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Contract: State of the industry—Innovation sparks broader usage of hard, soft surfaces

June 5/12, 2017: Volume 31, Issue 26

By K.J. Quinn

 

Screen Shot 2017-06-09 at 10.36.25 AMThe dynamics in the top commercial sectors are changing as interior design preferences evolve. While luxury vinyl tile (LVT) and modular carpet are the two fastest growing products, experts say, alternative flooring products are meeting designer needs for good looks, sustainability, durability and low maintenance and are expanding usage across the board.

“Categorically, the commercial carpet market is no longer defined by broadloom vs. carpet tile,” said Mike Gallman, senior vice president, commercial product, Mohawk Group. “It’s now hard surfaces vs. soft surfaces.”

Anecdotally speaking, experts say commercial flooring sales are on pace to increase 3% this year, according to industry estimates. While projections are based on a small sample size— approximately four months at press time—the growth rate represents a slight improvement over Q4 last year when market sales were reportedly soft. What is increasing more dramatically are flooring choices, as new products, aesthetics and finishes provide more selections than ever for the A&D community.

“Choices of sizes, colors, patterns, bevel treatments, constructions, wear layers, etc., affords them the ability to do what they do best—create,” said Al Boulogne, Mannington’s vice president of commercial resilient business. “Offering the broadest portfolio of choices gives them the ability to design a space without limitation of options.”

While experts say sales are fairly even between carpet tile and broadloom—the latter of which maintains a slight edge in volume—modular products are expanding significantly faster. “Carpet tile has been steadily taking share from broadloom in the education and corporate/office sectors, preferred for its ease of installation, increased design options and flexibility for moving and replacing tiles once installed,” stated Matt Miller, president, Interface Americas.

Sharing the spotlight is LVT, which is helping hard surfaces sustain growth in retail and healthcare strongholds and expanding at a double-digit rate into non-traditional markets like corporate/offices and hospitality. Expansion is coming at the expense of carpet and low-cost options such as VCT as lifecycle costs and styling further impact purchasing decisions. Workhorse products such as rubber, linoleum and VCT remain fixtures in healthcare and education settings while hardwood and laminates are carving a niche in certain retail and hospitality spaces.

Screen Shot 2017-06-09 at 10.36.37 AM“In all cases, performance and value are the drivers,” said Denis Darragh, Forbo’s vice president, North America, citing linoleum as an example. “Performance encompasses all aspects of the product, from durability through being the best product for a healthy indoor environment.”

Ceramic tile in particular has grown steadily. Estimates show the category represents about 15% to 20% of commercial sales and volume, with specified contract accounting for about 70% of the business. Ceramic is on pace to reach or exceed 2016 growth rates, when volume and sales rose approximately 6% and 5.5%, respectively.

“There still remains a tremendous growth opportunity for the tile category,” said Gianni Mattioli, executive vice president, product marketing, Dal-Tile. “Our company is diligently working to take advantage of this opportunity and the tile industry as a whole also appears to understand this reality.”

Mitigating factors
Despite the fact key economic indicators such as inflation, consumer confidence, lending rates and new construction are pointing in the right direction, growth—or lack thereof—within the five major markets varies. Each segment faces specific issues impacting interior design and flooring selections. For example, the corporate/office sector is witnessing changes in interior design aimed at helping employers retain and recruit top talent and ultimately drive greater results.

“Driven by strong earnings, many corporations are reinvesting in their offices through renovation or relocation,” noted Mark Oliver, vice president, workplace and retail segments, Mohawk. “They recognize the office—and the way its employees engage with it—is changing faster than ever before.”

The workplace remains a bedrock market for carpet tile, where it is coveted for acoustical properties, durability and comfort underfoot. “We’re still seeing carpet tile increase in the corporate part of the commercial market,” observed Ralph Grogan, president and CEO, Bentley Mills. “There are a lot of law offices and accounting firms using carpet tile now as they are going to a more open office concept.”

Screen Shot 2017-06-09 at 10.36.50 AMMeanwhile, hard surfaces such as resilient, hardwood, porcelain tile and even polished concrete are quickly gaining coverage in lobbies, break rooms and bathrooms. “Corporate is one of the last segments to be looking at hard surfaces in a bigger way,” Mannington’s Boulogne pointed out. “We are starting to see a shift in preference to LVT as design has started to focus more on targeting this category.”

Hard surfaces remains dominant in healthcare as resilient, rubber and linoleum meet durability, maintenance, hygienic and slip resistance needs, observers say. Ceramic, porcelain and terrazzo tile are commonly found in public areas such as hallways, making it easier to maneuver rolling equipment and mobile aids. Carpet and LVT are primarily specified for non-patient areas like waiting rooms and medical offices.

“Architects and designers are putting LVT in healthcare applications because of its modularity,” said Jeremy Salomon, director of product management and marketing – retail, Tarkett. “We’ve been designing LVT to look like some of the sheet vinyl products. It gives designers flexibility in solutions they want to put into healthcare applications.”

A fast growing area within healthcare is assisted living, due largely to the shortage of rooms available to care for an aging U.S. population. Facility managers are reportedly sprucing up these spaces to create “homey” environments for residents. “Activity is trending up, with some larger, continuing care retirement communities going up—along with new senior-living projects in urban areas, drawn by Baby Boomers in search of a more active retirement lifestyle,” said Jamey Block, vice president, resilient product management, Armstrong.

A similar makeover is occurring in hospitality, as hotels attempt to incorporate residential design with high-performance products that are also easy to maintain. “Our hospitality business has grown at a 33% compound annual rate over the past three years in the Americas region, and we expect that trend to continue,” Interface’s Miller said. More and more hospitality end users are shifting to a mixture of soft and hard surfaces, providing us the opportunity to sell both our LVT and carpet tile offerings.”

Sector-specific solutions
Other flooring materials, such as broadloom and ceramic, are also reaping the benefits. “For example, a design firm specified wood-look tile for the floors of guest rooms at a boutique hotel in Texas, but also specified carpet to be installed under the beds,” noted Lindsey Waldrep, vice president, marketing, Crossville. “Guests get the comfort of carpet right by the bed, yet the rest of the room is covered in easy-to-clean, rarely-needs-replacing tile that will let hotel staff turn rooms much more quickly and in a cleaner fashion.”

Similar to hospitality, the influx of new construction work and remodeling are impacting the retail segment. The sector is a mixed bag, with end uses ranging from small, mom-and-pop grocery stores to larger restaurants, retail chains and other establishments. “Car dealerships and fitness centers, both considered retail spaces at Dal-Tile, as well as quick-service restaurants, are areas of growth that are positively impacting the tile market,” Dal-Tile’s Mattioli said.

Screen Shot 2017-06-09 at 10.36.45 AMRetail is usually at the forefront of design trends as end users are always on the lookout for trendy, attractive options. “A new and different approach to hard surface designs wins in this highly competitive segment,” Mannington’s Boulogne said. “Abstract visuals are gaining share as are new and different looks.”

At the same time, the high amounts of foot traffic at retail locations require floors that perform well and look good over the long term. Ceramic, wood and carpet are often specified in high end spaces while resilient, VCT and rubber flooring are found in other public areas. “LVT is taking market share from both tile and broadloom sales because of design trends and ease of maintenance,” Mohawk’s Gallman observed.

Meanwhile, in the education segment, LVT is the rising star. Resilient accounts for an estimated half of the flooring specified in this sector, industry research shows. But other products, such as linoleum and rubber, retain a small niche as they provide both visual and functional qualities that appeal to staff, students and parents. “We are constantly improving the visuals as well as the depth and breadth of the product offering, particularly modular options, that enhance the capabilities of the product line,” Forbo’s Darragh said.

Ongoing innovations
Manufacturers of commercial flooring products are continually making investments to meet the varying needs of commercial customers. Designers are creating people-centric spaces for clients which, in part, helps enhance the work-life balance. “That’s why we’re seeing residential and hospitality influences in workplace design,” said Mark Page, senior director creative design and development, Mohawk. “With flooring, designers aim to strike a balance between hard and soft surfaces for work, rest and social activity.”

Soft surface innovation is taking place mostly in design, with new tufting technologies allowing for complex patterns and textures in carpet tile previously only available in broadloom. “It allows the use of more color, patterning capabilities and pinpoint accuracy,” Bentley’s Grogan said. “It has allowed all manufacturers to get lower face weights, which helps with budgets.”

LVT’s good looks have helped propel it to the forefront in many commercial segments. “In addition, the ongoing preference for designing commercial spaces to look more residential in nature has brought popular, proven hard surface products into the commercial arena,” Armstrong’s Block said.

With respect to tile, advances in digital printing technologies have enabled vendors to create realistic 3D visuals that mimic natural materials. “The bar is raised like never before,” Crossville’s Waldrep said. “Convincing wood looks, unique decorative facings, textures, more modular sizes, even porcelain tile panels so versatile they can be installed in ways traditional tile never could.”

Many tile production facilities feature printers that can digitally apply different gloss levels of glaze, metallic and even texture. “When coupled with sophisticated 3D scanners, this means highlights and shadows can actually be printed in line with the physical structure of the tile’s face to enhance the look of even subtly textured surfaces,” noted Ryan Fasan, technical consultant, Tile of Spain. Technology advances are also expanding tile formats, allowing vendors to create everything from beautiful mosaics in hexagon and rectangular shapes to massive porcelain slab sizes.

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Mohawk Group captures prestigious awards, accolades at NeoCon

unnamedChicago—Mohawk Group received several prestigious design awards and other accolades at NeoCon 2016. Held annually in at the Merchandise Mart here, NeoCon is the largest trade show for interior design professionals in North America.

At the annual event, Mohawk Group presented new product collections and customer experiences by expanding boundaries and taking flooring to a new level of design versatility. The company’s Expand Your Boundaries theme was revealed through a broadened line of product options and a completely renovated showroom (Merchandise Mart space 3-377) designed by Innocad. The packed showroom was abuzz with an overwhelmingly positive response to the new products from the A&D community.

For the third consecutive year, Interior Design magazine conducted the HiP (Honoring Industry People + Product) Awards to recognize individuals and product solutions in the design industry. HiP people were selected by a distinguished juried panel while product winners were selected by popular vote online. According to Interior Design magazine, more than 15,000 people voted in the competition. Royce Epstein, Mohawk’s director of design segment, captured the Rising Star, Manufacturer HiP Award, while Geometry took top HiP honors in the education/government/institutional flooring category. Mike Gallman, Mohawk’s vice president of product management, was an honoree in the HiP Leader, Manufacturer category. Serenity Carpet Tile, Onyx Definity by Durkan, Grown Up and Topography were also recognized as HiP Award honorees. Mohawk’s Topography also earned the Best of NeoCon Product Innovation Award. Sponsored by Contract magazine, the Best of NeoCon Awards is an annual juried competition for new products that reflect the greatest in design excellence and innovation.

Other accolades included a #MetropolisLikes honor, given to Moonscapes by the editors of Metropolis magazine. Moonscapes was created by the Mohawk Design Studio in conjunction with Austrian firm 13&9. The social media-based award program recognizes emerging design trends and innovation at design industry events such as NeoCon.

Finally, Mohawk Group is proud to announce Buildings has selected Serenity carpet tile as a 2016 Product Innovations Merit Award winner. Serenity was evaluated by the Buildings editorial staff for innovation and sustainability features that it offers to building owners and facility managers.

For more details on Mohawk Group’s presence at NeoCon 2016, visit the company’s interactive microsite at neocon.mohawkgroup.com.

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Tarkett recognized at NeoCon 2016

A selection from Collections Infinies, winner of NeoCon Gold.
A selection from Collections Infinies, which won NeoCon Gold.

Solon, OhioTarkett has been recognized at this year’s NeoCon with four prestigious Best of NeoCon awards, two Metropolis Likes, one HiP Winner and four HiP Honoree awards for its innovative product introduction.

“This year at NeoCon, we were astounded by the quality of design and product innovation across the industry,” said Jonathan Klinger, chief marketing officer for Tarkett North America. “To be recognized among these industry leaders is truly an honor.”

Tarkett products from both hard and soft surface categories were recognized amongst a record-breaking number of entries in Contract magazine’s prestigious Best of NeoCon Awards. Open Archive by Tandus Centiva received the Contract Best of NeoCon Gold award in the Carpet – Broadloom category for OverStitch and Moquette. Tarkett’s world premiere of digitally printed LVT, Collections Infinies, won Best of NeoCon Gold in the Flooring – Hard Surface category. Two of only ten industry-wide Innovation Awards were received by Tarkett for Open Archive Modular: Cache Tweed and GeoKnit by Tandus Centiva and Mesto Configurations by Johnsonite.

Tarkett’s Collections Infinies was also a standout with Interior Design’s HiP Awards, winning the Workplace Flooring – Hard Surface category. The company received HiP Honoree Awards for iQ One in the Health & Wellness Flooring category; Tandus Centiva’s MetalEdge Trim in the Accessories category; Jhane Barnes’ LightSpeed and Velocity for Education Flooring; and Open Archive Broadloom: OverStitch and Moquette in the Hospitality Flooring category.

Metropolis Likes honored Tarkett for iQ One and Tandus Centiva’s Open Archive collection.

“It’s an exciting time at Tarkett for the introduction of Collections Infinies,” said Chris Stulpin, senior vice president of design for Tarkett North America. “We are offering a flooring solution unlike anything else on the market. To be recognized at such a prestigious industry event speaks volumes of the hard work and collaboration that went into making this collection a reality.”

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Metroflor's Aspecta earns NSF/ANSI 332 certification

Screen Shot 2016-06-13 at 9.22.49 AMNorwalk, Conn.—Following on the heels of the first-ever Platinum NSF/ANSI 332 sustainability assessment certification in resilient flooring for its Aspecta Five contract LVT range, Metroflor’s dedication to sustainability and product certification has been reinforced with both Aspecta One and Aspecta Ten achieving the Gold level.

Under this widely recognized industry standard, resilient flooring products are evaluated for environmental performance and sustainability attributes in five key areas: product design, manufacturing, long-term value, corporate governance and innovation. Performance is scored on a 100-point scale.

“As a company, sustainability is a core part of how we do business, and we are continually improving our environmental performance and social responsibility,” said Corey Carter, director of safety and sustainability for Metroflor. “These new certifications reflect our unwavering commitment to sustainability in both the products we produce and our corporate practices.”

A global LVT brand developed by Metroflor, Aspecta was developed based on consultation with architects, designers and contractors to outperform current market offerings from an aesthetic as well as practical perspective. The new Aspecta Ten will be launched at NeoCon in Chicago this week while Aspecta One will be previewed at the show.

For further information about Aspecta, visit www.aspectaflooring.com.

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Contract: State of the industry

Carpet tile, lvt are the sector’s shining stars

May 23/30, 2016; Volume 30, Number 24

By K.J. Quinn

Screen Shot 2016-06-03 at 3.49.50 PMIf the flooring industry were a motion picture, the commercial market is starring in two major box office attractions and features a supporting cast that plays a key role in its success. Carpet tile and LVT are the headliners reportedly capturing the attention of the A&D community and replacing broadloom and other hard surfaces in major end-use sectors, observers report.

“LVT is a great solution for many applications in commercial spaces,” noted Marlene Manzella, account executive, flooring specialist, A&D consultant, at Consolidated Carpet, a New York-based flooring contractor. “The durability and resilience of the product makes it a suitable choice as an easily maintainable option that is flexible in design and price point yet still can perform in tough, high-traffic environments.”

Through the first two quarters of 2016 flooring maintained the 3% to 5% growth rate experienced last year, according to industry analysts. While specified contract represents the lion’s share of sales—an estimated 80%—Main Street commercial is expected to increase as more local businesses and retail chains carry out capital investments and renovation plans.

Looking beyond the numbers, key economic indicators such as inflation, consumer confidence, lending rates and the new construction market are positively affecting demand. Meanwhile, on the product front, concerns over sustainability have been greatly reduced—or exaggerated—depending on the different perspectives. “There is certainly a whole push toward transparency,” said Jeff Krejsa, senior vice president, Tarkett North America. “I think the resilient category has been more forthcoming and comfortable in talking about that because of the number of changes made in the development of these products.”Flooring producers have put effort into providing evidence their products not only contain environmentally friendly materials but also comply with LEED requirements. Similar to a nutrition label, environmental and health data are provided for each flooring type, so product claims are transparent and verifiable. Tools such as Environmental Product Declarations (EPD), Health Product Declarations (HPD), Declare labels and the Cradle-to-Cradle Certified Product standard are the primary certifications or tools listed as requirements for commercial projects. “Although it requires extensive commitment and investment, the Cradle to Cradle Certified standard ensures a product meets stringent certification criteria and is continually evaluated and optimized to meet or exceed future sustainable requirements,” noted John Stephens, vice president of marketing at Shaw Contract Group.

Taking it one step further, manufacturers have invested millions of dollars to upgrade their production facilities to minimize their environmental footprint. “All of our products are certified climate neutral and are over 50% bio-based or recycled-content based,” said Chip DeGrace, executive creative director, Interface. “Our products are also certified with EPDs, HPDs, NSF sustainable Assessment for Carpet and CRI Green Label Plus.”

 

What’s trending

Screen Shot 2016-06-03 at 3.49.42 PMFlooring companies report making additional investments to develop better performing and higher styled products that meet the varying needs of commercial customers. For example, ceramic tile producers increased usage of cutting-edge digital printing technologies, expanding the spectrum of colors and realistic graphics that can be achieved on surfaces. “These technologies allow us to leverage different types of glazes, resulting in unique and appealing visual combinations, such as concrete, veining and metallic [tones], as well as textured highs and lows in graphics or subtle patterns,” said Danielle Hunsicker, general manager, commercial and national account sales, Dal-Tile.

End users apparently like what they see, as ceramic is the largest hard surface category accounting for approximately 40% of commercial flooring sales, with most business coming from specified contract, according industry estimates. The most popular designs for commercial spaces are large-format wall and floor tile, wood-look planks and intricate mosaics. “From really convincing natural looks to porcelain tile panels, which many refer to as ‘thin tile,’ we now provide surfacing solutions that go beyond just floor and wall tile,” noted Mark Shannon, executive vice president of sales, Crossville. “There’s opportunity to take the tile category further by competing against—and earning specifications over—traditional slab, sheet and panel products.”Quality visuals, high-performance and sustainable attributes are among the major selling points for commercial broadloom and carpet tile, which are running neck and neck in volume, observers note. A similar scenario is playing out in resilient, where LVT and vinyl composition tile (VCT) sales are fairly close, although VCT is rapidly losing share to LVT. The entry of major mills such as Mohawk and, later this year, Interface, into LVT is expected to not only create more flooring choices but also increase awareness within the A&D community.

LVT’s increasing popularity and value proposition have a direct impact on hard surfaces utilized in niche applications, such as laminate, as luxury vinyl is considered a more durable flooring option. Still, there remains a place for workhorse products like rubber, linoleum and VCT, which have carved out a space in healthcare and educational settings. “The different sizes of LVT, VCT and rubber give designers more options and enable them to create unique environments and wayfinding within a space,” Krejsa explained. Hardwood and laminate combine to represent about 5% of hard surface commercial sales, although wood accounts for nearly twice as much revenue and offers significantly higher value and performance.

 

Changing market dynamics

Screen Shot 2016-06-03 at 3.37.05 PMWhile carpet tile and LVT remain the fastest growing commercial floor categories, they are not the ideal solutions for every commercial space. The dynamics of the major commercial sectors are ever changing and end-user design preferences continue to evolve. “This year, there has not been a significant difference in sector performance for the first five months,” Shaw’s Stephens said. “Hospitality and healthcare are still robust; the office sector may be slightly stronger.”

Corporate remains the largest commercial sector for flooring. Following a slow start this year, the market is beginning to grow as evidenced by an uptick in new office construction and renovations from landlord dollars. “The office market slowed down in the early third and fourth quarters last year,” said Jay Gould, president and COO, Interface. “Now we’re seeing the beginning of that turnaround in offices.”

While carpet tile is the dominant flooring solution in the workplace, broadloom remains coveted for its acoustical properties, durability and providing comfort underfoot. Yet hard surfaces such as resilient, hardwood, porcelain tile and even polished concrete are gaining traction within certain parts of the office, industry experts said. These products are utilized for their durability in high-traffic areas and diversity of design and color options.

“Tile demand in the commercial market is spurred by office construction and an increased use of tile as a low-maintenance and sustainable flooring option,” Dal-Tile’s Hunsicker said.

Healthcare maintains a broad flooring need as it is spread across assisted-living facilities, hospitals and clinics as well as medical office buildings. Facility managers are said to be striving to create an atmosphere that’s more home-like or similar to high-end hospitality settings. “These types of design choices allow patients to feel more comfortable and out of the mindset of a clinical environment,” she explained. “Also driving growth in this category is the increasing development of extended stay rooms.”

Resilient, rubber, LVT and linoleum are valued in healthcare applications for their durability and easy maintenance in addition to their hygienic and slip-resistant attributes. Carpet and LVT are primarily specified for non-patient areas like waiting rooms and medical offices. “Sheet goods are still being used in operating and emergency rooms where you want a product that doesn’t have a lot of seams,” Tarkett’s Krejsa noted.

Education remains a mixed bag for commercial flooring as college campuses encompass a wide range of applications—such as dormitories, athletic facilities and classrooms—while K to 12 settings are more utilitarian by nature. Plus, each segment faces its own set of issues impacting specifications. For example, as the economy gets better, state governments and counties are reportedly making more funds available for renovation of public schools. “That seasonability really picks up in late May and June,” Interface’s Gould said. “We’re starting to see good work orders come in.”

Carpet tile is finding expanded usage into classrooms and administrative offices, while VCT is prominently utilized in lower education as it serves as a low-cost solution. “There is still a lot of carpet tile and broadloom being used,” observed Mike Gallman, senior vice president of product management, Mohawk Group.

By comparison, private schools can afford to be more selective as they do not face the same spending restrictions enforced by tighter state budgets. That being said, design trends in higher education tend to emulate corporate and hospitality environments. “Schools have become more competitive and use space as a marketing tool,” Krejsa said. “So they do spend more in higher finishes.”

Retail stores are also looking for attractive, functional floors that can last for years. The segment is fairly fragmented, ranging from mom-and-pop shops and grocery stores to restaurants, retail chains and other establishments. These projects are largely governed by aesthetics and branding, which give designers more latitude and a greater selection of product choices. “We are seeing growth specifically in the Class A retail space, where tile and stone are serving as a premium finish,” Hunsicker noted.

Overall, ceramic, wood and carpet are often specified in high-end spaces—especially inside major retail chains—while resilient, VCT and rubber flooring are recommended for other public spaces. Retailers who specify carpet are doing so largely because of its value proposition, including sound-deadening and low-maintenance qualities. “More and more retail [applications] are using hard surfaces,” said Ralph Grogan, president and CEO, Bentley. “As more retail moves toward hard surfaces, we’re seeing some successes with area rugs there.”

There is an increasing blend of soft and hard surfaces specified in hospitality spaces as well as hotels attempt to incorporate residential design with high performing and easily maintained products that stand up to heavy traffic demands. With a wealth of selections from which to choose, designers find combining both types of flooring creates practical solutions for building owners. “The hospitality sector has led in all categories in terms of commercial sales growth,” Hunsicker said. “Within the category, we’ve seen the demand for value-priced products has remained strong and will likely continue into next year.”

Hospitality is among the faster growing segments as an improving economy is helping drive business and leisure travel back to pre-recession levels. As such, mid-range and upscale hotel brands have many projects in the pipeline, according to published reports. “We love hospitality as an opportunity,” Interface’s Gould said. “Globally, the hospitality segment still purchases $1.3 billion worth of broadloom carpet and we’re seeing massive growth in that segment now.”

While broadloom remains the preferred flooring for guest rooms, hallways and certain public areas due largely to its luxurious look and feel, other solutions are under consideration, experts said. Vendors report an increasing number of major hotel chains using hard surfaces as an alternative to carpet. “Motel 6, for example, is going to use LVT in almost all guest rooms,” Shaw’s Stephens noted.

Designers report seeing a rise in usage of natural and reclaimed materials in hospitality spaces, as well. Many commercial customers are moving toward using more texture in their flooring and away from pattern, which spells good news for manufacturers of both products. “Carpet tile continues to make inroads in that market, both in guest rooms and public spaces,” Mohawk’s Gallman said. “LVT and carpet tile are both growing in that market at the expense of broadloom.”

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Contract State of the Industry: Market improving, albeit with some rough patches

May 26/June 2, 2014; Volume 27/Number 28

By Ken Ryan

Screen Shot 2014-06-17 at 11.41.16 AMThe contract/specified market continues to shake off the effects of the recession as it returns to a more favorable pattern of slow, steady growth. Flooring executives who estimated last year’s growth in the low single digits expect 2014 to surpass 2013 levels, despite a terrible winter that hindered first-quarter activity for much of the country.

Many commercial projects that were on hold—some for several years—are now being released as a better economic picture, coupled with pent-up demand, stirs the market.

“We see the state of the contract market improving,” said Ralph Grogan, chief executive officer, Bentley Mills.

Michel Vermette, senior vice president of commercial and international business for Mohawk Industries, said those commercial customers that did not want to spend major dollars during the downturn suddenly have to compete for talent and customers, and have to present the right image. “They have to update their spaces to be relevant. Three years ago everyone was holding back.”

Still, others are more cautious about what they are predicting for the market. “Some corporations will spend money but they will tighten their budgets,” said Harold Chapman, president and CEO of Bonitz Flooring Group. “We had a good backlog going into 2013, but 2014 is a little different. Our backlog is not quite as strong and the first quarter was really slow. However, I do see the third and fourth quarters as having the potential to be very good.”

Jack Ganley, president, Mannington Commercial, added, “Economic conditions remain relatively uncertain and we see some hesitation to release capital for large projects. However, like last year, we are seeing growth in the commercial market—albeit at a slower rate than anticipated.”

Most executives told FCNews that government spending is still lagging behind on both the state and federal levels. However, the corporate market and higher education that is privately funded are among the sectors thriving.

“It is very much a tale of two cities contrasting commercial vs. institutional,” said Dominic Rice, who on May 15 assumed manufacturing responsibility for North American commercial resilient products at Armstrong.

Growth segments

Bill Blackstock, regional vice president of sales in the Americas for Milliken’s global floor covering division, said a variety of factors have influenced the contract market, including the desire for end users to stay current, recruit top talent and remain competitive. “Workplaces see the value in creating a uniquely designed space that reflects their brand and corporate culture,” he noted.

Vermette said Fortune 500 companies in particular are looking for expertise, reliability, simplicity, and, most important, they are looking for a solution—not just a product. “It’s about who can hit the mark best for some of them, but more of them are looking for one go-to [supplier],” he explained. “One solution is to make their lives easier. Our approach has been resonating with them. They know they will get great value, great service; they know we can make the process easier. You have major end users that have 20 million square feet. They have projects going all the time. They get done quicker, get done with a common standard everyone is happy with, and get done more cost effectively. They also have a level of trust, a credible partner that can resolve an issue quickly and efficiently. And they don’t have to explain what they are trying to do every time. They know performance, sustainability and price point standards.”

In the hospitality sector, a brighter job picture, improved consumer confidence and a general desire to travel more have boosted the hospitality sector for both recreational and business travel, executives said. “Hospitality is in a significant state of rebound, and seems to be the top growing segment for the industry,” Blackstock said. “Our hospitality clients want to remain competitive. They’ve placed a priority on keeping their spaces updated, relevant, and welcoming to visitors, guests and employees.”

Peter Greene, vice president of marketing at Interface, also said hospitality has rebounded strongly since the recession. “There is plenty of pent-up demand, with a lot of conversion opportunities. Hospitality is showing very strong activity right now.”

The retail segment has also benefited from the improving economic climate; business owners that had tabled projects are now putting them on the front burner. The majority of the work is renovations and expansions.

For education, while state-funded programs continue to be constrained to some degree, the pace of activity at the university level—especially higher-end private institutions with large endowments—is picking up. “Higher education institutions are competing with one another to attract top-tier students, and space is a key component in how they differentiate themselves,” Blackstock explained.

Some executives said the healthcare segment came out of the downturn better than any other, as an aging population is creating a need for care facilities. However, the uncertainty of the Affordable Care Act and how it will impact capital expenditures has held down activity. Rice noted that there is a degree of caution around significant investment until there is better understanding of “what this is going to look like.”

Chapman noted that he has seen cuts to healthcare projects recently. “The budgets are not what they were in the past and the only work that will be done is out of necessity. Again, work will be out there but within smaller or tighter budgets. The uncertainty in how Obamacare is going to shake out has facilities managers in an indecision mode as well.”

Overall, 2014 is shaping up to be stronger than 2013, with the expectation of a fairly robust second half. Rob Cushman, vice president of marketing at Beaulieu Commercial, said that while the harsh weather in January and February constricted activity, the market has since rebounded. “We are seeing a lot of activity right now,” he said. “It feels like it is picking up all over, every segment.”

Rice said a return to “more normal growth” might not be realized until 2015 and 2016. “It is simply a matter of timing. Companies deciding to do work now have to go through the process of finding designers, specifiers … the flooring part comes in later.”

Product trends

To no one’s surprise, LVT and modular carpet are the products most likely to be specified for commercial projects. However, higher-end broadloom “seems to have gained some momentum,” Chapman said, “especially with companies like Bentley and Atlas.”

He praised several other companies and products, including Tandus Centiva, which Chapman said “is doing a very good job with styling and performance backings. LVT continues to gain some market share and more companies are introducing new products in this category. The 28 mil products are the ones performing the best. FloorFolio and Tandus Centiva seem to be leading the way here. Hard surface continues to gain momentum and more people are going to hard tile, in some cases over carpet.”