurethane coating for low maintenance.
Mary Docker, founder of Halo, said there is a difference between assisted living and hospitals. “Assisted living is still more neutral; hospitals are trying to get more glamorous and a bit more cutting edge with more use of metallics and color.” Using design elements is also becoming very popular as facilities try to differentiate.
Amtico’s Apostolos, agreed that style and performance are critical in healthcare, but in these uncertain times having a brand the A&D community can trust goes a long way. “Amtico has been around for a long time. Architects and designers know we will sell them the right product. They can specify us with confidence.
Apostolos agreed with Minite in that facilities are moving toward hospitality-type looks. “They don’t want to feel like patients who are going to a prison.” She cited the entry-level Spacia as a product doing well here. “Budgets are important. Spacia offers the same quality, style and design you have come to expect from Amtico at an affordable price.”