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Laminate: Thicker products, stronger cores = high-margin opportunities for dealers

January 16/23, 2017: Volume 31, Number 16

By Reginald Tucker

Screen Shot 2017-01-16 at 12.21.57 PMIn the laminate price battle with the big boxes, specialty retailers may have another advantage: the willingness to promote thicker, beefier products that are not only designed to perform better over the long haul but also provide higher margin opportunities compared to base-grade, entry-level product.

While the home center channel is able to drive traffic pushing laminates in the $1.99-$2.99 range (in some markets, price points open at a margin-busting $0.79 per square foot), most specialty retailers choose to take a different approach. Instead of promoting the category as a loss leader, profit-minded dealers see the segment as a way to broaden their offerings to remain competitive while still providing the consumer upgrade opportunities.

The key, according to retailers like Sam Chesher, owner of Carpet Wise, a Flooring America dealer in Longmont, Colo., lies in explaining to consumers why the laminate products you’re selling are different and cost more money. “Make sure you have a story to tell,” he said. “You must train your staff because if you do not, you are going to get your lunch handed to you.”

Chesher is no stranger to competing with big boxes and discount outlets. A Lumber Liquidators sits a mere 200 feet from his store, and a Home Depot and a Lowe’s are one mile away. Interestingly, the proximity of the big
 boxes actually helps his business because it gives him the opportunity to differentiate his store through
 product knowledge and customer service that the box stores either cannot or won’t do.

The importance of proper and continuous training of your retail sales force cannot be overstated, experts say. Specifically, RSAs need to effectively communicate to their customers the difference between the 99-cent laminate flooring being pushed by the box stores vs. the 12mm-14mm laminate independent dealers stock at a significantly higher price point. Even in those cases where a retailer might advertise an entry-level laminate product just to get consumers into the store, the ultimate goal is to leverage that opportunity to present all options to the consumer—especially those that bring in higher profits.

This “loss leader” strategy, experts say, is fine—as long as that particular entry-level product does not make up more than 5% of your overall sales. So while a retailer might advertise a special at $2.49-$2.99 per square foot, the emphasis should be on trading up the customer to a product that retails for $3.99 and higher.

Then there are those experts who advise retailers not to “go there” at all. Elaine Carlson, vice president of Century Tile & Supply in Chicago, suggests specialty retailers avoid getting caught up in selling laminate flooring strictly based on price. Focusing on price over other attributes such as realistic visuals and exceptional durability, she said, will ultimately translate to reduced profits.

Screen Shot 2017-01-16 at 12.22.05 PM“While we do have a selection of lower-priced laminates, we try hard to feature and promote higher-end visuals. With the new technologies available today that create great surface textures and edge treatments, the quality of laminate being sold is traditionally medium high end to high end. If specialty retailers get caught up in the game of selling solely on price then profits suffer. Money is made by the consistent selling of the features and benefits found in a solid product line.”

From a sheer volume standpoint, it appears big boxes are winning the race. Research conducted by FCNews confirms that home centers and mass merchants still account for more than 70% of laminate flooring sales in the U.S. Experts point to, among other factors, the category’s entry-level price points, which make it an attractive option for the bargain-minded consumer who typically shops that channel.

“Home centers, by a wide measure, are driving the bulk of laminate flooring sales,” said Roger Farabee, senior vice president, laminate and hardwood, Mohawk. “Specialty retail, in terms of the independent dealer, is by far the smallest segment selling laminate today representing about 25% to 30%.”

The good news for specialty retailers, however, is there are still tremendous profit opportunities available through step-up products. What’s more, in many cases these upper-tier laminate options come with additional features and benefits (i.e., thicker cores, enhanced surface textures, etc.) that warrant higher prices at retail.

“Given the fact laminate was a remodel-focused category for so long—because it comes in a box and is so easy to install—it kind of gravitated toward the home center side,” said Dan Natkin, senior director of hard surface products, Mannington. “But now we’re seeing more growth on the other side, namely specialty retail, because of increased penetration into the new home construction sector.”

For sure, suppliers are doing their part to help specialty retailers differentiate themselves through product assortment. Laminate flooring manufacturers are counting on continued innovations in the way of performance and design to not only help the category keep pace with competing hard surfaces but also to give specialty retailers more products that can’t be shopped at the big boxes or discount merchants. Many of these offerings span new 12mm to 14mm boards featuring stronger cores.

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Laminate: Customization opens up design—and profit—opportunities

January 2/9, 2017: Volume 31, Number 15

By Reginald Tucker

If there’s one category that lends itself to customization, it’s laminate flooring. From the many design options available through mixing and matching random-width, random- length planks in the same SKU to altogether different patterns, consumers have a wide choice of scenarios when planning an installation.

Manufacturers, for their part, are working to help inspire retailers and their installers to present various options to the consumer. Quick-Step, for example, has developed an application that allows a customer to visualize how a particular floor or pattern will look in her home. The new tool, called Style My Floors, lets shoppers virtually “try on” Quick-Step laminate floors in the comfort of their home using a tablet, smartphone or other web-enabled device.

Screen Shot 2017-01-13 at 11.02.14 AMThe tool, which features true-to-size plank scaling technology, provides a simplified graphic interface for easy-to-follow steps and quick visualization along with high-definition plank modeling and light detection technologies that combine to create realistic visuals. What’s more, once the homeowner has chosen her ideal pattern, she can use the built-in product calculator to estimate the amount of material she will need for the project. The consumer can also order samples or—when she’s ready—use the Quick-Step dealer locator to schedule an appointment.

“Using the tool Quick-Step retailers can review the homeowner’s Style My Floor designs, pull larger showroom samples, give expert advice and help her complete the purchase,” said Paij Thorn-Brooks, vice president of brand marketing.

The customization possibilities don’t end there. All of the flooring patterns available to the consumer may also be used on vertical surfaces such as walls. “This trend has taken off with homeowners wanting to spice up their own rooms in this very unique way,” Thorn-Brooks said. “It adds something very special to the room and can liven up an otherwise dull space. Accent walls offer just enough texture, pattern and color to make a room more interesting without overpowering it.”

Quick-Step is not the only manufacturer that provides online tools to help consumers customize their laminate installations. In fact, Armstrong Flooring has long offered its Design a Room feature, an online visualizer that provides a series of pre-furnished room scenes to help consumers envision how a particular design or combination of flooring and wall colors, etc., might look in their own settings. Consumers also have the option of uploading their own photos to provide a true sense of how the finished room will look.

One fairly new Armstrong offering that lends itself to customization is the Architectural Remnants collection. Inspired by fashion trends, the new line depicts repurposed wood elements for a patchwork of mismatched designs with a sophisticated, modern twist. Blending of old and new, Architectural Remnants aims to replicate materials that evoke nostalgia.

“The appealing combination of colors and textures create a dramatic statement in any room,” said Sara Babinski, a designer with Armstrong. “From accent walls to wainscoting, discover how you can elevate your walls with our laminate flooring.”

Options fuel design ideas
To help professional installers and novice laymen alike, manufacturers are packaging planks in each box along with instructions that provide users with various design scenarios. With these random-width/random-length planks, suppliers say, consumers get to design their own floors by creating combinations of colors and plank sizes to suit their individual tastes.

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HF Design goes boldly into 2017

January 2/9, 2017: Volume 31, Number 15
By Reginald Tucker

HF Design is adding more than 50 hardwood offerings to its portfolio. Shown is Ferno Fiana plank.
HF Design is adding more than 50 hardwood offerings to its portfolio. Shown is Ferno Fiana plank.

To say that HF Design is excited about its new programs for 2017 would be an understatement. Given the scope of what it has in store for its channel partners this year, the company is betting the house that its distributors and retailers will be thoroughly pleased.

“We expect Surfaces 2017 to be the biggest show ever for us, not only in terms of turnout but also flow-through business afterwards,” said Alex Shaoulpour, president. “This past year we’ve been working on hardwood, laminate and waterproof core updates and new collections that will be unveiled at Surfaces. We’ve been fortunate in that many of the programs and Q1 launches that we’ve already previewed for our distributors have all been marked with five-star reviews from our customers.”

Among the highlights: American-made laminate flooring at imported pricing; WPC products featuring beveled and painted edges that are embossed in register combined with new rigid core technology; and an expansion of its thermal-treated specialty wood flooring offerings featuring different texture treatments and new visuals.

With respect to its laminate offering, HF Design announced a partnership with Kronospan whereby HF Design will serve as the marketing arm for the Germany-based supplier. The move comes on the heels of Kronospan’s recent acquisition of Clarion, a U.S. private-label laminate supplier. “This opens up doors to domestic production/made in America, which will certainly add value to the program,” Shaoulpour said.

The program is extensive, indeed. The laminate offering—which will be branded as Kronospan products, not HF Design—will entail 94 new styles. “Kronospan selected HF Design to handle the sales and marketing for distribution and specialty retail,” said Jeff Garber, HF Design’s vice president of sales and marketing, who helped broker the deal. “In the past they were OEM only. Now they have doubled their production capacity and they are ready for us to take on the distributor and large retailers. That’s going to give distributors the opportunity to buy ‘Made in America’ through German engineering at import pricing. That’s never been offered before.”

According to Garber, these products are either going to be unbranded (private label) for distributors or positioned under the Clarion/Kronospan brand. “We can bring a lot of value to the U.S. laminate flooring market in those terms,” he said.

Specifically, HF Design will provide in-house, turnkey marketing for all of its programs. The goal is to make the process of new product development and marketing as easy and cost-efficient as possible for distributors and retailers. “One of the most important factors in that equation is speed to market,” Shaoulpour stated. “Shortening that gap for our customers is an important directive.”

 

New in wood
In the hardwood department, which is HF Design’s forte, 52 new styles will be introduced. These include updates to existing lines designed to “freshen up the offering and also to stay ahead of the curve,” in Shaoulpour’s words, as well as an entirely new collection called American Relics. This line offers products that feature a multi-texture, dual hand-staining process that delivers a greater degree of variation from plank to plank.

“It’s important to manage color variation as the industry moves more quickly in this direction,” Garber explained. “The challenge is managing the consumer’s expectations so the samples match what she sees on the show floor.”

Lastly, HF Design has updated its private-label WPC program with new selections. The company plans to preview a beveled, painted-edge WPC offering, and it is also working with its suppliers on next-generation rigid board technology. “We’ll be unveiling both those new products/concepts at Surfaces,” Shaoulpour said.

With these introductions, HF Design is looking to build on the momentum it generated in 2016—a period in which it grew sales more than 50%. “We’re working 24/7 around the clock to ensure everything from product development to mass production to our marketing team and logistics teams fulfill their roles to satisfy the expectations of our customers,” Shaoulpour said. “We are heading into the new year at a strong pace.”

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Executive Forecast: Laminate & Wood—Suppliers dial up innovation to ward off competition

December 5/12, 2016; Volume 31, Number 13         

By Reginald Tucker

No one is expecting the laminate category to generate double-digit growth rates in 2017; after all, it is a fairly mature category in the U.S. On top of that, the segment is facing intense pressure from competing hard surface sectors, including LVT, WPC and, of course, hardwood.

However, don’t expect the segment to roll over in the face of fierce competition from other hard surface categories.

Travis Bass, executive VP, sales and marketing, Swiss Krono
screen-shot-2016-12-16-at-10-24-53-amWhat is your projection for category growth next year?
Flat to +3% growth.

What segments and/or products will fuel this growth?
Innovative laminate products with enhanced surface textures and value-add options.

What is the predicted growth of your company in 2017?
10%- 15%.

What is the “X factor” that will impact business next year?
New home construction and repair/remodel investment driven by increased home values and fueled by a stronger economy.

Where do you see opportunities for next year? Challenges?
Opportunities include non-residential, value-added products and Internet sales. Headwinds will be from domestic capacity coming on stream coupled with a strengthening dollar encouraging cheap imports from Europe.

What are some of your biggest initiatives for 2017?
We are working in collaboration with our affiliated European factories to introduce additional products. Domestically we continue to pursue the highest standards and styles for innovative product development.

 

Roger Farbee, senior VP, laminate & hardwood, Mohawk N.A.
screen-shot-2016-12-16-at-10-24-58-amWhat is your projection for category growth next year?
Approximately 1%-2% in dollar growth. However, we believe domestic manufacturers will grow at a higher rate as more import volume continues to shift to domestic production and as more producers focus on higher-end products.

What segments and/or products will fuel this growth?
Growth is being driven through residential new construction as well as increased remodeling activity. We are seeing laminate products being accepted in both single- and multi-family housing at rates unheard of 10 years ago.

What is the predicted growth of your company in 2017?
We will continue to outpace category growth by offering products with the highest level of realism, style, design and technical superiority in all of the channels in which we participate.

What is the “X factor” that will impact business next year?
There is still significant pent-up remodeling demand that will result in laminate flooring sales if consumers feel they have enough job and income stability to make an investment in their living spaces.

Where do you see opportunities for next year? Challenges?
Today’s highly realistic premium products offer consumers more options without having to compromise. There is also an appealing environmental story around laminate flooring products made in North America.

What are some of your biggest initiatives for 2017?
We are introducing more products using our state-of-the-art Deep Texture technology as well as our revolutionary Moisture Protection technology. These innovations are making customers think differently about what laminate means.

 

Drew Hash, VP, hard surfaces, Shaw Floors
screen-shot-2016-12-16-at-10-25-03-amWhat is your projection for category growth next year?
We continue to expect an increase in housing starts, which could have a growth impact of about 6% to 8% in 2017 for the wood industry.

What segments and/or products will fuel this growth?
Hardwood provides the high-end look that is very compatible with today’s newest home interior styles and trends. As a select choice, our engineered styles provide a range of looks that will help fuel this growth.

What is the predicted growth of your company in 2017?
Shaw Floors will continue to outpace the growth of the flooring market in 2017. Our wide breadth of categories and consistent standard of quality across our products supports this outlook.

What is the “X factor” that will impact business next year?
The “X factors” for business success will continue to be the delivery of a reliable customer experience and unmatched support for our retailers.

Where do you see opportunities for next year? Challenges?
We are continuously looking forward to discover new ways to communicate effectively with our customers and arm our dealers with the right information to tell the story of Shaw’s hardwood products succinctly and clearly.

What are some of your biggest initiatives for 2017?
Anderson will continue to expand in the new home construction market. Additionally, we will focus on delivering the most stylish and high-performing engineered styles available to respond to today’s newest trends.

 

Derek Welbourn. CEO, Inhaus
screen-shot-2016-12-16-at-10-25-07-amWhat is your projection for category growth next year?
We see continued growth for our laminate category at about the pace of U.S. GDP, which is between 2%-2.5%. We estimate the flooring category as a whole will have a higher rate of growth as the housing sector continues to recover.

What segments and/or products will fuel this growth?
In recent years vinyl (LVT in particular) has been growing. This was further expanded by the introduction of WPC. The success of these categories has inspired new innovations with composite products.

What is the predicted growth of your company in 2017?
We feel fortunate to continue to grow our global business. Company wide, our rate of growth is forecast to be in the low double digits. This is also what we expect for our North American division.

What is the “X factor” that will impact business next year?
The major “X factor” in the floor covering business is the rapid evolution of new product categories and the challenges that come with competing with products that didn’t exist previously.

Where do you see opportunities for next year? Challenges?
To us, the challenge and the opportunity are one in the same. It is how to successfully participate in the rapid expansion of composite products. We are investing the creation of an entirely new category of flooring.

What are some of your biggest initiatives for 2017?
Our largest initiative by far is the launch of our flooring line Sono, which is based on our new waterproof product technology that will make its debut at Surfaces.

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Spotlight: Divine Flooring ascribes to a higher marketing power

November 21/28, 2016: Volume 31, Number 12

By Reginald Tucker

screen-shot-2016-11-28-at-3-57-53-pmIn an increasingly competitive market segment such as the mid-range to high end, hard surface suppliers are focusing their efforts beyond core product construction and performance to differentiate themselves from other players in the field. For manufacturers like Divine Flooring, it’s all about marketing and optimal brand positioning.

As a supplier of hardwood, LVT, WPC and laminate flooring products for specialty retail, specified commercial and residential replacement, Divine Flooring is looking to cover all the bases—with the exception of the entry-level, low-price range. Its builder and residential replacement hardwood flooring products range from $4.50 per square foot (suggested retail price) up to about $20 per square foot for some of the higher-end custom collections.

“We have products in the mix that are focused more toward builders such as Farmhouse, which is a wide-plank, rustic,” said Sean Stewart, managing partner. “We also offer a variety of finishes such as aluminum oxide, lacquers, hard wax oil finishes, oxidative oil finishes and reactive oil stains—we cover the gamut. We also have a custom wood shop where we produce all of our own moldings, and we can also do custom work for architects or dealers. This includes wall treatments, stair parts, doors, etc. That’s an advantage from our builder experience that we can take on those special projects.”

The main idea, according to Stewart, is to provide options without “oversaturating” the market. “We do really well with dealers that understand the value of selling flooring at a higher price, and they appreciate the fact that we’re not on every street corner like much of our competition in the industry. It’s not only about our brand but our brand values as well.”

One way Divine Flooring avoids the “me-too” game is by focusing on custom-made offerings that can’t be shopped around. “One of the things that we do that’s quite unique is we work with award-winning designers when we develop our collections,” Stewart explained. “It’s a significant investment but it pays off because you’re getting someone who understands color trends, etc.”

A noteworthy example of this sort of collaboration is Divine Flooring’s Cosmopolitan collection, which was introduced in late 2015. Stewart called the line—which features trendy colors like white, gray and black in a variety of gloss levels and surface textures—the company’s leading collection.

Sheldon Peregrino, showroom manager at Fame Hardwood Floors, Los Angeles, took on the line about 10 months ago. “It’s been popular here in our area. The line has really good colors and they are right on with what our customers are looking for.”

Other Divine Flooring collections are turning heads as well. The company’s ultra-high end Louis XIV collection of French oak planks featuring matching square parquet tiles was the hardwood flooring product selected for the newly renovated Watergate Hotel in Washington, D.C. “It’s a very exclusive high-end product compared to others in the marketplace but still delivered at a much more competitive price,” Stewart said. “It’s also something that we stock, which also makes us very different.”

Joshua Kaswell, owner of Kaswell Flooring Systems, Ashland, Mass., the company that specified the flooring product for this particular installation, recalled the selection process: “A couple of years back I was asked by my client to find a unique prefinished product for the renovation of large suites in a world-renowned hotel in Washington, D.C. I instantly thought of Sean and his Divine Flooring line of both engineered wood and engineered parquets. After some presentation work with the client, ultimately several thousand square feet of Louis XIV prefinished parquet was selected for the suites and eventually purchased months later. Sean guided us with product information, literature and other marketing tools to both secure the order and ultimately guide the client appropriately on installation requirements.”

Five months after the installation, the floors are holding up well and looking regal. “This was a difficult project with a demanding client but the material was installed without any issues,” Kaswell stated. “The client and design team are thrilled with the results. We are proud to say with the assistance of Divine Flooring we have a successful installation at the famous Watergate Hotel.”

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Laminate: Manufacturers focus attention on texturing

October 24/31, 2016: Volume 31, Number 10
By Reginald Tucker

screen-shot-2016-10-31-at-4-21-06-pmLaminate flooring manufacturers across the spectrum are employing advanced surface technology to develop products that more accurately convey not only the look but the feel of real hardwood flooring. These methods run the gamut from improvements to the traditional embossed in register (EIR) process to more recent advancements in dual gloss technologies.

“Over the past three to five years there has been a shift toward more surface textures being utilized,” said Jeff Francis, laminate category manager, Shaw Floors. “Three or four years ago, EIR was really popular; now it doesn’t have to be EIR as long as it has some kind of surface texture on it. For example, with a wire-brushed texture it doesn’t make sense to do EIR on top of it.”

According to Francis, Shaw uses about four primary plates to obtain various surface textures. “One is just a traditional smooth plate and another is an overall surface texture where it’s not necessarily EIR but it’s some kind of surface texture. This way, when someone runs their hands across it they feel variation,” he explained. “Then we have a hand scraped plate, a wire-brushed plate and lastly an EIR plate. We use a wide variety of plates based on what we’re trying to do with that image and ultimately try to get a visual and a texture that is appealing to the end user.”

screen-shot-2016-10-31-at-4-22-20-pmInnovative surface texturing methods are also being employed at Mannington, according to Dan Natkin, senior director of hard surface products, “We focus very strongly on realistic embossed in-register textures, and the nature of our production plant really allows us to do that. The plant was designed to run a little bit slower than some of the more modern plants and this allows us to really differentiate. We’ve done quite a bit over the last couple of years to try to simulate what’s going on in real wood— for example, oil-finish looks and even more subtle textures.”

There are some emerging technologies around dual-gloss applications that Mannington has employed at times to create even further visual interest in the product. For example, the company has several products in its Restoration Series—Black Forest Oak and Treeline—which employ dual gloss technology to create added dimensionality. “On one product the higher gloss is down in the lower layer, and in the other the higher gloss is closer to the top of the surface.”

More important than the bells and whistles, these innovations translate into higher margin opportunities for retailers. “The more realistic laminate can produce and close that gap between engineered and solid wood, it’s going to be harder for the consumer to tell the difference between laminate and real wood,” Francis said. “Although there is an additional cost to that, the benefit to the consumer is when they look at that knot hole or veining in the wood, they can feel it and see it.”

Natkin agrees. “The more realistic the product looks, combined with the natural performance attributes of laminates, really helps differentiate itself vs. something that has just a subtle wood tick or very smooth finish on it.”

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Distribution: Wood continues to hold is own as most desirable

October 24/31, 2016: Volume 31, Number 10
By Ken Ryan

The popularity of hardwood flooring seems impervious to the rampant growth of the LVT/WPC segment. No matter how many new market segments the resilient product taps into, no matter how many “wood looks” marketers come out with, in some precincts at least, there is no substitute for the genuine article.

Distributors agree there is a sizable segment of flooring consumers who aspire to have hardwood floors in their home and are all too willing to pay a premium for it. “They want real hardwood, they don’t want something that looks like hardwood,” said Jeff Striegel, president of Elias Wilf, Owings Mills, Md.

screen-shot-2016-10-31-at-3-44-20-pmThat sentiment is particularly evident in California, home to the highest real estate values in the continental U.S. It is one reason why Galleher, Santa Fe Springs, Calif., continues to emphasize this segment. “Hardwood is 80% of the business. I wish it wasn’t, but it is,” said Jeff Hamar, CEO. “It’s all wood out here. Wood is clearly an aspirational floor and people with the money don’t want to settle for imitations—no matter how realistic the visuals are in LVT or laminate.”

Denver Hardwood, another top 20 distributor, has seen steady growth in unfinished wood. In addition, the prefinished market is gaining market share. “Hardwood continues to be the strongest category with significant growth in prefinished, mainly due to a focus on our private-label program,” said Enos Farnsworth, president. “We are experiencing significant growth in the remodel sector, with a solid foundation in new home construction. Through 2015 and 2016, we are investing in new facilities and personnel.”

Belknap White, a top 10 distributor based in Mansfield, Mass., has also benefitted from the strength in hardwood, which accounts for 50% of its mix. “Most certainly the economy is stronger and our commercial business continues to grow with many large projects being built in our area,” said Paul Castagliuolo, executive vice president, general manager.

Striegel said the one area where resilient might have the upper hand is the high-rise multifamily sector. “WPC is made for that market; it has some heft to it. But wood is not under threat by any of this.”

Laminate
A survey of top distributors showed the majority have reduced their assortment of laminate flooring as a percentage of business, in some cases to as low as 2%. A few wholesalers maintained laminate at their 2015 levels, and only one of the top 20 said laminate represented 10% or more of their business. That is not to say laminate hasn’t fared well in some markets—it is simply about picking the right lines.

“We have done real nicely with laminate,” said Bob Weiss, CEO of All Tile. “Just when you thought it was over for laminate, we have had a real good introduction of the Balterio IVC line that has done well for us. There is a place for style and design, and laminate is a very functional product.”

In 2015 more builders opened up to the possibility of installing laminate flooring as an entry-level or first-upgrade option. According to distributors 8-inch wide laminate looks almost like the real thing and is more scratch resistant and indentation resistant than other surfaces.

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Retailers, suppliers seize opportunities at the upper end

September 12/19, 2016: Volume 31, Number 7

By Reginald Tucker

screen-shot-2016-09-19-at-3-38-31-pmThe abundance of laminate flooring brands in the marketplace has expanded the number of options consumers, builders and end users have when selecting the products best suited for their design needs and budget requirements. But the downside of this tremendous availability is increased pressure on already razor-thin margins as many of the major home centers and discount merchandisers aggressively promote low, entry-level prices to generate traffic and volume.

The good news for specialty retailers is there are still plenty of opportunities in the midrange and upper end of the spectrum, given the right product mix, a targeted marketing strategy and, finally, the discipline to resist competing solely on price. “We don’t go after the low-end business,” said Phil Koufidakis, president of Phoenix-based Baker Bros., which sells the Armstrong brand of laminate flooring. Instead, he markets his company as a “high-service” operation and prices his products and labor accordingly. “When I ask customers how they perceive us in the marketplace, they usually say, ‘You’re the high-priced guys,’” he explained. “Then I ask them if that means we’re too expensive or if we are known for offering high-quality products and services. The question usually stumps them.”

That’s a good problem to have, as it turns out. Having your name associated with higher-end goods and services—supported by a storefront and interior presentation that screams “upscale” marketing and merchandising—bodes well for the retailer in terms of both profit opportunities and differentiation from the big boxes. “When you’re selling high-quality product and promoting high-quality installation, the expectation of the customer is also very high. So we set the bar high for ourselves.”

Of course, focusing on the “high end” with laminate is all relative. With many entry-level products coming in at around $1.19 per square foot, products hitting price points at $3.99 or slightly above are generally considered on the higher end of the midrange. Throw in high-quality acoustic underlayments and installation training by certified installers, and you have a recipe for a much bigger ticket. (All of Baker Bros.’ laminate installers are Armstrong certified.)

For other dealers, the route to bigger laminate tickets lies in strategic product positioning. For example, a $4.59-per-square-foot laminate situated next to a hardwood flooring display that typically houses products double or even triple that amount all of a sudden looks like a tremendous bargain. “When we talk about the difference between laminate and hardwood it is typically someone didn’t realize how expensive some of these hardwood products can be,” said Chris Green, owner of Great Southeast Flooring, Melbourne, Fla. “Meanwhile, their budget is telling them they should be in the laminate category. That’s where we can tell them they can be in laminate and still get the same desired effect.”

screen-shot-2016-09-19-at-3-38-42-pmSimilar product placement strategies are helping other dealers maximize opportunities to sell midrange and higher laminate flooring. At Flooring Town Group in North Hollywood, owner Abe Bashir has seen positive results by grouping laminate, WPC and wood lines from Eternity Flooring all in the same section. “It’s clearly one of the best products I’ve ever had,” he said, citing the above-average margins he earns on the laminate line. Beyond the trendy colors, designs and patterns, Bashir said his customers are increasingly gravitating to the improved performance attributes of the laminate and WPC offerings.

Battle for share

While the big boxes and mass merchants appear to be winning the battle for market share of the laminate business in terms of sheer volume, research shows. “Home centers, by a wide measure, are driving the bulk of laminate flooring sales,” said Roger Farabee, senior vice president of marketing, Unilin North America. “When you combine the home centers, Lumber Liquidators, Floor & Décor and warehouse clubs, this represents more than 70% of the market in 2014. Specialty retail, in terms of the independent dealer, is by far the smallest segment selling laminate today representing about 25% to 30%.”

The good news for specialty retailers, however, is that there are still tremendous profit opportunities available to dealers through step-up products. What’s more, in many cases these upper-tier laminate options come with additional features and benefits such as thicker cores and enhanced surface textures—all of which warrant higher prices at retail.

Given the fact that laminate was a remodel-focused category for so long, the product naturally gravitated toward the home center side. But as Dan Natkin, senior director, residential products, Mannington, reports: “Now we’re seeing more growth on the other side, namely specialty retail, because of increased penetration into the new home construction sector.”

screen-shot-2016-09-19-at-3-38-56-pmTechnological advances in laminate in particular have translated into exclusive opportunities for the specialty retailer. While the home center channel continues to drive volume with low-cost laminate, suppliers agree that specialty continues to win the margin battle by focusing on durable performance and realistic visuals that are differentiated from the home centers.

Hence the reason why major manufacturers are investing so heavily in their plants. Case in point: Swiss Krono recently broke ground on a $230 million HDF mill and factory expansion in Barnwell, S.C. According to Zeb Portanova, CEO, the investment is due to “strong consumer demand for our quality laminate flooring. Our strong retail partners who choose to sell our innovative products are the real foundation on which this expansion is built.”

Laminate flooring manufacturers are counting on continued innovations in the way of performance and design to not only help the category keep pace with competing hard surfaces but also to give specialty retailers more products that can’t be shopped at the big boxes. Many of these advances and developments span new 12mm to 14mm boards featuring improved cores and more realistic wood visuals. Vendors are also showcasing new capabilities in both color renderings and depth of textures.

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Incentives spice up selling season for dealers, suppliers

September 12/19, 2016: Volume 31, Number 7

Marketing executives agree that fall is an ideal time to promote your business or new product line. Consumers are back in town after summer vacations, their kids are back in school and everyone is ready for a fresh start.

The flooring industry seems to agree as several manufacturers and retailers are busy with fall promotions and rebate programs.

Mohawk
In addition to instant rebates of up to $500 on SmartStrand Forever Clean and ArmorMax products, Mohawk’s largest annual sales event will feature product discounts on select SmartStrand Forever Clean carpets, select ArmorMax and Mohawk brand hard surface products. The sale started Sept. 16 and runs through Oct. 31. The National Karastan Month semi-annual event tradition is slated for Sept. 22 to Nov. 8. “With an assortment of product discounts, rebates and attractive consumer offers, National Karastan Month consistently proves to be a successful in-store selling event for Karastan retailers across the country,” said Doug Ensley, director of marketing operations for Mohawk.

Shaw
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Shaw Floors is giving flooring retailers two comprehensive promotional opportunities during the fall selling season. “You Save. We Give” takes place in September and is designed to benefit the retailer, the consumer and the children of St. Jude Children’s Research Hospital. In the past, Shaw’s retail partners have deeply embraced the partnership with St. Jude and wanted to get more involved. According to Shaw, this promotion is another way to address those requests and is supported with Shaw social media, customizable advertising materials and point-of-sale materials.

Shaw Friends and Family Sales Event promotion runs Oct. 1 to Nov. 14. For the first time, consumers will have the opportunity to save up to $1,000 on select Shaw floors and get 24 months of special financing.

Raskin Industries
Raskin will be offering its FloorNation Displays for a $99 promotional price. Displays, which are powder coated, include the shelves and 18 x 20 boards. In addition, the five top-selling stores (of each Raskin distributor with the FloorNation Display) will receive new Apple watches until the end of 2016.

Mirage
Boa-Franc, parent company of the Mirage brand, is promoting the Mirage Fall 2016 Rebate Sale, which takes place across North America (excluding Quebec) at all participating Mirage dealers from Oct. 3 to Nov. 26. Consumers get a $0.50/sq. ft. rebate on Mirage flooring during this promotion. This offer is valid on all Mirage Classic, Mirage Engineered and Mirage Lock products regardless of species, color or width. “For many consumers, fall represents the time of year for renewal into their home,” said Brad Williams, vice president of sales and marketing at Boa-Franc. “Thanks to the $0.50/sq. ft. rebate offered on all our flooring during this sales event, it is the perfect time to save big while enjoying the quality for which Mirage Floors are known.ˮ Nearly 2,000 Mirage Maestro Dealers through North America are participating in this event.

Retail promotions
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Carpet One Floor & Home’s new advertising campaign, “Where Do You Stand?” focuses on customers’ needs when it comes to updating their homes with new flooring. The TV spot for this campaign takes the customer perspective by visually looking down at their floors as they go through their day.

In addition to the customer-centric messaging, the campaign makes use of Instagram with #ISTANDHERE to encourage customers to share photos of where they are standing. The campaign gives local stores the opportunity to highlight the causes they support in their communities and to share the many ways they take a stand for their customers. Weekly winners will receive $100 gift cards toward a new pair of shoes at a leading online retailer. Contest details can be found at carpetone.com/Where-Do-You-Stand.

O’Krent’s Abbey Flooring in San Antonio held a 101st birthday sale on hard surface goods. The September sale offers consumers 10% off on hardwood, tile and laminate if they spend $2,500; 15% off for spending $2,501 to $5,000; and 20% off for spending over $5,000.

Worldwide Wholesale Flooring, Edison, N.J., which recently launched a new rug website (therugcorner.com), is offering 20% off rug sales through Sept. 30. Consumers are encouraged to visit the website and enter their email address to receive coupons and notices of future promotions. A free rug grip comes with every area rug purchase.

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How Armstrong’s ‘Quest’ for floor space paved the way for laminates

July 18/25, 2016; Volume 31, Number 3

By Reginald Tucker

Screen Shot 2016-08-22 at 4.31.07 PM“It was really about presenting fashion to the floor covering retailer at a time when many companies were not really doing it. That was the mindset driving that whole system.”

That’s according to Sherry Qualls, a former advertising and marketing executive with Armstrong World Industries, reflecting on the concept behind the development of the infamous Quest resilient floor covering merchandising system that Armstrong officially launched in 1995. Primarily devised as a means to squeeze competing hard surface products off the showroom floor, observers say it actually resulted in more space being devoted to laminate flooring, then an up and coming category.

Massive and bold in its presentation, the Quest display claimed to be the first such system to utilize large-scale, freestanding samples and the first of its kind to incorporate actual room-scene photography on the reverse side of those samples. The system was also built on a good/better/best platform that appealed to retail sales associates and consumers alike.

“The idea was to give the specialty retailer permission to feel more comfortable about being in the interior fashion business,” said Qualls, who for 17 years managed the residential and commercial flooring brand strategies at Armstrong. As she explained: “Everyone at Armstrong felt it was really important that we didn’t differentiate between resilient and laminate flooring as much as we wanted to reinforce the fact that we were giving customers a variety of choices in a display system that was beautiful as well as functional. The goal was to take an elevated approach to the traditional retail presentation.”

But that was only part of the reason behind the development of the Quest merchandising program. With Armstrong-branded resilient flooring products and signature collections gaining more prominence within home centers, the company needed a way to address the rising channel conflict caused by the unrest that was brewing among independent specialty retailers who struggled to compete head-to-head with the big boxes on the same branded products.

“Yes, that was a very important strategy, obviously,” Qualls recalled. “There were a number of products, especially laminates, that were finding their way into the big box retail locations. In those days it was very important to Armstrong to make sure there was a very clear differentiation, and one of the things that the Quest display did was to demonstrate a very real difference between what was being sold at Home Depot and Lowe’s vs. the full-service, more curated approach we wanted to take at the specialty retail location. We really believed specialty retailers were in a better position to deliver that curated experience so it was very important to create displays and products that put some distance between the specialty retailer and the big box. Granted, we knew there were going to be some cross-over products at the lower end of the spectrum. But we were trying to encourage the specialty retailer to not worry about spending so much time or space staying focused on those lower-end products being marketed at the home centers.”

Quest was also designed to make life easier for the salesperson, so they did not have to know every nuance about every individual product. As Qualls recalled: “We designed the display so that there was very clear differentiation between the good/better/best products. RSAs didn’t have to know, on their own, all the things that made those products different from each other.”

Right about the same time that the Quest program was rolling out, Armstrong had decided to revamp its branded offering by separating the Solarian brand from the rest of the Armstrong family and add a third brand, Vios, specifically for independent floor covering retailers. The Armstrong brand became the value offering, selling for less than $17 per square yard while Solarian targeted the mid- to high-end consumer willing to spend as much as $38. Meanwhile, Vios was a completely new, high-end product that featured a glass-fiber reinforced construction.

Screen Shot 2016-08-22 at 4.31.16 PMThe main idea behind the strategy was for home centers to carry the two well-known brands—Armstrong and Solarian—while specialty retailers who participated in the Quest merchandising program would have exclusive rights to Vios. Despite the best intentions, though, there were difficulties surrounding the launch (including a “yellowing” problem that surfaced out in the field) that would soon cause the entire game plan to unravel. On top of that, many specialty retailers were not so supportive of adopting a relatively unknown brand in Vios while home centers got to keep proven performers like Armstrong and Solarian. And any modest success the Quest program managed to generate backfired when it fell apart. Many observers believed this allowed laminates to grab even more retail floor space.

By 1997 Qualls was no longer working for Armstrong. (She left the company about a year and a half after the Quest rollout to establish White Good, a full-service marketing and communications agency specializing in the furnishings, decorative finishes and building products industries.) And although the Quest program no longer exists, she believes the concept laid the groundwork for many practices and formats that are commonplace in home furnishings retailing today.

“What Quest did was to encourage specialty retailers to create more beautiful, welcoming environments that were more easy to shop,” Qualls said, citing the nascent Perch home furnishings retail chain as an example. “The whole Perch concept we see today came about in a small way because of some of the things that Armstrong and other companies did over the past 40-50 years with respect to display evolution. While I wouldn’t say that we went the full length to where we are today in terms of experiential retail—where there’s a lot more hands-on activity taking place—the Quest display certainly paved the way for it.”