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Carpet: Dominance of LVT stifles soft surface growth

June 24/July 1, 2019: Volume 35, Issue 1

By Ken Ryan

 

Constrained by multiple interest rate hikes, carpet price increases and the continued onslaught of the LVT segment, the carpet industry experienced deficits across residential sales/volume and commercial sales/volume in 2018, marking the first time since 2010 that the segment finished in the red in sales and volume.

FCNews research showed overall carpet sales fell 0.5% in 2018 to $8.785 billion, while volume (including rugs) fell 4.2% to 10.75 billion units. Residential was down 0.2% in sales and 4.1% in volume. Rug sales, which has been the fair-headed child in the soft surface category in recent years, increased 2.3% to $2.591 billion, buoyed by the growth of hard surfaces and online sales. It was the sixth consecutive year of increases for rugs.

While carpet and rugs comprise 54.8% of the overall flooring market—still the highest percentage of any flooring surface—it is 2.5% lower than the previous year and continues the category’s steady decline since 2006, just prior to the start of the Great Recession. In 2006, for example, overall carpet sales were $12.87 billion. In the 12 years since, sales have dropped 30.2%. Meanwhile, volume is down a whopping 38.9% over that span (17.62 billion units in 2006 to 10.75 billion in 2018). To view it another way, carpet/rugs has lost more than 13 market share points since 2008, when the category accounted for 67.7% of the industry sales; 2008 was the one year in the last 10 in which soft surfaces gained a market share point, and that occurred during the heart of the recession when virtually all flooring categories were taking it on the chin.

Following the downturn, which ended in mid-2009, hard surfaces categories have mostly grown while carpet has only managed to skim along the bottom, with small gains or losses along the way.

In this market, observers say any sign of instability can impact carpet sales by effectively keeping consumers on the sideline. In 2018, for example, there were many reasons to sit it out despite a relatively healthy economy. For starters, 2018 saw the Federal Reserve raise interest rates four times. Meanwhile, existing home sales slowed, and the year ended with the government in a shutdown. What’s more, carpet mills, facing inflationary pressure primarily from raw materials, passed along price increases on four to five occasions during 2018. That helped elevate the average selling price to $6.97 per yard compared with $6.70 in 2017.

Michel Vermette, president, residential carpet for Mohawk, called 2018 a tale of two halves: a strong beginning and a lackluster second half. “The year was looking to be OK, but then with all the increases in prices it came to a standstill,” he explained. “There was a lot of disruption in the marketplace. New housing came to a halt. When interest rates were announced in October, consumers went into a shell for the most part.”

The October rate increase from 2% to 2.25%, which drew the ire of the White House, was carried out to preserve a steady economy, according to the Fed. The fourth increase of 2018 took place in December as the central bank hiked its fund rate to 2.5%—the highest it has been since 2008. The funds rate is tied to most consumer debt, particularly credit cards and adjustable-rate loans. That move, coupled with rising raw material costs (up to 20% in some cases) for some components used in soft surfaces, impacted flooring sales in general and carpet in particular. “The carpet numbers did not keep up,” Vermette said. “We were playing catch up all year long [in 2018] and we’re still playing catch up. You also can’t ignore LVT/LVP and how it is eating at the rest of the market.”

Bifurcated market
A widening gulf between low- and high-end goods has defined the carpet segment in recent years. At the commodity end, solution-dyed polyester is driving the market and helping companies like Engineered Floors and its Dream Weaver residential brand take significant market share. Engineered Floors, already a top three carpet mill in just its 10th year of existence, enjoyed growth rates of between 20% and 30% in 2018 and is doubling down on solution-dyed polyester as its go-to fiber. “That’s where the growth of the industry is,” said Joe Young, soft surface category manager. “These days, if it is not soft multicolor polyester, it is hard to sell.”

At the upper end of the market, priced at $15 or more per square yard, companies are also finding success. “The last two years were solid for residential high-end carpet and rugs,” said Jonathan Cohen, CEO of Stanton Carpet. “Although residential continues to lose share vs. hard surface overall, there are pockets of growth in high-end decorative carpet and rugs.”

Continuing that same theme, Mark Clayton, CEO of Phenix Flooring, noted carpet’s average sales price continued to improve in 2018 as consumers opted for mid- to higher-end goods and products that exhibited more pattern and overall sophistication. “Since consumers have ‘broken up’ the overall floor of the home, in lieu of wall to wall, consumers have been willing to move toward better design/color options,” he explained.

Where carpet mills—and their retail partners—do not want to end up is in the dreaded middle of the market, which most define as the $8 to $14 per-square-foot price range, a veritable black hole for the carpet industry these days.

Commercial
Commercial carpet, which makes up 42.9% of the total carpet market, was down 0.8% in sales and 5% in volume in 2018, marking the third year in a row that both sales and volume have fallen. FCNews estimates the commercial market at $3.774 billion in sales for 2018, with specified contract sales coming in at $3.07 billion and Main Street business at $704 million.

[Note: For years a large percentage of mills considered level-loop polypropylene a Main Street product, mostly installed in rental space/tenant improvement and low-end apartments and basements. Today, much of this business has been lost to low-end polyester cut piles. These cut pile sales are reported as residential, not Main Street. As well, some mills break out Main Street from their specified business; others do not.]

The down figures for commercial in 2018 continue a disturbing trend. The last time commercial sales were in positive territory was 2015, when it increased 2%. However, volume was down that year as well. The last year commercial carpet units grew was in 2014, when it rose 4%.

The struggles of the commercial business can be tied directly to the overwhelming strength of the LVT/SPC market that continues to expand its footprint in all applications, in the process pushing carpet to the margins. As Mike Gallman, president of Mohawk Group, explained, “You can’t talk about carpet without talking about hard surfaces.”

While broadloom is still an ideal solution in key targeted commercial segments, there continues to be a shift to carpet tile in overall demand due to its ease of installation, maintenance and design versatility. That’s according to Tim Baucom, president of Shaw Industries, who points out that the proper seam matching, row cutting, roll sequencing and seam diagrams required with broadloom can be difficult and result in a loss of profit if not properly executed. “Labor challenges—especially the need for and lack of qualified installers for broadloom—also have led to the increased use of carpet tile,” he explained.

As corporate and government sectors are changing their environments—utilizing less traditional office spaces and moving to more open and collaborative spaces—Baucom said flooring solutions like carpet tile can help define separate spaces to creatively achieve that desired workspace.

Education and healthcare combined make up almost one-third of the commercial carpet market. Baucom said carpet tile is rapidly taking share in K-12 education and is solidly in place in higher education. “We estimate that carpet tile now makes up about 80% of K-12 carpet installations. In many schools, broadloom is limited to stairs. In higher education, the move to carpet tile took place much earlier and now represents almost 90% of carpet installations.” Carpet as a whole continues to shrink in the healthcare segment. Carpet tile has about 90% of the carpet market in health- care and continues to grow in share while broadloom has decreased in the past year in acute care facilities and medical office buildings.

A path for success?
It is projected that hard surfaces, in particular LVT/rigid core, will continue to take market share from other flooring categories including carpet. How much longer carpet’s decline will continue is not known, although there are some optimistic voices who believe the rate of decline will start to slow especially if the 25% tariffs on Chinese imports—which impacts hard surfaces—continues beyond 2019. Some executives point to advantages in soft surfaces that are not always mentioned. “Carpeting, for a majority, is still produced in the U.S., and manufacturers need to educate consumers of the importance of supporting local production to help maintain domestic growth,” said Chet Graham, CEO of Marquis Industries. “If tariffs continue to put pressure on pricing levels, we should see some gain on soft goods even though I don’t believe it will come back to the high point from years ago.”

While more favorable economic triggers may help carpet down the line, mill executives say the industry must do a better job of exciting consumers on the look and merits of the product. More recently, mills have taken a page from hard surface trends by developing carpet that replicates distressed looks or even stone visuals—all meant as a complementary piece to hard surface in the home. “We as an industry are going to have to innovate a little more—be fashionable,” Vermette said. “[Mohawk is] putting money into carpet. We’ve made nice investments in tufting and fiber. We have the resources to reinvent ourselves compared to some others. Companies that have not made the investment, or took too long, are not here anymore.”

Stanton’s Cohen said there are still plenty of opportunities to promote soft surfaces as a complementary home décor to hard surfaces—whether it is used for area rugs, runners or wall-to-wall for bedrooms. “The older generation is already aware of this, but the younger generations need to be reminded of [the benefits of carpet] in new and unique ways. There is a huge replacement cycle opportunity as [these products] become a real fashion statement that can be replaced more frequently than previously to keep the aesthetics of the home updated. Specialty retail needs to have a regular cycle of updating the look of their showroom while staying appropriately active on social media.”

Phenix’s Clayton believes that in the coming years the share of carpet should stabilize and maintain a prominence in the home thanks to the category’s aesthetics and functional benefits such as softness underfoot, noise abatement and overall design capabilities.

Fiber
With few notable exceptions in commercial, the carpet market has turned decidedly toward solution-dyed polyester. In 2018, PET captured virtually all of the growth, grabbing share from olefin and nylon. “Some of the competition will have to reset,” Mohawk’s Vermette said. “If you are highly leveraged in nylon you will have your hands full.”

T.M. Nuckols, president of the residential division of The Dixie Group, concurred, noting “From a trend standpoint, where we had been seeing nylon make a bit of a comeback over the past few years, we are now seeing PET and triexta resurging and taking more share of the residential market. This is being driven by the large mills due to the increases in nylon prices over the past 12-18 months.”

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Scoring flooring: Industry stats for 2018

June 24/July 1, 2019: Volume 35, Issue 1

 

The flooring industry as a whole in 2018 continued on its slow but steady growth curve in terms of dollars—a journey that began in 2011 and shows no signs of abating. The growth is led by the resilient category in general and the waterproof subsegment in particular, which is basically carrying the floor covering industry on its back. That’s the good news. The not-so-good news is that it is becoming obvious that resilient is cannibalizing dollars from just about every other flooring category, all of which were either flat, up or down slightly in both dollars and volume, with the exception of carpet volume.

While growth rates pale in comparison to the mid-2000 heydays, the industry last year continued to post steady gains across the board with an increase of 4.57% in dollars. However, total volume was down slightly (-0.56%) for the first time since 2011. FCNews research reveals that carpet (which comprises 54.3% of industry volume) dropped approximately 475 million square feet, and not even the high-powered resilient segment can make up for that. This comes on the heels of 3.85% growth in dollars and 3.2% in volume in 2017; 5.1% growth in dollars and 3.8% in volume in 2016; 4.4% growth in dollars and 3.2% in volume in 2015; and 3.6% and 1.8% growth, respectively, in 2014. In fact, 2018’s figures represent the ninth consecutive year of dollar increases.

FCNews’ exclusive research reveals total 2018 flooring sales topped out at $22.98 billion and 19.625 billion square feet. (These numbers are in wholesale dollars reflecting the first point of sale. They also do not include stone flooring, nor does it account for ceramic wall tile, cove base and rubber accessories.) It’s the highest dollar count since 2006 and the second highest volume number since 2007, eclipsed only by 2017’s 19.736 billion square feet.

Some good news: The industry is beginning to get close to the peak it reached in 2006, when sales of $24.175 billion and 26.36 billion square feet were posted. Flooring currently sits just 4.9% below 2006’s dollar mark although still 25.6% off in volume. What does that mean? More good news: Back then, the average square foot price of flooring was a shade under $0.92. Today that figure is $1.17. Attribute that to a multitude of price hikes, better goods infiltrating the marketplace, favorable product mixes, more retailers using credit as a tool and, of course, a stronger economy with historically low unemployment rates. Tariffs on Chinese-imported LVT, WPC and rigid core also contributed, but it was only 10% in 2018 and not every manufacturer increased prices.

Let’s look at the industry in another way. When we entered this decade back in 2010, we were recovering from the Great Recession and flooring sales were $16.221 billion and 16.625 billion square feet. As we approach the end of the decade, the industry is up 41.7% in dollars and 18% in volume. So the average selling price of one square foot of flooring has increased 19.5 cents in the last nine years.

Another thing to keep in mind about the numbers: Ten years ago FCNews included cove base and accessories in its rubber flooring numbers. Two years ago we made the decision to include only sheet and tile flooring in our rubber numbers and only adjusted back to 2012. In the absence of that change, 2018’s volume could have eclipsed 2007’s volume figures.

As mentioned, the average selling price of all flooring in 2018 was $1.17, up from $1.11 in 2017, 2016 and 2015. On the surface, you can focus on price increases as the primary reason. Carpet was basically flat in dollars and down about 4% in volume. The multiple price hikes are what kept dollars about even. Wood also experienced a few price increases, most noticeably on red and white oak species.

But at the end of the day, one need only look at the resilient category for an explanation for the rise in ASP. Twelve years ago, the average selling price for all resilient flooring was $0.64. Two years ago it was $1.04. Last year it was up another dime. A decade ago, sheet vinyl, vinyl composition tile (VCT) and the low-cost, peel-and-stick tile commanded 75% of dollars. Last year that number plummeted to 22.5%, down from 28.8% in 2017. (In terms of volume, that number is a more healthy 43.2%.) The increased usage of the higher-cost LVT, both residentially and commercially, and now WPC/SPC/rigid, have been industry game changers.

But it’s not just resilient. The average ceramic tile price has increased from $0.95 to $1.19 per square foot over the last 10 years, and hardwood has seen an average-square-price jump from $2.36 to $2.52 per square foot. Even the maligned soft surface segment—which has seen its share of the market dip from 64% in 2007 to 49.5% in 2018 (and down from 51.9% in 2017)—has seen an increase in average pricing from $0.89 to $1.06. For the record, laminate is the only category with pricing in decline, going from $1.21 a square foot in 2008 to $1.09 in 2018. (Pricing has actually held at that mark for three years running.)

Laminate and carpet were the only categories in 2018 to show a decline in both dollars and volume—the latter taking a significant hit on the volume side. Laminate attributes its fallback to a decline in import shipments and lower domestic production capacity in 2018, but mostly the growing popularity of WPC/rigid core.

Why has the growth been slow and steady and not more robust? For one, housing has not led the recovery from the recession and is actually lagging the overall economy. While it continues to rebound and grow each year, housing starts are still below the 1.4 million threshold that is considered normal. Also, in past recoveries there has always been a period of strong economic growth before it settles into normal growth mode. That has not happened with this strong economy.

But there have been many positives. The U.S. economy continues to grow as consumer spending (due to rising employment) and household income (and with it disposable personal income) are on the rise. Commercial construction continues to rebound, and corporate pre-tax profits grew again in 2018.

Also not to be underestimated as a flooring market driver is an aging baby boomer population. Boomers control the lion’s share of this country’s disposable income and are in their prime spending years. Furthermore, many are buying second homes, or at the very least transitioning into different places of residence.

Resilient
Much like the past few years, the resilient category continues to be the locomotive powering the industry, with WPC/rigid core serving as the catalyst for this explosive growth. In 2018, resilient (not including rubber flooring, which checked in at $227.4 million) carried the industry on its shoulders, posting meteoric gains, rising 23.1% to $4.916 billion from $3.993 billion in 2017. Since 2010, the category has increased a stunning 185% and is now at its highest point in history in terms of dollars. Interestingly, it has “only” increased 84.5% in volume, again accentuating the migration from felt-backed products to fiberglass sheet, along with the transition from residential/commercial sheet and VCT to LVT and WPC/rigid.

In the grand scheme of things, resilient now accounts for 21.4% of the total flooring market in dollars (up from 18.2% in 2017) and 22.3% in volume (up from 20.4% in 2017) after a 9.5% rise in units to 4.373 billion square feet. In 2017, resilient held an 18.2% market share in terms of dollars, which was up from 16.5% in 2016; 13.3% in 2015; 12.2% in 2014; and 11.9% in 2013. Interestingly, its market share in volume had stayed around 15% for eight consecutive years until leaping to 17% in 2015; 18.8% in 2016; 20% in 2017; and now 22.3%.

FCNews research reveals just how much LVT—along with its sub-category, WPC/rigid core—is driving growth of the segment. LVT sales have gone from nearly $750 million in 2012 to $3.687 billion in 2018. That means the category has grown nearly five times in six years. But it is no longer sufficient to strictly talk about LVT. WPC/rigid core has taken on a life of its own these past two years with astronomic growth in 2018. In illustration, 2017 sales were $936.3 million (92.4% residential) and 480.25 million square feet (93.1% residential). In 2018, FCNews research reveals this subsegment posted sales of $1.761 (91.4% residential) and 932.2 million square feet (90.4% residential).

To put this in perspective, WPC/rigid core now comprises 47.8% of all LVT (up from 34.9% in 2017) and 61.9% of all residential LVT sales in dollars. In terms of volume, WPC/rigid core constitutes 38.1% of all LVT and 45.6% of all residential LVT. And at $1.90 per square foot, it is the most expensive resilient flooring product aside from linoleum, rubber and commercial sheet.

LVT/WPC/rigid core in general also carries with it a premium price tag as it comprises 75.4% of the category’s dollars but only 56% of its volume. To illustrate its growth, those numbers were 37.4% and 20.6%, respectively, in 2012.

As LVT grows, it is taking share from other resilient categories, especially VCT, which today is only 5.7% of resilient dollars and 11.6% of volume. Six years ago, those numbers were 19.7% and 26.8%, respectively. But it is also nipping share from sheet vinyl as well. Sheet vinyl—residential and commercial combined—has declined 2.1% in the last four years, going from $756 million in 2014 to $740.4 million in 2018. Commercial has taken the bigger hit, declining 11.9% in dollars from $254.24 million in 2013 to $224 million in 2017. However, the category may have been up slightly in 2018 with estimated sales of $232.5 million. It remains a mainstay in healthcare, where a more seamless floor covering is demanded. The category has been a challenge for just about everyone, with heterogeneous continuing to take share from homogeneous—a segment that really has only three players remaining: Armstrong, Mannington and Tarkett.

Carpet
What began as a somewhat promising year for carpet ended with the category down in sales and volume for both residential and commercial. You would have to go back to 2010 to find the last year in which soft surface was down across the board.

In 2018, carpet was victimized by outside forces (four Federal Reserve rate hikes and a government shutdown) and internal issues (multiple carpet price increases) as well as the incredible dominance of the LVT segment, which has kept carpet from gaining any positive momentum.

The cumulative effect of losing ground to hard surfaces is fairly stunning. While carpet/rugs comprise 54.8% of the overall flooring market, that compares to 67.7% in 2008, a full 13 market share points lost in that span.

While the growth of LVT has been instrumental in carpet’s decline, the soft surface segment has its own internal issues. The widening gulf between low- and high-end goods has meant that a significant middle market— priced between $8 and $14 per square yard—has been rendered irrelevant. On the contrary, solution-dyed polyester has bolstered the commodity end of the market, while high-end decorative carpet and rugs has created pockets of opportunity at the high end.

On the commercial side, 2018 marked another down year in terms of sales and units. The struggles of the commercial business can be tied directly to the overwhelming strength of the LVT/SPC market that continues to expand its footprint in all applications, and in the process pushing carpet to the margins. As Mike Gallman, president of Mohawk Group, explained, “You can’t talk about carpet without talking about hard surfaces.”

Where carpet has been specified in commercial, it is mostly modular carpet getting the call. Top executives estimate that car- pet tile now makes up about 80% of K-12 carpet installations and about 90% in healthcare.

Going forward, the industry hope is that the share of carpet should stabilize and maintain a prominence in the home thanks to the category’s aesthetics and functional benefits such as soft- ness underfoot, noise abatement and overall design capabilities.

Ceramic
While 2018 again saw growth for the ceramic tile market, those gains were down compared to that of the previous year. One tile supplier told FCNews that while both the commercial and residential segments saw growth, it was the lowest since the economic crisis. For example, 2017 saw jumps of 5.8% in sales an 5% in volume—the second largest segment gain next to resilient—translating into $2.921 billion in sales and 2.426 billion square feet in volume. In 2018, FCNewsresearch showed the category saw about 2% growth to 2.474 billion square feet. Sales were relatively flat for the category, registering less than 1% growth to $2.935 billion. Another supplier noted the buildup of inventory, especially from China, during the last quarter in anticipation of the higher tariff scheduled for 2019.

Several factors challenged the category in 2018. The housing market, for example, historically serves as a good reference for how the ceramic tile market will fair. While the housing market has experienced modest growth climbing out the recession, it really hasn’t led the charge. In fact, many industry observers noted a cooling in housing last year. The remodeling segment admittedly saw gains; however, ceramic tile doesn’t garner nearly as much in sales from the segment as it does with new projects, one industry observer noted. Ongoing trade disputes with China also impacted the ceramic tile market as tariffs scheduled for 2019 put questions in the minds of consumers, manufacturers and importers. Competition from other categories, expressly LVT, also put pressure on the category. Tile suppliers noted a need to focus on innovation and cost to help withstand the pressure from LVT in the future.

Moving forward, suppliers noted a positive attitude toward the ceramic tile market’s health. However, several economic factors will have to be resolved before a true understanding of the market’s potential is understood. “We are seeing a lot of reluctance in investment with both consumers, builders, manufacturers and distributors until there is more certainty around the macro economic and political climate,” said Raj Shah, president, MSI International. “Never has the industry been tested with such large-scale factors as Section 301 tariffs, anti-dumping investigations, etc. The hope is that much of this will settle in the third quarter. We will then see investment decisions being made again, which will result in growth of the industry.”

Wood
The hardwood category, the segment that arguably relies most on raw materials, shows just how movement in lumber prices can impact the final numbers. While many suppliers both large and small report modest gross increases in sales, those increases were heavily mitigated by numerous price hikes that took place over the course of 2018. That was particularly the case with in-demand species such as white and red oak, and, to a lesser extent, hard maple and walnut. (Tropical exotic imports were a whole other story.)

Another factor that impacted pricing was demand from inter- national markets, observers say. With more hardwood flooring production taking place in China and Southeast Asia, export demand put additional pressure on pricing. Couple that with intense competition from LVT, WPC and SPC—segments that take direct aim at entry-level hardwood flooring products.

At the end of the day, the hardwood flooring category generated $2.42 billion in sales, a 4.4% increase over 2017. The volume of hardwood flooring sold at the first point of distribution also grew, albeit at a slower rate (3.2%), to 959 million square feet, reflecting higher-priced product and better-quality goods. The category’s saving grace was the residential replacement sector, which grew its share of the pie in 2018, accounting for roughly 58% of hardwood end use. That’s up a few percentage points from 2017, when residential replacement activity accounted for approximately 55% of wood sales. But that growth came at the expense of lower consumption by the new home construction sector, which fell to roughly 33.5% of sales last year compared to 35% in 2017.

Laminate
The laminate category—once considered the “WPC” of its heyday back in the mid-1990s—continues to lose market share. FCNews research shows laminate flooring sales dipped to just over $1.103 billion last year, a 1.7% decrease from 2017. It also represents the second consecutive year of sales declines in the category.

Naturally, the volume of laminate flooring sold in the U.S. was commensurate with the stagnation in dollar growth. In 2018, volume was estimated at 1.012 billion square feet, a 2.1% decrease over the prior year on top of a 1.9% decrease in volume sold in 2017. Even more telling is the fact that laminates’ portion of the overall flooring market fell to roughly 4.8%, down from 5.1% of total industry dollars in 2017. With respect to volume, the category represented approximately 5.2% of total square footage sold, down slightly from 5.3% in 2017. The category also saw a dramatic falloff in shipments from vendors belonging to the European Producers of Laminate Flooring—a coalition that in the past accounted for more than 40% of laminate imports.

 

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Installation: Underlayments = solutions + add-on opportunities

June 10/17, 2019: Volume 34, Issue 26

By Megan Salzano

 

Sundry products such as underlayments and subfloor levelers are often overlooked by the consumer but play a vital role in the successful completion of any flooring installation. Furthermore, they also provide the retailer with upselling opportunities.

As such, it is squarely on the shoulders of the retail sales associate to convey the pivotal role these products play when it comes to the final outcome of a project. “The underlayment is a very important add-on sale,” said Jim Wink, vice president of sales and marketing, Foam Products. “It generates much greater profits with high margins over the low profit margins of the actual flooring.”

Current flooring trends have also made room for upselling opportunities. For example, as hard surface flooring has grown in popularity, the importance of underlayments has grown as well. “Many families who have been accustomed to the benefits of carpet with a separate cushion are now finding out their new hard surface floor isn’t as quiet as what they were used to,” said Erik Kempf, president, Leggett & Platt Flooring Products. “For consumers who are making the switch from soft surface to hard surface, the retailer should explain the reasons why a good quality underlayment is needed. Carpet has an obvious companion product, which provides a profit center. When you move to hard surface flooring, not only are you taking a customer out of the market for a longer period of time but oftentimes no underlayment is used. That is a tremendous profit opportunity for the retailer.”

In order to land that add-on sale, retail owners and their sales associates should first be well informed on the benefits underlayments provide and then relay those benefits to suit the needs of the customer. “It is always essential to assist customers in researching what best fits the needs of any particular installation,” said Wade Verble, vice president of business development – underlayment division, DriTac Flooring Products. “If sound control is the primary concern, the focus should be abatement qualities. If moisture control proves most important, research the moisture mitigation attributes of the underlayment.”

Adam Abell, market manager, tile and stone installation systems, consumer and construction business unit, Bostik, agrees retailers must embrace their role as industry experts. “Stay savvy and educate your customer with the proper techniques, the reasons why conformance with our industry requirements will result in longevity and quality of the completed project.”

However, offering underlayment is not only about making a sale. It can also help add value to a retailer’s customer relationships. “When retailers use underlayments to address subfloor issues, they then become a solution provider—not just a salesperson,” said Shane Jenkins, senior technical coordinator, Schönox, HPS North America. “This is the greatest opportunity for retailers to gain the trust of the consumer as an expert. This added trust can lead to a successful sale without lowering the cost or compromising on the quality of the project.”

For some sales associates, adding underlayments to the final cost can be daunting. However, manufacturers agreed, oftentimes the opportunity to upgrade the customer with an underlayment sale naturally presents itself. “In many situations there is an obvious need for a solution, and just pointing out that there are underlayments that offer a remedy is a path to a better installation for the customer and higher profits for the dealer,” said Ann Wicander, president, We Cork. “So often the dealer rep is afraid to add more cost to a project estimate—they miss the opportunity to upgrade the customer to a better situation.”

Other industry experts agree. Jack Boesch, director of marketing, MP Global, said adding a premium acoustic underlayment is as easy as a fast food restaurant asking if you want to “super-size” your drink. “Consumers look for guidance from sales staff on what to purchase. When the customer service rep explains the benefits of a premium underlayment, the additional cost doesn’t seem unreasonable.”

Manufacturers, likewise, agree that profitable opportunities in today’s market should never be overlooked or underutilized. “There are financial benefits to promoting and upgrading your customer,” Bostik’s Abell said. “If you omit this discussion with said customer you are leaving an opportunity untapped and, in today’s marketplace, your savvy competitors won’t likely pass on similar opportunities they encounter.”

When it comes to merchandising techniques, Leggett & Platt’s Kempf said countertop, point-of-purchase units used at key locations in showrooms are useful. They not only showcase the underlayment but they can also illustrate the key reasons why underlayments are used, he said. “The one mistake some make is having too many choices. There are so many flooring options that consumers may get frustrated. Don’t over complicate the underlayment pitch. Keep it simple.”

In the end, establishing your brand as one of quality installation and service is critical in today’s marketplace, and underlayments can help accomplish this. “If retailers begin with a solid foundation, then finished flooring will look and perform as intended,” Schönox’s Jenkins said. “The end goal is to have a completed project all parties can all be proud of, and that starts with a sound and smooth subfloor.”

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Laminate: Latest looks aim to excite today’s consumers

June 10/17, 2019: Volume 34, Issue 26

By Reginald Tucker

 

In the battle to regain market share lost to red-hot categories such as LVT, WPC and SPC, laminate flooring suppliers have raised the ante in terms of performance—particularly the product’s water- and dent-resistant attributes. But they are also seeking to generate attention—and, by extension, more real estate on the showroom floor—by kicking things up a notch or two in the aesthetics department.

To that end, laminate manufacturers are leveraging various technologies, innovation and some creativity to get retailers excited about the category again. “Laminate designs over the last couple of years have really evolved from what we’ve seen in years past,” said Adam Ward, senior director of wood and laminate, Mohawk. “The level of realism you can get in a laminate product still beats what you can get in other categories such as ceramic, LVT and rigid core products.”

In Mohawk’s case, that realism is primarily due to the decorative papers used to render the primary image, plus an innovative four-color process employed to bring the visuals to life. These technologies have paid big dividends for Mohawk, whose RevWood line earned the company top honors in the laminate category in the 2019 Award of Excellence competition. “The level of pressing detail and registered embossed combined with our in-house design really takes design to another level, and it’s why we positioned the category as RevWood over laminate,” Ward explained. “The things we can do from a visual perspective—combined with our waterproof story—really has elevated the category over some of those other imitations that have come into the market.”

Examples include the Antique Craft collection, a 9 1⁄2-inch wide x 7-foot-long plank that plays on the growth of wider/longer in the wood category. According to Mohawk, it features ultra-realistic design and texture combined with bevels that mimic the texture of a real wood floor. Then there’s Collosia, a collection that resides within Mohawk’s Quick-Step brand. In keeping with its name, the product boasts 80-inch-long x 10- inch-wide boards available in modern urban looks in a variety of fashion-forward colors. “What we’ve been able to do with these products is bring retailers back to the category,” Ward said.

Mohawk is not alone. Inhaus, which also earned an Award of Excellence for its laminate offerings, believes the category still has a lot to offer retailers and, ultimately, consumers. “Laminate is one of the flooring categories with the lowest cost complemented with leading scratch and wear resistance,” said Derek Welbourn, CEO of Inhaus. “Furthermore, working with clarity of pressed melamine and digital printing there are design abilities that other categories don’t have. Our goal is to match these technical qualities with great designs complemented by the ability to bring these designs to the market with greater speed to offer our customers something that other categories cannot.”

To that end, Inhaus has invested in its own design center, a 40,000-square-foot facility that includes a workshop for raw materials, manned by 22-member team that works continuously on design. “This helps us create new products at a faster rate and respond to trends in the market as quickly as possible,” Welbourn added.

Major suppliers continue to dedicate resources to give themselves an advantage through innovation and differentiation. “Our styling team is able to take real wood and enhance it through advanced scanning and digital manipulation to get the exact look they want,” said Dan Natkin, vice president, hardwood and laminate, Mannington. “Also, with the newer technologies in printing, we can also create a broader array of visuals with less repeats.”

As an example, Natkin cited Arcadia and Sawmill Hickory, top-selling offerings from Mannington’s award-winning Restoration collection.

CFL Flooring, another innovator in the laminate sector—among other categories—has also made great strides in developing eye-catching looks. Utilizing its vast experience in hard surface flooring production, as well as its manufacturing scale, the company is able to leverage those attributes to its advantage. “We have a broad range of fashion-forward design visuals available in varying lengths or random widths across many species, including handscraped or embossed-in-register real wood surface structure,” said Barron Frith, CEO of CFL’s U.S. operations. “Our biggest advantage is the number of unique visuals we offer, making it very realistic and hard to see repeats once the floor is installed, which technically is more difficult to achieve.”

For CFL, staying on the forefront of innovation is the name of the game, according to Frith. “We continue on the path we started in 2014, when we were the first to launch water-resistant laminate and solely focus on water-resistant solutions with special sizes—herringbone, blended lengths and widths, etc.—as well as special designs that require a significant amount of pattern variation.”

Seemingly across the board, suppliers are leveraging technology to develop realistic patterns and visuals. “High-resolution printing advancements are opening up the opportunity to produce unique, one-of-a-kind looks,” said John Hammel, director of category management, hardwood and laminate, Shaw Floors. “Consumers can now choose from laminate with grouted tile, realistic wood plank and stone visuals, giving them a durable, low-maintenance product with high style.”

A winning proposition
The latest innovations we’re seeing in laminate are designed to do much more than dazzle consumers. The main objective is to keep the category relevant in the face of increasingly stiff competition. “Laminate still has many advantages over other categories like resilient or wood, such as its scratch resistance and strength,” CFL’s Frith said. “Warranties are very similar with waterproof products as well. Bathrooms, three-season rooms, spills or large-area installation without T-moldings are all warranted, so we believe these types of products still have a bright future ahead.”

Mannington’s Natkin agreed, adding, “Laminate is already the most scratch- and indentation-resistant printed product category on the market today. It is also visually more realistic than LVT; it lacks that plastic look.”

It’s a message that laminate suppliers are hoping will resonate deeply with retail sales associates—those on the front lines with consumers. “The com- bination of leading design, wear performance and cost create a value proposition for laminate that is very powerful,” Inhaus’ Welbourn stated. “Other categories will have problems competing with this.”

At the end of the day, it’s all about providing trade-up opportunities for retailers. As Mohawk’s Ward explains: “With RevWood Plus and our other RevWood products, we are giving consumers and specialty retailers a reason to turn back to the category where they may have traded down consumers in years past—particularly with the millennial and younger customers who might not necessarily require a hardwood or demand it. This has given retailers a reason to trade up from a cheaper laminate that they may have looked at in the past.”

All this, plus laminate’s proven value proposition and high-performance attributes, will go a long way in helping the category recoup market share, suppliers say. “Today’s consumers are looking for affordable laminate flooring, but with higher quality, style and design than the laminate of the past,” Shaw’s Hammel stated. “The trend toward thicker products, combined with improved high-end visuals and realistic embossing, means laminate isn’t simply an entry-level product.”

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Dealers continue to see value in Mohawk’s Omnify program

June 10/17, 2019: Volume 34, Issue 26

By Lindsay Baillie

 

Almost three years ago Mohawk launched Omnify, an omni-channel solution that aims to simplify digital marketing by capturing and tracking leads while also streamlining social media publishing and search engine marketing. Today, Omnify works in conjunction with many of Mohawk’s other initiatives including its revamped Five Star program as well as Edge, its new go-to-market strategy.

Many Mohawk dealers adopted Omnify when the manufacturer unveiled the program at Solutions in 2016. Rahim Daya, principal and general manager, The Westvalley Flooring, Alberta, Canada, became a believer only five minutes into FloorForce’s chief innovation officer John Weller’s Omnify presentation. “We were the first company in our market/region to sign up for Omnify,” Daya explained. “I have been hands on with my company’s digital presence right from day one, realizing the importance of Internet marketing. After a careful review of optimization options available in my region and speaking to John, I decided to work with Omnify.”

For Daya, Omnify truly does simplify digital marketing. “Mohawk has done an excellent job of realizing that store owners are not online marketing executives,” he said. “With Omnify, you have the expertise of people who know and understand the flooring business working with you to deliver tangible results. The program has allowed me to benefit from the Internet while being able to focus on what my company does best—sell flooring.”

For Daya’s business, Omnify provides the latest, up-to-date graphics and interface that aligns with the consumer’s ethos—a major selling point. Through Omnify the consumer is led through the digital pipeline to Daya’s front door. “[Omnify] is vested in ensuring state-of-the-art marketing is employed on a dealer’s behalf,” he explained.

Tom Heffner, president, About All Floors with locations in Birdsboro and Wyomissing, Pa., has also seen the value in using the omni-channel program. “We’ve been using Omnify since its inception,” Heffner explained. “I’ve had lots of sales reps come in and offer me digital advertising programs, but they’ve all been expensive and haven’t worked. With Omnify you are partnered with Mohawk to drive your brand in the local market while tying it to the world’s largest flooring manufacturer. There is an interest in it working for both my company and Mohawk, and they’ve committed the resources and people to make it work.”

Paula Anselone, owner, Anselone Flooring, Mansfield, Mass., signed on for Omnify in November 2018 and has already seen a difference. “We have noticed a significant increase in online leads and have found it helps our customers with a more fluid shopping experience,” she said. “I would definitely recommend Omnify to other flooring dealers, especially if they use FloorForce web hosting. It’s a no-brainer.”

While flooring dealers have a host of options when choosing digital marketing programs, many believe Mohawk’s Omnify provides greater value. “Digital marketing programs that are not segmented specifically towards flooring do not offer the same level of value as Omnify,” Daya told FCNews. “Mohawk and its senior management team understand the process and are extremely value driven in this area. A combination of flooring expertise and a sound understanding of digital applications make this the best valued program in the market based on my experience.”

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Technology: Top 10 tips for choosing the right software

June 10/17, 2019: Volume 34, Issue 26

By Lindsay Baillie

 

Selecting the ideal software for a flooring business should not be done in haste. That is according to several software manufacturers that urge dealers to take their time getting to know and understand the ins and outs of each system.

New software—whether it is a store’s first system or simply taking the place of an existing program—often requires a dealer to invest time and money before it is running at maximum efficiency. In addition, employees must be more open to adapting to the new business/measuring/inventory system, which can greatly affect the success of the software.

Following are 10 things to consider before leaping into a new software purchase.

Evaluate your business cycle. When considering new software, experts say it is important to know the current status of your business cycle and where the company needs to be to increase revenue and reduce operational costs. The right software should reduce or eliminate errors, minimize repetitive actions and lower operational expenses.

“If your business involves too many manual processes, your bottom line is affected,” said Edgar Aya, president, Comp-U-Floor. “Every time a mistake is made it affects your overall profit, reduces your selling time and directly impacts your overall business health. This is where the right software can make a huge impact on your profitability.”

Define your objectives. Before looking for software, dealers should create a list of what they want the program to achieve. For example, does a dealer want stock inventory? How important is inventory control? Does the dealer want to focus on automating paperwork and bookkeeping?

“Many people include every feature and function they ever heard about in their wish list of things they want the software to do,” said Joseph Flannick, president, American Business Software (ABS). He reminds dealers that all their software does not necessarily have to come from one vendor.

The main objective, he said, is to be realistic. “Think more along the lines of ‘must have’ vs. ‘nice to have.’ The larger the budget, the more things you can include in the ‘must-have’ category.”

Weigh the benefits of industry specific vs. generic. Software manufacturers say this choice depends on multiple factors, including the size of the company and the goals of the business, among other consideration. RFMS advises flooring dealers to look into flooring- specific software before investing in a generic program.

“Because of the uniqueness of the flooring industry—think about roll goods and inventory control or measure/estimating projects—most of the time industry-specific software is the best choice,” said Rod Bayless, director of sales and marketing.

Industry-specific software can also help eliminate errors prior to installation. Some experts believe measuring software should provide the installer with a clear drawing as well as all the information he or she needs for the project. “It should have a printout indicating where the flooring needs to be installed with all seams showing,” said Dennis Benton, president, NivBen. “It should also have a fill-cut sheet displaying the fills and their sizes. This will help the installers proceed with the project with ease.”

Choosing between cloud-hosted vs. cloud-based. Beyond comparing industry- specific programs with generic software, dealers should also look into the differences between cloud-hosted and cloud-based software.

“There are many companies that offer services for low monthly fees that are cloud-hosted,” Comp-U-Floors’ Aya explained. “This often means the older desktop technology was moved to a server, so it is easier for a provider to push out updates to all of its users at one time and allows for easy management of the older technology. This dated technology will not help you grow to meet customer demand.”

By comparison, cloud-based technology is fairly new to the flooring industry and often requires an upfront investment—namely time. As Aya explains: “It is written in the latest advanced code, is responsive to your devices anywhere and anytime, has links to other internal components within the software and allows using the Google Calendar Interface for installer or service scheduling.”

Look for an easy-to-use program. Software is designed to automate operations and maximize efficiency. To fulfill both those requirements, observers say, software must be easy to use for all users.

“If only one or two people in your company know how to use the software, it obviously limits the level of impact you will see,” said Chad Ogden, CEO and president, QFloors. “Look for user-friendly software that everyone in your company can learn—even those who are not particularly tech savvy. A good way to evaluate ease of use is to count how many different screens and clicks are required to perform a certain function.”

Look for integrated software. To remain relevant and profitable in today’s rapidly evolving flooring industry, using available digital technology combined with industry-specific software is key. This means taking the time needed to find the best fit so that you can benefit from the efficiencies, analytics and performance improvement available.

“Dealers should invest in a system with integrated accounting that seamlessly pairs their flooring-specific processes—such as job cost, inventory value, purchasing and other business reporting—in real time, and then flows easily to a system’s analytic platform to deliver critical business data in a readily comprehensible visualization format,” said Kelly Oechslin, marketing coordinator, RollMaster.”

Using an integrated soft- ware program also makes per- forming various tasks on a job site easier and can reduce human error, experts say. “The easier your measure solution is integrated with your business management the better,” said Steven Wang, president, Measure Square. “That way you don’t have double entry or need to switch to other software.”

Schedule system demos.After learning about a software’s benefits, bells and whistles, it is important to schedule an in-depth demo with team members from every department of your company. “Since each department will have needs that are specific to their area of the business, it might be best to set up a series of shorter demos with each department,” Bob Noe Jr., president, Pacific Solutions, explained. “Remember, if you have buy-in from the majority of your staff, the adoption of the software will be a much smoother process.”

Ask about tech support. Beyond a software’s features and benefits, dealers should also look into the quality of support available from each software company. This includes any resources available to help bring the staff up to speed as well as technical and training support.

“Training and technical support, if not included with your purchase, can sometimes be unanticipated ‘gotcha’ costs,” QFloors’ Ogden warns. “Before purchasing software, ask a lot of questions about the options and costs for training, conversion and ongoing support. Also, find out what your technical support will look like. For instance, after your purchase, can you call and talk with a live person if you have a question?”

Request referrals. Don’t just take the vendor’s word on it. Before choosing a software system it is important for a dealer to speak with other businesses that have used it. The key, according to Pacific Solutions’ Noe, is to find dealers of similar size and scope.

While speaking with those referrals, experts also suggest dealers ask about their experiences with the software company’s technical support and training staff.

Choose a system that evolves over time. A great software program will grow alongside a dealer’s business, experts say. To this point, it is important for dealers to evaluate where they want their business to go in the future and then select a system accordingly.

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Installation: Välinge pushes innovation with latest offerings

June 10/17, 2019: Volume 34, Issue 26

By Ken Ryan

 

With more than 2,600 patents to its credit and another 5,300 in the pipeline, Välinge Innovation AB continues to burnish its credentials as an R&D company par excellence.

“Innovation is in our DNA,” Lennart Thålin, region manager - North and South America, told FCNews. “Lately we’ve launched a few more groundbreaking innovations.”

Whether it’s the company’s legacy 5G locking system or a new innovation like wood powder technology, Välinge’s objective is to push through any barriers and deliver technological solutions to the market. In many instances, it requires a new way of thinking, Thålin said. Case in point is the company’s wood powder technology—a production and material innovation in which Välinge uses a mix of wood powder that comes from recycled laminate flooring, melamine, aluminum oxide and pigment. “With this powder mix we create two types of flooring: ceramic composite featuring the Nadura surface and hardened wood featuring Woodura surface,” Thålin said. “The former has a ceramic look and feel, and the latter features a wear layer of real wood which is infused with the powder mix and thereby increases the hardness and impact resistance three times compared to the original species.”

According to Thålin, ceramic composite flooring is harder and more scratch resistant compared to normal ceramic or porcelain tiles, but still feels warm and comfortable to walk on due to the wood fiber content. “It also withstands impacts much better and can be installed as a floating floor using our 2G/5G locking system.”

The wood powder technology uses a thinner wood wear layer (0.6mm) that enables production of wider planks at an affordable cost. “You get an automated filling of knots and cracks in the process thanks to the penetration of the powder when heated and compressed in the production cycle,” Thålin explained. “It also withstands impacts much better than similar flooring and can be installed as a floating floor using our 2G/5G locking system.”

Välinge plans to license the wood powder technology as well as set up its own production of flooring.

Liteback
In recent years Välinge has stepped up its introduction of market innovations, especially as the resilient flooring segment has soared on the strength of LVT, WPC and SPC offerings. The sheer weight of these types of flooring can prove challenging for installers. To remedy this, Välinge created a technology and process called Liteback to remove some of the material from the back without affecting the properties of the floor. By removing material, users can achieve a weight reduction of 15%-20%. As a result, all handling of the product becomes easier and more efficient—from delivery out of the production unit to the time of the purchase and during installation. In addition, the removed material can be recycled, and new flooring can be produced.

How it works: by using a grooving unit, groovers are milled on the backside of the floorboard. The material that is removed in the process is recycled back into the production process, thereby reducing material consumption by up to 20%. Terry Barbree, global director of sourcing, hard surfaces, Shaw Industries, said the company has been using the Välinge locking system for many years. “We appreciate the great technical support and the new features Välinge has brought to the flooring industry. We’re excited to see where the newest innovations like Liteback and powder technology will evolve.”

5G
5G is the well-known Välinge brand for the globally recognized fold-down installation system used by more than 100 flooring companies around the world. The unique feature about this technology is the flexible tongue that enables a much easier and faster installation process. “We have fine-tuned the 5G system so it also works with thin materials (down to 4mm) such as LVT and SPC by using an alternative version of the plastic locking tongue—stepnose—that also makes the installation easier and the locking stronger,” Thålin said.

Anett Nemeth, deputy CEO at Graboplast, a Győr, Hungary-based vinyl flooring manufacturer agreed that the 5G system facilitates and significantly shortens the time of installation, adding, “The prefabricated wood floor with shock absorbing underlay together with 5G fold-down installation system is a perfect match. Our customers like it very much.”

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I4F broadens its scope to cover rigid core platforms

June 10/17, 2019: Volume 34, Issue 26

By Reginald Tucker

 

Early glueless locking systems mostly targeted laminate and hardwood flooring categories. But with the rising popularity of rigid core platforms, developers of these systems are expanding their portfolio of technologies to offer licensees and manufacturing partners even more options.

To that end, I4F has announced new partner- ship agreements with rigid core flooring manufacturers CFL Flooring and KingdomFlooring.

In the case of CFL, the patent partnership agreement pertains to a new engineered stone, wood veneer composite base flooring board. The breakthrough magnesium oxide, veneer board addresses the disadvantages currently associated with natural wood flooring by reducing moisture intake and flammability on any floor level or room type. The new sound-absorbing board provides a stone-wood composite base that keeps the wood veneer level dry and heat resistant by substantially retaining moisture and heat with-in the stone-wood base.

“We are excited about working with I4F to promote this breakthrough technology,” said Thomas Baert, president, CFL. “This technology, developed by Mondo Pallon, is the beginning of many more to come over the next months and years.”

John Rietveldt, I4F CEO, was equally enthusiastic about the partnership. “This latest partnership with CFL underscores our strategy to seek out and market flooring technologies that have a profound impact on today’s flooring landscape.”

As part of I4F’s recent partnership agreement with KingdomFlooring, I4F receives exclusive sub-licensing rights for KingdomFlooring’s new patented polymer core floor panels enhanced with grout features. The new panels enable aesthetically pleasing, visible joints by introducing a grout-shaped recess close to the surface of the panel on at least one of its edges.

“This new partnership agreement takes our cooperation with KingdomFlooring to the next level and further supports our strategy to partner with innovation-focused manufacturers,” Rietveldt added.

Davord Dai, chairman of KingdomFlooring, echoed those sentiments. “We are excited about the prospect of working with an expert in the field to promote this new design-enhancing floor panel.”

Cost-saving innovations
Beyond innovative locking technologies, I4F is offering a patented technology enabling manufacturers to save up to 10% on materials during the production of rigid polymer boards. The technology also enhances productivity by optimizing the extrusion process during the production of rigid polymer boards, including SPC and expanded polymer core (EPC) panels.

“Sustainable material savings are good for the industry and our planet,” Rietveldt noted. “Manufacturers can now benefit from increased productivity gains during the production of rigid boards and have the opportunity to make significant savings on material costs.”

All this dovetails nicely with I4F’s Patent Cluster Concept (PCC), enabling partners to pick and choose the platform they require. More importantly, PCC also provides full transparency on the composition of license fees to obtain the best return on investment while avoiding unnecessary payments for unused patents.

Clustered patents represented by I4F cover the following:

•Locking

•Surface finishing

•Materials and panel composition

•Manufacturing processes

•Board/wall panels

I4F’s PCC means manufacturers can select the intellectual property that best suits their business needs. Additionally, they can regularly evaluate which cluster provides them with optimal patent protection.

“We will continue to work in partnership with the world’s leading and most innovative companies to find more exciting innovations that truly make a difference,” Rietveldt noted.

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Area rug: State of the industry—Rise of e-commerce, pricing pressures constrain growth

June 10/17, 2019: Volume 34, Issue 26

By Ken Ryan

 

If you are just returning from a five-year sabbatical from the flooring industry you might not recognize the area rug business circa 2019.

Dwindling are the days when the average specialty flooring retailer devoted racks of handmade, high-end Persian and Oriental rugs for discerning customers. E-commerce has changed the way consumers shop for rugs, and as a result the market has become more fragmented with price points being increasingly compressed.

This is not to suggest the area rug business isn’t adapting in the face of these challenges. Industry observers say manufacturers and specialty dealers have responded by marketing custom-created rugs to keep pace with all the changes. The challenge for today’s specialty dealer is the sheer number of places a consumer can find a commodity rug—furniture stores, general merchants, home centers, the local convenience store and, of course, the web. “In the last five years, e-commerce has been the biggest disrupter of the rug industry,” said Bart Hill, senior vice president product development and operations, Mohawk Home. “Then there has been retail consolidation, mainly larger chains. We used to do a lot with Sears and Kmart. We are losing a retailer a year, which is significant. Then there is the continued influx of machine-made rugs sourced primarily from Turkey which has driven down price points.”

From a percentage standpoint rugs are essentially flat in 2019 year-to-date vs. the corresponding period in 2018, research shows. The category is outperforming carpet in the residential segment on a percentage basis on the strength of hard surfaces, which has led to add-on sales for rugs.

Flooring executives said 2019 started out OK for rugs before hitting a soft spot in the second quarter. Unit demand is still faring well, but deflationary pressures have hurt average selling prices. “The Internet has changed the rug business and made it super competitive,” said Jared Coffin, vice president of product management for The Dixie Group (TDG).

TDG is a good example of what many mills are doing in today’s landscape. Although not a typical rug company, all three Dixie Group brands (Masland, Fabrica and, to a lesser extent, Dixie Home) sell custom-made rugs. The growth category for TDG has been fabricating off its broadloom collection where it can customize, say, a 9 x 11 1⁄2-foot rug to fit the approximate size of a customer’s room. “That business is up 10%-15%,” Coffin told FCNews.

Similarly, Anderson Tuftex markets the fact it can take any A/T carpet style and turn it into a rug that will complement any room in a consumer’s home. Customers can choose from a standard rug size or customize it to fit their specific needs, the company said.

Online sales make their mark
What has influenced the rug market the most is the role of e-commerce. With sites like Wayfair and Amazon offering 5 x 8 rugs for as little as $59–$79 compared to $299–$399 a few years ago—flooring stores cannot compete. “The top 80% of the business is $199 or below for e-com,” said Blake Dennard, senior vice president, Kaleen Rugs & Broadloom. “Smart brick-and-mortar dealers are not selling that [commodity] rug, they’re going after the better-end goods—the handmade, wool offerings. If you are going to take up space in your store you only have so many display arms to show your rugs; in that case, it’s better to move those higher-end goods to help compensate for the price erosion.”

Dennard said the days of walking into a carpet store and seeing 5 x 8 racks with 40 rugs in each display is pretty much over. “Those racks have come down. Retailers are instead doing sample programs and fabricating rugs out of their broadloom. That market has completely changed in the last five years.”

As the rug business shifts, dealers are offering private-label programs or selling higher-end goods. Cherry Hill, N.J.-based Avalon Flooring, with 14 stores in three Mid-Atlantic states, sees both good and bad forces influencing the rug market today. “The ‘bad’ is the race to the bottom on price points,” said Gerry Yost, director – area rugs and window treatments. “The ‘good’ is more customers are coming to retailers like ours because they bought a bargain rug and now would like something better, and they need help choosing a rug that will complement their décor.”

O’Krent’s Abbey Flooring in San Antonio has been selling rugs for more than 100 years. However, business has become more difficult over the last handful of years given the explosion of online retailers, according to company executives. “In order to deal with this consumer change, we have in turn focused increased efforts on custom rugs made from broadloom carpet in order to maintain margin and retain our hard surface customer’s rug business,” said Margie O’Krent, rug buyer. “In doing so, we have been able to keep our area rug sales volume flat in a year over year comparison.”

Mills are actually seeing greater demand for rugs these days because of the growth of the e-commerce model and the move toward custom-cut rugs. “We are shipping more units in the opening price points, primarily driven by online growth,” said Gerard O’Keefe, vice president of sales, Nourison. “We have gone to a seven-day work week in our main distribution center to accommodate demand and are in the process of adding more distribution capacity. Meanwhile, the emergence of large national players in online retail and an overcapacity in supply chains, combined with changing consumer buying habits toward rugs have led to an erosion of price points. This, along with the inevitable return [on investment] requirements, puts operational pressure on all companies to get to a particular sales number.”

Focus on differentiation
As custom programs proliferate, mills are trying to differentiate their offerings with larger rug sizes and extra wide-width broadloom combinations. “Programs like our 50 to Infinity come into play as really viable solutions for the brick and mortar players,” O’Keefe said. “It provides a great opportunity to offer something that differentiates them and keeps them out of the fray of competing with e-commerce.”

Mohawk and its Karastan brand aim to differentiate their products through unique fiber extrusion abilities as well as rug fabrication with an emphasis on 10- and 12-foot cuts. “We control our own destiny with our raw materials supply,” Hill explained. “For us it’s about adding textures—providing that value equation. We have to be innovative on the front end. We are a fashion business where color, design and texture are still very important.”

Mohawk believes it has the added advantage of doing most of its manufacturing (80%) in the U.S., which is increasingly important in this age of tariffs against U.S. trading partners. “We still see signs of life for rugs,” Hill added. “We’re seeing pent-up demand in the home furnishings category that has been soft, and we expect a pickup in the second half of 2019. Overall, we are bullish on the category even though there are still issues with global economic factors.”

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New York area flooring contractors pay it forward

June 10/17, 2019: Volume 34, Issue 26

By Reginald Tucker

 

New York City—Several New York-based high school seniors, along with a respected member of the local flooring industry, were recognized earlier this month during the 35th Annual Francis J.P. McHale Scholarship Awards luncheon.

As in years past, the 2019 scholarship awards were presented to a pair of students whose parents are affiliated with the New York City District Council of Carpenters (Local 2287), along with two seniors whose parents are non-union employees of contractor members. The awards program was named after a former business manager of Local 2287 who became treasurer of the Carpenters’ Union in the 1980s.

“Over the past 35 years we have supported the college education of 95 students, issuing more than $1.2 million in scholarships to very deserving young men and women,” said David Meberg, who serves as both trustee-chairman of the Greater New York Floor Coverers Industry Promotional Fund—which oversees the scholarship program—and president and CEO of Consolidated Carpet, a prominent New York-based contractor.

And the 2019 Francis J.P. McHale scholarship recipients are:

Thomas Waldron, whose father, Bernard “Bernie” Waldron, works with Classic Carpet Showroom. Waldron is a senior at Holy Cross High School in Flushing, N.Y. He plans to attend St. John’s University in the fall and will study finance. Waldron is a member of the Holy Cross Varsity golf team and captain of the varsity hockey team. He also plays on local teams such as the Long Island Ice Caps, Long Island Sharks and the Long Island Jaws. Waldron received the Michael J. Pergolizzi Scholarship and is a member of the National Honor Society. After college he plans to attend law school, with the goal of becoming a corporate lawyer.

Luke Goehring, whose father is Scott Goehring, Pyramid Floor Covering, is a student at John H. Glenn High School in Elwood, N.Y. He will be attending SUNY Maritime College in the fall of 2019, where plans to further his education and earn a degree in Mechanical Engineering. Watching his father repair items in his garage sparked his interest in building and design. In high school, Goehring was involved in many shop classes and robotic clubs. Other interests include exploring the outdoors. In fact, he earned the rank of Eagle Scout and is a member of the Order of the Arrow, a national honor camper society. Goehring is also a member of the National Honor Society and participates in Science Olympiad, Science Research Club and Technology Club. “Luke has an interest in solving problems, particularly ways to increase productivity through modification of the task at hand,” Meberg told attendees. “As contractors, we could really use your skills.”

Luke Sacco, son of David Sacco of Pyramid Floor Covering, is a senior at Syosset High School who plans to study finance at Marist College in the fall. In his spare time, Sacco serves his community using his skills to teach and coach local Syosset youth in lacrosse. He’s also involved in many activities in his school, including JV lacrosse (he’s team captain), school store, Substance-Free Alliance and the JV football and indoor track and field. Sacco is also a member of the Italian International Honor Society as well as the National Honor Society. His ultimate goal is to start his own business.

Stacey Kappel, daughter of Ray Kappel of Consolidated Carpet, is a senior at Bethpage High School. In the fall she plans to attend Hofstra, where she will work toward a degree in biomechanical engineering. Kappel—the second in her family to receive the J.P. McHale Scholarship—has received a number of honors and recognitions, including national merit scholarship finalist. Like Sacco, she is also a member of the National Honor Society as well as the National Italian Honor Society. She was chosen for a composite engineering program and participated in the All County Art Exhibition. Kappel also received the George Washington University Award for Excellence in Math and was recently named valedictorian of Bethpage High School.

Honoring service
In addition to the student college scholarships, the Greater New York Floor Coverers Industry Promotional Fund named Christopher Capobianco this year’s J.P. McHale Scholarship Award Honoree. Currently business development manager with Spartan Surfaces, Capobianco has been involved in the flooring industry in many different capacities over the past 40-plus years.

The Capobianco name has a long legacy and history in the flooring industry. In 1932 Christopher’s great grandfather opened what is now Glen Floors in Glen Cove, Long Island. Many of his family members are still on the retail side of the business, and several family members are on the manufacturing side.

For 34 of the last 41 years, Capobianco has worked in sales. For seven years he worked as a technical consultant after owning his own sales and technical consulting company. In 2012 he joined forces with Spartan Surface and helped open a New York City office for the firm—a move that represented Spartan’s first expansion beyond the Washington, D.C./Philadelphia market. In his current role, Capobianco works with architects, end users and flooring contractors in the New York City metropolitan area as well as Connecticut. He is also a part-time journalist for a number of different industry trade magazines, and he is also involved in volunteer work within the industry. In the 1980s he spearheaded an industry effort to establish a training school on Long Island, where he became a resilient flooring instructor.

For 25 years running Capobianco has been a member of the ASTM resilient flooring committee and has helped write many standards. He also served 12 years on the FCICA board—six as chairman—and he has been with the IICRC for 12 years. While there, he helped develop the resilient flooring inspector certification program. Capobianco also worked with Habitat for Humanity, securing donated floor covering and volunteer installers for several homes on Long Island.

“I’ve known Chris for as long as I care to remember,” Meberg recalled. “He has always been a passionate supporter of everything in our association as well as the installation community. It’s an honor to present Chris with this award.”

Capobianco accepted the honor with his signature grace and humility, citing those who earned the award before him. “I’m very humbled that the trustees chose to put me in some very good company,” he said. “Thank you all.”

Capobianco also acknowledged the student recipients as well as the Greater New York Floor Coverers Association. “To the scholarship winners—you are the main event here today. I hope this scholarship helps you on your way to a great future. As for the association—this organization has done such good work for the industry here in New York and the metro area. When any of you were awarded a job on a product I’ve specified, I never had to worry about it; it’s going to get installed properly, and the workers are going to be taken care of.”