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Resilient: Marmoleum dealers sing product’s praises

July 9/16, 2018: Volume 34, Issue 2

By Lindsay Baillie

 

Forbo Flooring Systems’ Marmoleum line, long utilized in commercial applications, is finding favor residentially. Retailers who report success selling the line cite various attributes, including the product’s updated visuals and, of course, the environmental story as major selling points.

“Marmoleum sheet flooring is our No. 1 resilient product by a wide margin,” said Curt Stiger, manager, Major Brands Floor Supply, Seattle. “We stock over 50 colors of sheet material, more than 25,000 square feet of Marmoleum tile and 10 colors of Marmoleum CinchLoc.”

Stiger is not alone. Jeff Lerner, owner of Floorcraft Carpet One, San Francisco, is also a believer. “Forbo has great existing looks and the company has added some innovative visuals to its collection,” he explained. “We love presenting Marmoleum to our customers. We tell them, ‘Here’s a product that doesn’t try to look like others. It just tries to look like itself.’”

For dealers like Stan Levy, president of A-1 Floor Covering, Los Angeles, the appeal of Marmoleum is its versatility. “Now consumers can get it in a couple of different looks and textures,” he explained. “It’s really an update from the looks they’ve had for years. Customers like the fact that it’s a green, natural product. And here in Los Angeles, it’s a big selling point when restoring the original look of homes.”

Consumers are gravitating toward the product’s green attributes for sure, dealers report. Unlike other resilient products, Marmoleum is made of all-natural ingredients such as wood flour, jute fiber and linseed oil. What’s more, the flooring product contains no plasticizers, phthalates, volatile organic compounds or toxic chemicals.

All of these qualities and so much more give dealers like Patrick Rutledge, general manager, Green Depot, Portland, Ore., full confidence in selling the product. “Marmoleum Click CinchLoc is where we have seen a big jump in sales. It’s super easy to install—just about any flooring installer can do it. The indoor air quality health aspect is the next biggest thing.”

But at the end of the day, the clincher for many dealers is the look. Marmoleum is available in more than 300 colors and patterns as well as 12 different structures. Consumers have the option of choosing modular formats or sheet products depending on their needs. A floating floor option, Marmoleum Click CinchLoc, is also available for the DIY customer.

“There’s something for everyone,” Green Depot’s Rutledge said, citing Marmoleum’s expansive color palette and range of options.

Sam Snow, owner of Eco-Floors in Portland, Ore., is in agreement. “Their line offers some great retro looks that work well in our market, where people are going for a period-correct kitchen or bathroom remodel. With such a big line of products, it can easily cover both residential and commercial applications.”

The fact that consumers are consciously seeking out more environmentally friendly products is also driving interest in products such as Marmoleum. As Mike Masucci, owner of Ted’s Flooring and Interior Design, Albany, N.Y., explains: “A lot of people are looking for that natural product. People who aren’t looking for linoleum often see the new colors and say, ‘Wow, I’ve never seen anything like it.’”

Service counts, too
Beyond the aesthetic and performance attributes, retailers who sell Marmoleum cite the top-notch support Forbo provides. “Forbo also conducts a school for our mechanics,” said Ron Codron, owner of Abbey Carpet of El Cerrito in California. “Consequently, we receive an important credential upon graduation, something many competitors fail to do. This gives us an edge.”

Eco-Floors’ Snow concurs. In fact, Forbo recently held an informal training at the retailer’s warehouse for both its in-house installation team as well as a few other local crews the company utilizes regularly. “Forbo has been a great company to work with in terms of support and customer service,” he stated. “It’s easy to tell the folks at Forbo take great pride in their products and want them to be successfully installed and truly enjoyed by the end user.”

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Underlayment: Eco-friendly materials give dealers ammunition to sell

July 9/16, 2018: Volume 34, Issue 2

By Nicole Murray

 

In keeping with offering customers a more environmentally friendly flooring package, underlayment manufacturers are developing the latest acoustical, sound-absorbing products out of various recycled materials, including fibers and rubber tires—to name a couple. These eco-friendly underlayments often tout low volatile organic compounds as well as indoor air quality and Greenguard certifications.

What’s more, these products are being created for various types of flooring—providing environmentally conscious options for all consumers. Following are a few of the latest green underlayments to hit the market.

Diversified Industries
The Floor Muffler One line from Diversified Industries is made from recycled rubber and tire crumbs. The product boasts high acoustical properties and is ideal for multi-unit, multi-floor and high-rise applications.

With Floor Muffler One, “sound travel, especially from floor to ceiling, is minimal; this gives multi-unit homes the allusion they are living in their own space with a sense of privacy,” said Colleen Gormley, national marketing coordinator.

What’s more, Floor Muffler One comes with an optional moisture barrier for below-grade applications. It can also be floated or glued down as well as put on top of all substrates and under all types of flooring.

“This is a fan favorite because it requires the installer to only bring one underlayment to the job site as opposed to many,” Gormley explained.

Also new is Diversified’s Eco Natura Elite, which is constructed in the U.S. from recycled needled fiber. It is deal for applications such as hospitality markets where temperature stabilization is a key consideration.

DriTac
DriTac Impact 8301 and Double Impact 8302 are the company’s latest eco-friendly polyurethane underlayments. The products complement the manufacturer’s adhesives, are compatible with radiant-heated floors and are part of the company’s Total Sound Reduction System.

DriTac Impact 8301 is 1mm thick and works best with LVT and resilient products. Double Impact 8302, which is 2mm thick, is geared toward wider boards and thicker materials such as hardwood or laminate flooring. Both products have very low VOCs, are hypoallergenic and are mold, mildew and bacteria resistant. They also boast high impact isolation and sound abatement with respect to typical floor to ceiling sound travel.

“Our entire package is green from top to bottom,” said Wade Verble, vice president of underlayment and business development. “There is only one source to question for any issues, and because there is no ability to finger point another source, issues [are kept to a minimum].”

Ecore
Ecore has combined its environmentally friendly underlayment, EcoSilence, and new luxury vinyl tile collection, Attain, to create AttainSilence, a resilient flooring system available in five configurations. The aim is to solve common acoustical challenges associated with multifamily or hospitality environments.

Then there’s EcoSilence, available in 2mm and 5mm thicknesses—ideal for wood—and also a 10mm option, which works best under tile. The underlayment is created by turning ground-up recycled rubber truck tires into underlayment.

“Rubber is the perfect material because its quality never fades,” said Bob Racioppi, director of sales commercial products portfolio. “So instead of existing in a landfill forever, the material is being put to good use.”

EcoSilence can be installed under virtually any type of finished flooring, has a crack isolation up to 1⁄8-inch and is compatible with radiant heat flooring systems.

Healthier Choice
SoundSolution and OmniChoice are acoustical underlayments made with soy-based polyurethane as well as other natural, recycled resources. Both products are Greenguard Gold certified for indoor air quality, contain anti-microbials and are hypoallergenic.

“These underlayments are protected from top to bottom,” said Andrew Stafford, director of marketing. “The microbials are infused while the products are in a liquefied state, which means it is practically impossible for mold, bacteria or mildew to grow after the flooring has been installed.”

Sound Solution is best used with laminates, engineered woods and hardwoods; and OmniChoice is designed to go under ceramic, stone, vinyl and wood. In addition, both OmniChoice and SoundSolution come with a “never crush” guarantee, which states the products will maintain 90% of their thickness. Consumers are also given the option of adding a Vapor Bloc, which is a laminated moisture barrier for an extra layer of protection.

MP Global
Quiet Walk Plus is the latest iteration of MP Global’s signature Quiet Walk brand of underlayments. The product made from small pieces of blue jean, carpet, cotton and polyester fibers, which are often too short to use in the manufacturing process and would have otherwise ended up in a landfill.

“We have developed a patented process of repurposing what normally would have been deemed as trash into a high-performing underlayment product,” said Deanna Summers, marketing coordinator. “MP Global is repurposing 20 tons of raw materials a day because what others see as garbage, we see as a flooring opportunity.”

Quiet Walk Plus also touts acoustical features, compression resistance, moisture protection and longevity. It is also certified for low chemical emission and has just recently been Indoor Air Quality certified with Greenguard and Greenguard Gold standards.

“This material can be nailed, floated or glued down, and it can be paired with a range of products including vinyl planking or WPC products,” Summers explained.

Schönox
Schönox’s signature “manmade gypsum” technology is twice as hard as concrete, doesn’t promote the growth of mold or mildew, and doesn’t shrink or crack, according to the company. This technology can be poured over all types of substrates and is found in Schönox’s AP and APF leveling compounds.

Products containing the synthetic gypsum leveling compounds have been verified for LEED credits including low-emitting material, building reused and recycled content. Another benefit is a minimal amount of dust emits when poured into a barrel.

“There is less mess and less time spent because this technology is made to go over the worst of the worst,” said Doug Young, executive vice president.

Schönox’s Hybrid Active Dry technology combines the speed and temperature tolerance of cement with the versatility of synthetic gypsum to form a fast and strong underlayment.

AP Rapid, which contains this technology, can be poured up to ½ inch. The product has low shrinkage and allows for flooring to be laid down approximately six hours after it’s poured.

WE Cork
WE Cork’s Warm & Quiet and Warm & Quiet Plus are made of cork from the bark of trees, which means these products have no off gassing, renew themselves every nine years and are moisture resistant.

Warm & Quiet is an 1⁄8-inch thick and is lighter than rubber underlayment of the same size weight. It is best used under laminates or in situations where thermal installation and sound control is required.

“You won’t hear residents walking or high heels clicking,” said Ann Wicander, president. “This product can even make a fake floor sound real. The density absorbs the reverberation of footsteps so the sound does not travel within the room or from floor to ceiling.”

Warm & Quiet Plus is ¼-inch thick and should be paired with laminates and hardwood floors. It is best suited for multifamily and second-story applications.

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Ceramic: New shapes, sizes expand possibilities

July 9/16, 2018: Volume 34, Issue 2

By Nicole Murray

 

Ceramic tile manufacturers continue to push the proverbial design envelope by developing new shapes, formats, patterns and sizes. The aim is to better meet the needs of a diverse and growing range of end users.

In terms of visuals, ceramic is looking to nature for inspiration—literally. Wood planks continue to rise in popularity, based not only on the high level of realism that can be achieved due to sophisticated digital printing, but also because of the advent of longer plank sizes and wider widths.

“Playing with the different sizes side by side adds a more modern yet sophisticated element to the design because the non-linear pattern will pop as a focal point,” said Laura Grilli, senior product development manager, Dal-Tile. As an example, she cited Daltile’s Emerson Wood collection, which is available in three extra-long sized planks, including 12 x 48, 8 x 48 and 6 x 48 formats.

But it’s not just wood looks that are trending. Warm, gray-colored concrete tile, as seen in American Olean’s Union collection, is turning heads, according to the company. “There is a softness that comes through when using gray,” Grilli explained. “Once installed, end users have the option to choose a design direction ranging anywhere from minimalistic to modern.”

Industry observers also continue to track interest in larger formats. While 12 x 24 remains the staple tile size, larger options such as 24 x 48 and 18 x 36 are gaining in popularity. Proponents cite the appeal of minimal visible grout lines, which are inherent in larger tiles, to the greater floor space bigger tiles cover, particularly in more expansive settings.

Larger-format ceramic tiles are also being utilized in various indoor spaces that require a clean and professional look as well as low maintenance. “Think elevator bank walls in office buildings, exterior cladding for hotels and retail centers, feature walls in multifamily lobbies as well as fireplace surroundings in living areas with vaulted ceilings,” said Lindsey Waldrep, vice president of marketing at Crossville. “These huge pieces of ceramic tile have infinite design capabilities and are so appealing in these environments.”

Interestingly, larger tiles are creating opportunities beyond interior settings. “Consumers are using larger panels for a monolithic look that takes tile from the front door all the way out to their patio,” said Emily Holle, director of trend and design, MSI. “Ceramic tile has proven its functionality no matter the environment, and people are taking advantage of it.”

But that doesn’t mean smaller tiles no longer have a place in the home. Observers say miniature ceramic tile sizes are still being utilized for decorative applications such as backsplashes or accent walls. “People are much more appreciative of the handmade products these days,” Waldrep said, citing Crossville’s Retro Active 2.0 collection, which is available in 13 different colors and various shapes. “Smaller tiles allow for more options of how to use the space on the wall by playing with different shades of colors and how they are arranged.”

What’s more, using various shaped tiles allows end users to experiment with color and size in both traditional and unconventional ways. For instance, Emser Tile’s Design Form collection of 9 x 9 tiles offers 16 different black and white patterns that can be mixed  to make a classic linear design or busy flooring pattern that can function as the focal point of a design.

“People are playing with irregular angles, linear etching and plaster effects to add texture and alluring dimensions on their walls,” said Barbara Haaksma, vice president of marketing, Emser Tile. “It draws in the eye so much quicker and keeps it there because there is so much to take in when the pattern is kept busy.”

Some of the most popular shapes being used on walls are fish scale, chevron and herringbone—some of which may incorporate 3D textures for a multi-dimensional look. “Our Visual Impressions collection is the perfect example of a wall tile that is not only visual but tactile and can make a space much more comfortable,” American Olean’s Grilli explained. “People are looking to take it to the next level so that you can touch and feel the texture of the tile which adds even more personality to the entire design.”

Technological leaps
Ceramic tile producers attribute many of the latest looks and designs to the advent of digital printing technology. This, observers say, has almost single-handedly ushered in the ability to create patterns and designs that at first were thought to be unrepeatable.

“Ceramic can now mimic looks that cannot be replicated in other materials,” Emser Tile’s Haaksma said. “The tile can capture textured concrete looks, mod-inspired graphic patterns and reminiscent terrazzo prints while outperforming other materials in cost and ease of maintenance.”

More specifically, printing technology has allowed marble to thrive because of the new capability to manipulate small details within the material so the design pattern can expand to more than one tile and be used in larger areas.

“Printing technology has allowed manufacturers to perfect minor aspects of the graphics that could not be achieved in the past,” Grilli explained. “For example, we are now able to adjust how one specific vein looks on a piece of marble that could not have been adjusted previously. This allows us to synchronize multiple pieces together.”

But it’s not just flooring we’re talking about here. Large porcelain slabs, such as Daltile’s Panoramic Porcelain Series, can also be used for countertop applications. “Porcelain slabs are easy to clean, waterproof, scratch-proof, cannot be stained and don’t freeze,” Grilli noted. “They are becoming the obvious choice because of the design capabilities, along with the numerous everyday advantages.”

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Wood: Canadian suppliers in a class all their own

July 9/16, 2018: Volume 34, Issue 2

By Reginald Tucker

 

Most laymen associate Canada with sprawling, breathtaking forests, maple syrup and feverishly devoted hockey fans. But when it comes to flooring, especially hardwood, industry observers agree the country produces some of the highest quality products in the industry.

Case in point is Boa-Franc, manufacturer of the standard-setting Mirage brand of hardwood floors. Over the past 10 years, the company has earned 33 quality awards—more than any other North American hardwood floor manufacturer, according to Pierre Thabet, president and founder. This includes an impressive streak of FCNews Awards of Excellence trophies as well as honors from the Canadian government and private enterprises. Among them: the prestigious Gold Trophy Award at the Canada Awards for Excellence several years ago, and the highest honor at the Grands Prix québécois de la qualité awards in 2017 and, prior to that, 2012.

“Boa-Franc strives to pro- duce the finest hardwood floors,” Thabet said. “Our entire focus is on making superior quality flooring that exudes well-being and gives dramatic new life to consumers’ home décor dreams.”

For the past 35 years, Boa-Franc’s main goal has been to produce the industry’s finest hardwood flooring, according to Thabet. To follow through on that quality promise, he said, the company adopted a management philosophy founded on five core values: passion, respect, integrity, commitment and innovation.

“Innovation is at the heart of everything we do here at Boa-Franc,” Thabet stated, adding that being a leader means being the best, not necessarily the biggest. “It’s what enables us to make superior quality products and maintain our leading position in North America.”

Boa-Franc’s distributor and retail partners appreciate that quality-minded philosophy. Shawn McCloskey, marketing manager for J.J. Haines, the industry’s top-ranked wholesaler, cites one of the company’s best-selling lines—Mirage’s Flair collection, which features an advanced finish called Duramatt. “It is an extremely durable, low-gloss urethane finish that has the appearance of an oil finish without the associated maintenance. It also contains anti-microbial agents and is 20 times more wear resistant than a conventional oil finish.”

Another quality-minded supplier renowned for its expertise in hardwood production and coating application is Mercier, which markets the advanced Generations 2500 Intact finish. The molecules that comprise the coating, named for its numerical performance on the Taber test, interlock with the wood cells to create a waterproof barrier. The finish also features aluminum oxide particles of varying sizes and boasts a multilayered composition for greater flexibility and impact resistance. Generations 2500 also touts antimicrobial qualities and features anti-yellowing properties to combat the effects of UV rays.

“Mercier gives us a first-quality, Canadian-manufactured wood line that fits all possibilities in today’s ever-changing customers lifestyle,” said Steve Flanagan, product and marketing manager, Jaeckle Distributors. In particular, he cited the appeal of Mercier’s matte finish on its Design Plus collection, as well as the Legend Series from the Nature collection. “Mercier fits the consumers need anywhere from a quality entry-level product in their Pro series to the most fashionable 7-inch-wide pine board or other in-demand species such as hickory, maple, red and white oak and their entire Exotics series.”

Depth and breadth of product—as well as high service levels—are also hallmarks of many Canadian wood flooring manufacturers. That’s according to dealers like Mike Caroll, owner of Buffalo, N.Y.-based MP Caroll, a hardwood-only retailer that positions the Preverco line front and center. Although he has only carried the line for a few years, it has quickly become the company’s go-to product. “Preverco is our leading line, which we consider an upscale offering,” he told FCNews. “It’s super consistent with its milling and colors, and their attention to detail is unmatched.”

The same can be said for companies like Wickham Hardwood Flooring, which prides itself not only on consistent product quality but also quick turnaround times on special orders—a rarity in the industry. A big plus, customers say, is Wickham’s unique make-and-ship program. How it works: All stock is kept unfinished and then is finished as ordered. Regardless of species, colors, grades, sheens or widths, retailers can meet almost any consumer specification when participating in the program.

“Assisting the client in order to constantly grow their business is a crucial component of a healthy business relationship, and we are committed to making sure efforts to sell are mutual on both sides,” said J.P. Nittolo, president. “Our sales- force is devoted to assisting the customers, whether it is for product knowledge sessions, travel with the sales representatives or even in helping with product marketing. We also offer a variety of merchandising programs where customers can build their own displays—with joint efforts from the Wickham team—based on the end consumers’ needs.”

Clients like Craig Dupra, president of Installers Warehouse, a Rochester, N.Y.-based distributor, knows this firsthand. “Since assuming a controlling interest in Wickham Hardwood about 10 years ago, J.P. Nittolo has completely transformed the former Wickham Hardwood Flooring company into a brand new entity. From the time when I first visited them to today, Wickham has been in constant transformation. They have evolved from a quiet little mill to a major supplier in the North American market. Benchmarked against his competition, the growth has been remarkable.”

 

Satan Flooring sees opportunities on the wall
Toronto, Canada—Satin Flooring, maker of a variety of trendy, high- performance hard surface flooring materials, is going vertical. Known primarily for its wide offering of laminate, hardwood and resilient flooring products, Satin Flooring is now targeting consumers in the market for decorative wall materials.

With the launch of Decora 3D wall panels, Satin Flooring is targeting the homeowner who’s looking to do a complete room remodel—not just the floors. Featuring a decorative laminate wrap over a high-density fiberboard core, the new decorative panels address one of the biggest trends in interior design.

“Feature walls have become more important in decorating today,” said Ingrid Mancini, senior marketing manager. “People are putting in accent walls using stone or wallpaper, etc. This is not a throwback to the ’70s, when you had wood panel walls, but I think it’s adding texture and dimension to make the space more homey, interesting and more visually appealing.”

Available in five introductory patterns (concrete, slate, light barnwood, brown barnwood and earth pine) the new wall panels aim to complement—but not necessarily match to a tee—the products currently available in the company’s flooring line. “The patterns in the Decora 3D wall collection were created specifically for a certain kind of texture or look, but they will definitely coordinate with our flooring patterns,” Mancini said. “In my home, I have the concrete pattern on the wall and a beautiful, engineered red wood called Twilight on the floor. It’s a little more brown/gray, but it goes nicely with the concrete wall color.”

Another feature of the new wall line, according to Mancini, is it can be installed in a variety of different sizes and blocks to create a multi-dimensional effect. “So, depending on the person, there’s a lot of variation that’s available and there are a lot of trims to match,” she stated.

The new Decora 3D wall line, which was previewed at the NWFA convention earlier this year, makes its official debut this month.

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Floors & More: Retailers challenged to leave comfort zone

July 9/16, 2018: Volume 34, Issue 2

By Ken Ryan

 

Englewood, Colo.—“Peak performance” was the aptly named theme for Floors & More’s 2018 summer convention, held against the backdrop of the Rocky Mountains. Peak performance was also appropriate for the overall health of the group, which between Big Bob’s Flooring Outlet stores and Floor to Ceiling/Floors & Kitchens Today experienced 12% to 14% growth in 2017, and 2018 is shaping up to be even stronger.

Sales are up and so isnew membership, which
has spiked 16% in 2018. Those numbers do not include the pending list of verbal commitments. As founder and CEO Vinnie
Virga explained, “We don’t count them unless they are signed, but the general outlook is very positive. The future looks incredibly bright.”

Floors & More, according to Virga, appeals to independent flooring dealers “because we have answers that you don’t get from other places. For example, our whole digital program is superb—no one is close. Another thing: No one understands the efficacy of traditional media like us, which is to say that traditional methods like TV and radio are not efficient anymore.”

To that end, Floors & More at convention announced plans to eschew TV and radio from its marketing and advertising strategy, with implementation to start in January 2019. In its place, according to Virga, will be “new- school” methods focused heavily on digital.

Compared to other buying groups, Floors & More is the outlier in the way it fully embraces non-flooring categories, thus the “More” in Floors & More. Virga estimated that while Big Bob’s is roughly still 80% flooring, Floor to Ceiling retailers are closer to 60%-40% flooring—and the gap is narrowing. To that end, Virga and Mike Cherico,
vice president, challenged members to unlock the fear factor and go after non-flooring opportunities even if it’s uncomfortable.

Certainly, there were opportunities for retailers at convention. For example, the exhibition area featured window treatment companies, vendors pitching blinds, kitchen and bath products, as well as cabinetry. One educational session was devoted to motorized shades and blinds from Lafayette Interiors.

However, no category got more attention than cabinets. It was announced that One Two One cabinetry, a division of KraftMaid, was offering Floors & More members exclusive rights to their cabinetry program for a 30-day period. As an incentive, dealers were offered a $10,000 credit for signing up.

That was good news for Rick Stoeckel, COO of Floor to Ceiling/Nelson Lumber in Hayward, Wis. His business, which was founded in 1995, is in the midst of a record-breaking year with monthly revenue exceeding $500,000, which is unprecedented. Half of that volume is coming from cabinetry. “You have to be in that business if you are a Floor to Ceiling dealer,” he said. “It is a profitable business and it is not difficult to manage. You are missing the boat if you aren’t in it; fortunately, there are programs here to help members.”

New programs, new vendors
Several new vendors have joined Floors & More since January. Newcomers include Gulistan, which essentially replaced Beaulieu; KraftMaid, Ribadao Wood Boutique and Rubi Tools. Floors & More invites its vendor partners to the general session as well as all activities during convention, which is not the norm among all buying groups. “I got a lot out of the discussions,” said Bruce Hammer, vice president of sales for Ribadao. He particularly enjoyed Pami Bhullar, Invista’s retail guru, talk about Stainmaster and the consumer.

Floors & More announced Cash for Core, a sales incentive program in which RSAs can earn money on certain core products and private-label offerings. How this spiff works: Once an order is placed, funds are loaded onto an RSA’s F&M debit card, which can be used for their own purchases. The program launches in August.

“The driving force in our business is to get our people excited and energized with our core vendors, and this spiff program does a great job with that,” said Jake Leppo, store manager with Floors & Kitchens Today, Norwood, Mass.

Exhibition excites
The convention included a two-day vendor trade show that featured brisk buying activity, according to suppliers. Nance Industries, for example, had multiple offers on its new DIY residential carpet tile line for Big Bob’s outlets. Meanwhile, Ribadao Wood Boutique, which received orders for several displays, had interest in its private-label offerings. Engineered Floors showcased two rigid core lines—Triumph and Revotec—as it takes a step into the world of luxury vinyl flooring.

“There is still an incredible amount of business out there in hard surfaces/LVP,” said Will Young, director of national accounts at Engineered Floors. “We’re not a one-trick pony anymore. We can go into a single-family builder and provide them with every surface.”

John Sheffield, vice president of sales and marketing for Gulistan, didn’t know what to expect as a first-time vendor. “I don’t know these dealers; for the most part these are all new accounts for us, which is a good thing.”

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First-half report: Early rally puts flooring dealers in driver’s seat

July 9/16, 2018: Volume 34, Issue 2

By Ken Ryan

 

Despite a lackluster first quarter for some retailers—and an unexpectedly soft April for others—the consensus among flooring dealers is the first half of 2018 fared better than expected.

Not surprisingly, the resurgence is tied to red-hot product categories. While the LVT category and its super sub-segments continue to drive growth, dealers say there has been strong activity from two unlikely heroes—carpet and laminate.

“Both categories are strong for us this year and,
I believe, well into the future,” said Dave Snedeker, division merchandise manager-flooring, Nebraska Furniture Mart. “Both categories are viable in our markets and offer great values for our customers.”

Sales of residential carpet have been trending up in the first half of 2018, a sign of a better economy and willingness among consumers to invest in better goods, observers say. Billy Mahone III, manager of Atlas Floors Carpet One in San Antonio, said he has noticed carpet already making a comeback in his market after years of flat to tepid growth. “We may not be selling as much square footage-wise, but things have been evening out with customers typically selecting higher quality products for the rooms where they place carpet in their home,” he explained.

Several dealers told FCNewsthey were especially pleased with the pace of activity, which started out slowly but picked up quickly in the second quarter in most areas—albeit with an unexpected April dip for some. “The first half has been very busy with no slowdown in either commercial or residential flooring,” said Carlton Billingsley, owner of Floors & More, Benton, Ark. “The two biggest surprises for me was the WPC category, which continues to grow with our sales at record-breaking pace. Also, the end user is spending more per unit for better material selections for finishes than I have seen in a while.”

Larger flooring dealers that generally outperform the market did not disappoint in the first half, either. Cherry Hill, N.J.-based Avalon Flooring, with 14 locations in three Mid-Atlantic states, saw activity ratchet up in the second quarter with positive signs in carpet sales and especially the LVT segment.

At The Flooring Gallery, with five stores in the Louisville, Ky., market, the first half was busier than the previous year on both the retail and new construction fronts. Still, Nick Freadreacea, president, said business success is not without its challenges. “The most unexpected, unavoidable thing is the absolute shortage of installation and the extreme labor increases we have had to absorb,” he explained. “Top line is great, but the bottom line has been short due to the cost increases from the mills and labor.”

In light of the U.S. Tax Cuts and Jobs Acts bill, which passed near the end of 2017, some flooring dealers were expecting to see a more robust start to 2018. Instead, many saw an uneven first half, with improving conditions from April through June. “My assessment of the first half would be an unusually slow first quarter and a superb second quarter,” said Bill Zeigler, co-owner, Charles F. Zeigler & Sons, Hanover, Pa. “This still baffles me.”

Indeed, fickle consumers and uneven buying patterns have become the new norm in flooring among specialty flooring dealers. John Taylor, owner of Taylor Carpet One, Fort Myers, Fla., noted that while the first two quarters were good, the company did not experience the increases it hoped to achieve.

“We are still up for the year and still getting good traffic on a day-to-day basis,” Taylor said. “People seem to be a little hesitant on pulling the trigger right now. However, the LVP category is still showing a lot of growth and continues to take away from the wood category, in our opinion.”

Then there are others like Allentown, Pa.-based Crest Flooring, which had a banner first half from the get-go. In fact, sales in the first half far exceeded 2017 on a percentage basis, according to Steve Weisberg, president. “That was a pleasant surprise,” he said. “While LVT is leading the parade, we are still selling a lot of carpet.”

No matter how favorable the road ahead appears, Weisberg’s strategy is to not become complacent. “We continue to be very aggressive with our advertising, and our market share continues to grow because of it,” he said. “As Tom Petty said [in his song, “Mary Jane’s Last Dance”], ‘You never slow down, you never grow old.’”

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Commercial: Retail sector lags behind improving economy

June 26-July 2, 2018: Volume 34, Issue 1

 

By Reginald Tucker

What do Sears, Kmart, J.C. Penney, Macy’s, Payless, Toys ’R Us, Walgreens, Michael Kors and Gymboree have in common? They are among the scores of big retail names that announced massive store closings last year. Sears (358 stores in 2017; 63 in January this year alone); J.C. Penney (138 stores); Macy’s (68 stores); and Payless Shoe Source (900 locations), to name a few.

According to a CNN Money report, retail outlets announced the closure of more than 6,000 stores in 2017, which beats the previous all-time high of 6,163 store closings in 2008 amidst the financial crisis. On top of that, more than 300 retailers filed for bankruptcy by mid-2017—a 31% increase over the same time in 2016. That begs the question: Why is it that the retail sector—which represented about 7% of commercial flooring activity in 2016 but only about 4% last year—is lagging behind other end-use markets that are on the rebound in an improving economy? Industry experts cite increased pressure from online operators combined with dramatic changes in brick-and-mortar retail design. A recent study from Pew Research Center found that nearly 80% of Americans do at least some shopping on the internet, with 43% shopping online weekly or a few times a month.

“Technology has accelerated the decline of retailers who have not been in touch with what their consumers wanted as much as their competitors,” said Richard Kestenbaum, contributing writer for Forbes magazine. “Technology helps consumers see more of what’s available, and that makes the comparison between brands so much more stark and apparent.”

One reason behind all the retail store vacancies—the highest they have been in six years—is the ongoing evolution of retail formats. According to Kestenbaum, the main reason why we are seeing so many vacancies (even though more stores are opening than closing) is the footprint and locations of the stores being closed aren’t suitable for the stores being opened. Simply put, the old stores’ formats can’t be transformed, and their locations don’t work for the new stores that are opening.

Outlook for remainder of 2018
Unfortunately, the trend seen in 2017 and in the years prior is expected to continue for much of 2018. According to a CNBC report, the amount of retail space “going dark” in 2018 is on pace to break a record, as companies with massive floorplans are either trimming back their store counts or liquidating altogether.

As of April, more than 90 million square feet of space is expected to be vacated, according to commercial real estate services firm CoStar Group, which closely tracks the non-residential construction market. The firm believes that’s on track to surpass a record 105 million square feet of space shuttered last year.

“I think there’s probably a couple more announcements coming,” said Suzanne Mulvee, a senior real estate strategist with CoStar, which predicts 2018 should be a peak year for the amount of retail space closing. “It wouldn’t surprise me to see a few more significant announcements from department stores, and more chains that continue to struggle.”

On the upside, observers believe property owners see the vacancies as an opportunity to fill spaces with new tenants that operate more profitable businesses. In a recent case study on U.S. malls, CoStar Group found top-tier, Class-A mall owners were more likely than other landlords to release a space within one year of a department store anchor moving out. “I think it gets harder and harder [for owners to find replacements] the more these big boxes come on the market,” Mulvee said.

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Commercial: Corporate, hospitality specifications drive sales

June 26-July 2, 2018: Volume 34, Issue 1

 

By K.J. Quinn

 

A flurry of activity in key end-use sectors—corporate, hospitality and education, among them—drove the bulk of commercial flooring specifications in 2017. FCNews research shows total specified commercial flooring sales grew to $6.62 billion in 2017, a 3.5% increase over 2016’s $6.396 billion.

Performance of the respective product categories varied widely, as each sector encountered macro issues impacting demand. Sales of hard surface products such as resilient and ceramic tile continued to surge, while carpet tile increased its share of the total soft surface pie. Designers cited access to a plethora of products to meet a variety of end-user needs ranging from function to price to sustainability requirements.

“To meet these needs, manufacturers have increased focus on the impacts of their products on occupant well-being and productivity,” observed Matthew Miller, president, Interface Americas, “offering a wider range of aesthetic and functional solutions to deliver against the requests of designers’ clients.”

Carpet, while it has lost share to hard surface, remains king of the hill in commercial spaces, generating approximately $3.8 billion in sales, according to FCNews research. Specified contract represents nearly 80% of carpet sales with the remainder utilized in Main Street commercial applications. As in years past, carpet tile consumption outpaced broadloom, claiming about half the volume and 60% of dollars. “This is due to two main factors—cost improvements, as additional options at the low-end range are continuously being added, making carpet tile a more competitive, appealing alternative to low-end commodity broadloom,” Interface’s Miller noted. “Second, carpet tile has added design elements, thanks to enhanced tufting technology that has come to market over the last five years at the mid- and high- end levels, expanding the settings where broadloom is traditionally used.”
Surprisingly, a fair amount of broadloom was consumed in commercial applications last year as the product remains a viable option for commercial spaces requiring a luxurious look and feel. “A lot of low-end broadloom is being sold for Main Street applications,” said Richard French, vice president of sales, Bentley Mills. “We still see some higher-end broadloom sold to the hospitality, legal and financial services sectors.”

But carpet continues to lose market share to hard surfaces. Soft surface saw its share of the commercial sector slide from 61.3% in 2016 to about 57.4%, FCNews research shows. Meanwhile, resilient grew its share of commercial sales from roughly 19.8% of the business in 2016 to about 21.3% last year. Ceramic tile’s share also grew slightly during the period, inching up from 12.9% to 14.1% of commercial sales. And while wood grew its share of the specified contract pie to 3.5%, up from 2.8% in 2016, laminates’ share fell to just under 0.4%.

Resilient is the leading hard surface, posting approximately $1.407 billion in commercial sales last year, according to FCNews research. Proponents cite its installer-friendly attributes as well as its track record in the market. “It has the advantage of comfort and flexibility when compared to unforgiving hard surface flooring like ceramic or terrazzo,” noted Robert Brockman, segment marketing manager, commercial, Armstrong Flooring. “Compared to carpet, it is more durable, has less concern around dust, moisture, bacteria and virus harboring. It also offers an ease of maintenance that costs less to keep looking newer longer.”

LVT and WPC accounted for about 39% of square footage and 49% of dollars sold in commercial resilient flooring last year, research shows, as the category expanded dramatically into areas traditionally dominated by carpet. These include hospitality, multi-family, senior living and retail sectors. Sales and volume grew by double digits—an indication average selling prices held firm. “LVT has certainly taken some share from other resilient products and it is also likely taking share from soft surfaces as well,” said Jeff Fenwick, president and COO, Tarkett North America.

VCT remains a fixture in many commercial environments, experts say, but no longer is it considered a low-cost option due to high maintenance over the life of the floor. Rubber and linoleum are positioned as healthy flooring choices and maintain strongholds in healthcare and education settings. “I do think there is a big opportunity for linoleum in Main Street commercial, which is about getting the right product there,” said Denis Darragh, vice president, North America, Forbo Flooring. “I think people are looking for a floor that’s healthy, installs easily and maybe has a bit of unique flair.”

The second-largest hard surface category, ceramic tile, saw both sales and square footage rise over the prior year. FCNews research shows the category represented 14.1% of commercial sales in 2017, up from 12.9% in 2016. “We have seen positive growth in the tile segment, which can be attributed to a combination of factors, i.e., technological advancements, commercial market recovery, consumer confidence and interest rate fluctuation,” said Gianni Mattioli, executive vice president, product and marketing, Dal-Tile. “We see continued development in high tile usage segments such as hospitality, healthcare and education.”

Hardwood also saw its share of commercial sales rise, increasing from roughly 2.8% of sales to 3.5% last year. Meanwhile, laminates’ share of commercial continues to fall industry-wide, although some manufacturers report success in some niche sectors. “New improvements in laminates technology, such as waterproof cores and more water-resistant laminates, helped sales soar up a little bit,” said Al Boulogne, vice president, commercial resilient business, Mannington Commercial. “But it’s such a small share of the commercial marketplace today that it’s hard to tell if it’s way up or down.”

Corporate
The leading end-use market is corporate offices, representing roughly 48% share, according to FCNews research. The sector experienced double-digit growth over the previous year as capital budgets opened up. Demand is reportedly driven more so by renovations than new builds.

The office sector is among the most diverse segments in terms of product selection. Flooring impacts everything from the level of employee motivation and efficient workflow to employee recruitment. “This has resulted in a movement to incorporate more comfortable and fun aesthetics while creating a uniform visual throughout the office and work environment,” Armstrong’s Brockman said. “Designs that allow for an ergonomic and dynamic feel or a warm, welcoming option are favored.”

An ongoing trend is the influx of multiple flooring solutions which coordinate in design and product thickness, meaning minimal transitions from soft to hard surfaces. A case in point is the uptick of woven products in C-suite areas and conference rooms, echoing the desire for more texture and a “resimercial” feel. “We’re finding hard surface in traditional areas—some in the foyer, some in the cafeteria—but also now in office runways and corridors to help direct the flow,” noted Michel Vermette, president, Mohawk Group. “A lot of tech companies that once had stained concrete are covering those surfaces with commercial enhanced resilient tile (ERT) to help with comfort and sound.”

Carpet tile is the top flooring choice, thanks in part to evolving aesthetics and formats. The product is expanding into workstations, board rooms and privacy rooms. “Product design teams are using the modular approach to achieve new and unique pat- tern options that give interior designers a great deal of control over the finished look, making the design of each client’s space truly unique,” said Sharon Steinberg, AIA, LEEP AP, a principal architect at Stantec’s Houston office.

Resilient, hardwood, porcelain tile and polished concrete are preferred for certain areas where fashion and functionality are required. But LVT is really taking off in corporate spaces. “We’re seeing it placed in a lot of conference rooms and reception areas where end users want to highlight a high-traffic area,” said Jenne Ross, director of marketing, Karndean Designflooring.

Hospitality
Fashion and function are paramount in hospitality, an industry sector reportedly investing millions of dollars to remodel existing properties and build new ones. Flooring choices vary widely, depending on application and budget. For example, broadloom remains the surface of choice in guest rooms, hallways and certain public spaces, thanks to its plush looks and sound-deadening qualities.

Stone, marble, porcelain tile, hardwood and LVT continue gaining coverage in hospitality spaces, experts say, as specifiers seek to create modern, homey looks. “During the last 10 years, hospitality spaces started moving to hard sur- faces to replicate the look of the home,” noted Elizabeth Bonner, director of hospitality design for Mohawk’s Durkan brand. “There have been advances in the manufacturing of LVT products which give them much better looks that resemble actual wood and stone.”

Further fueling interest in hard surfaces are technological advances
that enable high-fashion designs and products to
last longer. Hospitality, considered the second-largest commercial sector for tile, represents an estimated 12% of sales. “The hospitality industry continues to grow, with much of the spaces requiring tile,” Dal-Tile’s Mattioli said. “Designers in the hospitality space demand unique designs, and we are taking style and design to the next level through our latest introductions.”

Healthcare
Healthcare experienced a spike in refresh construction projects and cosmetic remodeling last year, as the business expanded to accommodate the needs of an aging U.S. population and rebranding efforts stemming from corporate takeovers, according to published reports. One of the fastest growing subsegments is assisted living, as facility managers are creating more “homey” environments for residents. “We’ve seen a lot of living spaces, kitchenettes and common areas going to hard surfaces,” Mannington’s Boulogne said.

While the A&D community utilizes green building programs and rating systems as a general guide, experts say, they’re finding there is much more to the equation than simply performance and cost. “Healthcare-built environments are demanding, non-stop living entities that require Lean Six Sigma methods of operational management,” noted Cynthia Hubbell, vice president of healthcare and senior living segments, Mohawk Group. “So not only do products have to be sustainable in their material construction, but they also have to be sustainable in terms of how they are maintained, cared for and replaced over the years.”

Fortunately, there are commercial floors with a proven track record, experts say, helping ease the minds of designers during the specification process. Resilient sheet goods and tile, rubber and linoleum are valued for their durability, hygienic and slip-resistant qualities. LVT is expanding into many healthcare areas while modular carpet, ceramic, porcelain and terrazzo tile are commonly found in hallways, making it easier to maneuver rolling equipment and mobile aids.

“We’re seeing more demand for carpet tile and hard surfaces in healthcare, whether that is in patient rooms, mini corridors or operating rooms,” said Brenda Knowles, vice president of marketing for Shaw Industries’ commercial business.

Retail
The retail business experienced its share of ups and downs last year, which impacted flooring sales. For example, hundreds of retail locations closed their doors in 2017 and more shutdowns are expected this year. Mall vacancies, in fact, are at a six-year high.

But on the flip side, new construction and remodeling plans were announced by several major chain stores, and the new stores that are opening are adopting much smaller footprints. For instance, supermarkets are honing their layouts and remodeling to improve the in-store experience for customers, and eateries are making investments to renovate, creating interior design around a common theme.

Like hospitality and education spaces, flooring types run the gamut. Traditionally, carpet tile and LVT are among the leading flooring choices at retail, experts say. Broadloom, ceramic and hardwood are usually found in high-end spaces, while resilient, laminates and rubber are utilized in public areas. “Advancements in digital printing technology allow us to offer what this segment really needs—beautiful tile that can withstand high foot traffic,” Dal-Tile’s Mattioli said.

The environmental movement is reportedly helping stimulate demand for natural materials such as ceramic, reclaimed wood and linoleum. Wood-grain tile planks, large-format tiles and patterned tile accents are among the most popular looks and formats, according to Nicole Rehfuss, senior associate, retail, at Little. “Existing subfloor in retail up-fits may dictate the kinds of flooring we can install,” she stated. “That means instead of hardwood, we are required to use LVT due to floor leveling.”

Education
The fourth-largest commercial segment, education, exhibited growth across the board last year, industry members say. The amount of flooring sold for K-12 applications was aided, in part, by the passage of funding to support school construction and renovation. Meanwhile, higher education invested money to renovate existing facilities and build new ones, as recruiting and retaining students often hinges on the quality of academic and living facilities. Flooring types vary, as campuses encompass a wide range of applications, such as dormitories, athletic facilities, class rooms and retail spaces. “The schools are looking for flooring that supports future ready goals, requires less maintenance, will have a timeless aesthetic, have competitive upfront costs and are in need of quick delivery for the short window to complete replacements,” Shaw’s Knowles explained.

Across the board, the needs of the education sector are changing, in part, to adapt to the new design of school-learning environments. For example, flooring is being used to create a space within a space to identify collaborative or breakout areas for small group discussions. In some areas, design preferences are shifting toward non-PVC-based products, which observers say has contributed to an uptick in rubber floors. As schools move away from mundane looks, it’s opening up opportunities for stylish products, such as LVT and carpet tile, to be specified in place of VCT.

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Ceramic: Positive factors fuel eight-year winning streak

June 26-July 2, 2018: Volume 34, Issue 1

 

By Ken Ryan

 

The U.S. ceramic tile industry registered its eighth consecutive year of growth in 2017, buoyed largely by a strengthening economy, sizeable gains in the construction and housing sectors, falling unemployment numbers and favorable interest rates.

FCNews research shows sales rose 5.8% to $2.921 billion while volume increased 5% to 2.426 billion square feet. The 2017 numbers were similar to 2016 when sales jumped 5.7% and volume increased 5.5%, reflecting the continued strength of a category that is the third-largest sector in flooring in terms of dollars, representing 13.3% of all flooring sold in 2017, up from 13% in 2016. In terms of volume, ceramic tile represented 12.35% of total industry volume, up from 12.1% in 2016. Only carpet/rugs and resilient account for larger pieces of the flooring pie.

The eight-year winning streak follows a rather dark period (2007-2009) when the cate- gory fell an almost incomprehensible 20% or more for three consecutive years before beginning its comeback in 2010. The nadir took place in 2009, when the ceramic market fell 24.2% in sales to $1.347 billion while volume dropped 22% to 1.28 billion square feet. Fast forward to 2017—ceramic sales have risen 116% since 2009 while volume has increased 89.5%.

While the overall economy—and housing in particular—is showing robust activity, ceramic is taking advantage with gains that only LVT has surpassed among flooring product segments. “Housing starts are crucial for the ceramic tile industry,” Donato Grosser, industry consultant, told FCNews. “During the recession, housing starts fell by 70% and ceramic tile sales fell by more than 30%. Now, housing starts are progressing at a moderate pace. When the sector cools off, it will not do too much damage.”

The combination of still relatively low interest rates, high home equity and a backlog from the economic crisis of 2008–2010 has been instrumental in the flooring industry growing at rates exceeding that of the nation’s gross domestic product (GDP), which grew 2.3% in 2017. Ceramic has been a main catalyst for flooring’s spurt.

“It is almost the perfect storm of economic data that is enabling ceramic tile to continue its double GDP growth rates,” said Raj Shah, president of MSI International. “The U.S. continues to be significantly below the long-term average of residential investment as a percentage of GDP. If we can get back to our long-term average, then we can expect almost a 20% increase in the overall industry size.”

From a residential perspective, there is a strong parallel between tile consumption and new housing starts. To that end, new housing starts greatly contributed to the growth of the ceramic category in 2017, most notably in Florida, Texas and California. There are other trends at play as well. “Single- family homes have generally grown larger in size over the years, providing an opportunity for tile consumption to reach new levels,” said Jason Roshel, product director for Dal-Tile. “These bigger homes tend to use larger quantities of tile because of its style and effortless maintenance. Additionally, we are seeing an increase in wall tile application.”

Role technology plays
Beyond the economy and housing, ceramic tile is taking a disproportionate share within the flooring industry, in part because it is becoming mass marketable due to improvements in technology that have led to applications on countertops, walls and outdoors. Specifically, advances in ink-jet printing have allowed companies to mimic the popular looks of hardwood that so many consumers demand.

“We’re seeing expansion where tile is used for walls and countertops,” said Bob Baldocchi, chief marketing officer and vice president, business development, Emser Tile. “A lot of product we put on floors is also suitable for walls, with 12 x 24 formats and wood-look tiles being the most popular. Ceramic/porcelain and application usage is blurring together. The use of product beyond the floors is happening in all classification of the business. While some products we develop are ceramic, the trend can be seen nearly across the board in terms of what materials are being used to create amazing looks.”

While ceramic sales continue on a healthy trajectory, the average selling price has remained relatively steady for the last four years. Observers cite a directional tug of war that is keeping the average-selling price relatively flat. Among the mitigating factors impacting pricing: less trim is being used today (in favor of profile strips); the growth in wall tile usage; better pricing on 4 x 16 and 3 x 6 white ceramics, and competitive, entry-level price points and competition from LVT/WPC/rigid core product segments. On the flip side, the reasons behind average-selling price increases include: more indoor/outdoor applications; greater feature wall tile usage, and large formats and countertop slab materials. In the end, observers agree average-selling prices for 2017 was virtually unchanged from 2016.

Commercial market
Positive growth was apparent across several commercial segments in 2017, among them corporate offices, healthcare spaces, educational facilities and hospitality. The multi-family segment was strong as well, experiencing growth throughout the year. In general, technology is largely impacting the commercial market with advancements that provide outstanding performance capabilities.

Commercial projects and spending continued on its growth path seen from the last three years. However, growth in the commercial sector was slowed partially due to continued labor issues in the marketplace.

Imports vs. exports
In 2017, imports comprised 68.9% of U.S. tile consumption in square feet, up slightly from 68.6% in 2016. China was once again the largest exporter to the U.S. in volume, a position it has held since taking over the top spot from Mexico in 2015. Chinese imports accounted for 31.3% of U.S. imports (in square feet) in 2017, according to the Tile Council of North America (TCNA). This was up from 29.4% the previous year, and it’s the highest percentage China has ever held of the U.S. import market, research shows.

While the peso has fallen significantly vs. the U.S. dollar over the last five years, ceramic tile imports from Mexico have declined sharply, TCNA reported. Shipments from Mexico comprised 18.9% of 2017 U.S. imports, down from 23.4% in 2016 and off from 27% of U.S. imports just two years ago. Italy was the third-largest exporter of tile to the U.S., making up 18.1% of U.S. imports, down from 19.4% in 2016. The next largest exporters to the U.S. in 2017 were Spain (11.7% import share) and Turkey (6.2%).

On a dollar basis (including duty, freight and insurance), Italy remained the largest exporter to the U.S. in 2017, accounting for 33.7% of U.S. imports.* China was second with a 26.6% share, and Spain was third at 13.9%.
U.S. shipments of ceramic tile rose 4.1% in 2017 to a record high of 946.5 million square feet. Domestic production, which has increased each of the last eight years, has been boosted recently by the expansion and opening of additional manufacturing facilities in Tennessee.

Domestically produced ceramic was by far the tile of choice of consumers, as 31.1% of all tile (by square footage) consumed domestically in 2017 was made in the U.S. The next highest countries of origin were China (21.6% of all tile consumed in the U.S.), Mexico (13.1%) and Italy (12.4%).In dollar value, U.S. FOB factory sales of domestic shipments in 2017 were also at a record high of $1.43 billion, up 6.1% vs. 2016. (FOB port means the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays the cost of marine freight transport, insurance, unloading and transportation from the arrival port to the final destination.) Domestically produced tile comprised 39.3% of total U.S. tile consumption by dollar value, almost double that of Italian tile imports, which made up 20.5%.

Challenges
While the ceramic tile market has risen for eight consecutive years and bears little resemblance to the 2007-09 period, its growth has nonetheless been constrained by a continuing shortage of labor and—to a lesser extent—the massive growth of LVT and its subsegments such as WPC and rigid core.

The installation shortage has hurt the tile industry more so than others, observers say, because of the difficulty in finding qualified tile setters. However, not everyone is ready to call the labor shortage a calamity. While acknowledging that a lack of qualified installers is driving inflation, MSI’s Shah maintained the paucity of labor shortage is also reducing overall unemployment which is helping the industry. He also suggested that the growth of LVT is not hurting ceramic tile, which is not necessarily the consensus out in the market. “LVT has been a game changer in the industry and is really taking share of laminate and hardwood,” he said. “Ceramic tile has the ability to be used on walls, counters, outdoors, etc., and thus has been able to continue to grow in this environment. Technology is enabling much larger, wider and thicker tiles that can be used on floors, as facades, on countertops, walls as stacked stone, or bricks and outside pavers.”

Some observers believe that while the popularity of LVT- related tile may stunt ceramic’s growth in the short term, the durability of LVT long term is still a question mark. “In a few years, LVT growth may slow as consumers realize that the product does not keep up, it looks like ceramic and is not fireproof,” Grosser explained. “I expect more tile usage, especially tile panels (3½ x 10 feet), on walls particularly in commercial installations.”

Most industry observers expect ceramic tile to continue its positive trajectory in the years ahead, citing the fact that the U.S. is still one of the lowest-per-capita consumers of ceramic tile, and therefore there is still a great deal of upside.

(Editor’s note: The product’s value is calculated at point of entry into the U.S. In other words, it is recorded when it lands on U.S. soil. So, much of ceramic tile’s increase was attributed to suppliers beefing up their inventory levels and not reaching first point of sale.)

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Laminate: End-use activity shifts amidst sales, volume declines

June 26-July 2, 2018: Volume 34, Issue 1

 

By Reginald Tucker

 

A palpable shift in import shipments, combined with the loss of significant domestic capacity when one major supplier shuttered its U.S. laminate operations, led to a simultaneous dip in both category sales and volume for the first time in many years. FCNewsresearch shows sales of laminate in the U.S. fell to $1.123 billion, a falloff of 2.7% compared to 2016. Volume shipped also decreased in 2017—albeit at a slower rate—as square footage at the first point of distribution hit an estimated 1.034 billion square feet, down 1.9% compared to 2016.

That would put would laminate sales at their lowest level since 2013—when sales reached just over $1.12 billion before rising each year for three consecutive years—and volume at its lowest point since 2011, when shipments totaled 1.02 billion square feet. The contrast is even more stark when comparing last year’s activity to laminate’s performance 10 years ago; at that time, U.S. sales hit $1.169 billion, with volume reaching roughly 970 million square feet.

Dan Natkin, vice president, hardwood and laminates at Mannington, and president of the North American Laminate Flooring Association (NALFA), concurs that U.S. laminate flooring sales were down about 2%-3% in 2017. But that doesn’t mean the category is down for the count. (In fact, Mannington’s top-selling laminate line was up by double digits last year.) “At the end of the day, it’s still a $1 billion product category,” he said. “We are forecasting 2018 will be a growth year for laminate.”

As of now, though, the laminate category has its hands full trying to fend off pressure from competing hard surface segments. In 2017, laminate represented 5.1% of total flooring sales and 10.6% of hard surface consumption. That’s down markedly from 2012, for example, when laminate flooring represented roughly 17% of all hard surface sales and a little over 15% in terms of volume. Meanwhile, competing products such as resilient and ceramic tile grew their shares of the hard surface market to 37.8% and 13.3%, respectively, in 2017.

While laminate has been facing some stiff competition, particularly from LVT, WPC and hardwood, not everyone believes the category lost as much share as has been reported. “Our research shows laminate was up about 1% to 2% in 2017,” said Roger Farabee, senior vice president, laminate and hardwood, Mohawk Industries. Meanwhile, Swiss Krono’s 2017 estimates put the laminate market around 1.3 billion square feet and about $1.3 billion in sales—a level that category has not seen since its heydays in the U.S. market some 20 years ago. Others still are split with respect to sales/volume activity within the category. Drew Hash, vice president, hard surface product category manager, Shaw Floors, estimates the segment was down in terms of overall square footage shipped in 2017 but up in revenues.

Nonetheless, suppliers are still bullish on the category’s prospects. “Most laminate companies would probably
say their mix of better-end goods has improved throughout 2017, and that trend should continue this year,” Hash told FCNews. “From our perspective, we
still believe—now that we have a model where we can truly take the most innovative products anywhere in
the world and put them through our systems with
our salesforce and service—
that it will be a growing part
of our business.”

Proponents of the category—particularly those companies that continue to invest in new technologies and innovations in support of the segment—attest to laminate’s viability. “The laminate flooring industry is in a good place,” said Derek Welbourn, CEO, Inhaus. “It continues to enhance its core value proposition, which is a great looking floor at a leading price point that won’t let you down on performance. We see continued evolution in terms of design and features that are creating some amazing looks and furthering the value proposition of laminate.”

Other industry executives agree wholeheartedly. “It’s a wood product with the look and feel of solid hardwood but with less maintenance and more durability,” said Travis Bass, executive vice president, Swiss Krono. “It’s easier to install and offers a much healthier, sustainable environmental impact than many competing products.”

Part of that optimism, observers say, comes from evidence showing a continued shift in consumption by end-use channels. For example, in 2012, the new home construction market accounted for roughly 6.3% of laminate sales. But that has changed as more major home builders embrace the product category. FCNews research shows new residential construction accounted for 10% of sales, while the residential replacement sector maintained its share of nearly 88% of sales—consistent with its stake in 2012. Where the category has seen the biggest drop-off consumption-wise, however, is the commercial market. Estimated at 2.5% of category sales in 2012, laminate represented less than 0.2% of specified commercial in 2017. However, the Main Street market, which hasn’t moved the needle above 2.5% of sales since 2012, still seems to be popular among barber shops, boutiques and stores of that ilk.

“Laminate flooring has always been strongest in residential replacement, and this continued in 2017,” Inhaus’ Welbourn said. “We feel there has been an increase in new construction thanks to better designs.” But it’s the new home construction market where suppliers see the greatest potential. “We see a rapidly growing acceptance of laminate here,” Mannington’s Natkin said. In fact, he believes this sector may have accounted for as much as 15% of laminate sales last year. “Laminates have begun to take the place of entry-level hardwood in this sector.”

Changing channel dynamics
Just as end-use activity has changed in recent years, so has the sales activity as defined by distribution channel. FCNews research shows the specialty retail sector accounts for roughly one-third of category sales. What’s more, observers say, many of the laminate flooring products sold at this channel represent thicker, higher-margin items not typically sold at the average home center or mass merchant. Some observers feel specialty retail’s share was a bit higher than that. “We feel it might be as high as about 35%-36% given the growth in new home construction,” Natkin told FCNews.

Despite this optimism, however, the fact remains home centers and mass merchants still account for the bulk of laminate flooring sales. FCNews research shows Home Depot and Lowe’s increased their share of laminate sales to the tune of a combined 46%, up from 42% in 2017. That’s in keeping the big-box giants’ market share of laminate sales reported in 2012. Meanwhile, warehouse clubs, home décor outlets and the like accounted for roughly 10% of sales, down a few percentage points from 2016.

When it comes to actual profit margins, however, specialty retailers stand to emerge as the biggest beneficiaries. A cursory review of national home center laminate flooring pricing finds much of the products advertised target the $1.99-2.49 range, while many specialty retailers and buying group dealers concentrate on the mid-to-upper end of the price spectrum (those products retailing in the $3.49-$4.99 realm).

Price pressure from competing categories such as WPC, LVT and SPC, along with aggressive advertising promotions driving some of these categories, is also impacting how the traditional laminate customer views the product. “There is no doubt these hot categories have stolen growth from the laminate cate- gory and others,” Inhaus’ Welbourn stated. “However, laminate is in a much better cost position than these plastic- based categories, and it is able to deliver some of the best value in the flooring business. This fact, along with continued innovation in the laminate category, has kept it competitive.”

As consumer preferences shift toward more hard surfaces being incorporated into the home, resilient flooring has seen an uptick in market share. The challenge for laminate flooring manufacturers, executives say, lies in improving upon water-resistant technology. This was evidenced by the various performance demonstrations conducted at Surfaces 2018. Proponents say it is only fitting given the innovations that originally inspired the creation of the laminate sector. Suppliers say enhancing these features certainly has created greater value for laminate flooring. “Additional focus on design continues in laminate with further enhanced textures and high-definition printing contributing to creating the best designs the laminate category has ever been able to offer,” Welbourn added.

Many concede that laminate—much like other flooring products—has lost some market share to WPC/rigid core (roughly $950 million in sales last year). But from the consumer’s perspective, suppliers believe laminate is still a viable product that’s relatively inexpensive and offers several key attributes end users are looking for—realistic-looking patterns and design with proven performance.

Imports vs. exports
The changing import vs. domestic production dynamic is palpable—so much so that many industry observers are seeing almost a complete reversal with respect to the traditional laminate product mix. While FCNews research showed the share of domestic production of laminate rising from 60% to 64% in 2016 (compared to imports’ market share decline from 41% to 36%), some believe that ratio is even more lopsided.

“The ratio appears to be shifting in favor of domestically produced laminate due to the increase in capacity that came online in 2017,” Shaw Floors’ Hash said. “We estimate closer to a 70/30 split between domestic and imported laminate, respectively, as domestic capacity continues to increase.”

Swiss Krono’s Bass has the domestic/import split closer to 60/40, respectively. But even he’s in agreement that German producers increased their share the past year. “I believe Europe’s share shifted from 14% to 19% while China’s share of the overall pie fell by double digits.”

To some industry experts, the dramatic drop in imports from China reflects a paradigm shift. “What we’re seeing is a preference for European and domestic supply,” Welbourn said. “As the domestic suppliers add capacity, the volume of imports will go down and the ratio of import vs. domestic will be reduced.”

Not everyone, however, believes the full impact of all this additional capacity is being felt at present. Some industry experts feel the biggest ripples are yet to come. “It really hasn’t had an impact yet because most of that new capacity has not yet come online,” Mohawk’s Farabee told FCNews. “We’re certainly seeing companies putting more capacity in the U.S., going after all the big- box customers in particular. This will continue as that capacity comes online.”

In some cases, this new capacity simply displaces product that had previously been made in Europe by those same companies that are now producing domestically, observers said. This phenomenon will likely put pressure on the remaining producers both in the U.S. and in Europe to be able to compete not only on price but also in terms of product performance and visuals. “It will be interesting to watch because there’s a lot of new capacity coming online in a category that’s not really growing,” Farabee said “However, we do expect some price pressure.”

The road ahead
In spite of the challenges facing the laminate sector, manufacturers believe laminates have a place in the market. “In some cases, we’ve lost sight of what makes laminate great—phenomenal realism, all bio-based, superior indentation and scratch resistance, and the fact the vast majority is made in the USA,” Natkin said. “Most laminate is significantly moisture resistant as well with multiple manufacturers developing new technologies to make the product nearly impervious to liquids.”

Natkin is not alone. “We see continued growth for the laminate category at a pace between 2% and 5% in 2018,” Welbourn said. “We estimate as a whole will have a higher rate of growth as the housing sector continues to recover.”

While the laminate flooring category has certainly ceded some market share, the fact remains it is still a viable option since its official entry into the U.S. marketplace more than 20 years ago. “As manufacturers, it’s our job to remind people of the incredible benefits laminate flooring offers,” Mohawk’s Farabee pointed out. “It’s a wood-based product; it’s the most durable hard surface product outside of ceramic; it’s the easiest to install; it’s the most cost-effective product on an installed basis; and it offers the most realistic visuals of any replica product on the market.”

Barron Frith, president, CFL North America, maker of the Atroguard brand of laminate, concurs. “The bulletproof reputation has proven to be a big positive for us since we launched Atroguard more than four years ago. Today, many large players are getting into the game and pushing these products to their distributors. We believe the combined marketing power of the big players has already started bringing much attention to the category, and we would not be surprised to see a slightly stronger growth for the category in 2018.”