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Hardwood: Exotics still have their place in the market

February 29/March 7, 2016; Volume 30, Number 18

By Reginald Tucker

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The vibrant colors, unique grain characteristics and unusual markings found in many “tropical” exotic hardwood floors are not only visually striking, but from a performance perspective these rare floors rank amongst the hardest, most dense species known to man. And although they are typically priced above comparably constructed products made in America, they are still within the reach of many consumers. So why is it that tropical exotic woods—which seemed poised to seize a bigger share of the U.S. hardwood flooring market just 10 to 15 years ago—appear to now be ceding more ground to homegrown species, particularly “domestic” exotics?

“[Tropical] exotics have definitely lost a little bit of steam lately,” s
aid Jeff Krekelberg, president of Gold River Flooring, a three-store chain based in Rancho Cordova, Calif. “When they first came out they were oversold to the consumer and this left somewhat of a black eye on the market.”

By “oversold” Krekelberg means many marketers hyped the purported superior scratch resistance qualities of some species. On top of that, he said consumers and retailers alike actually understood very little about how exotics behave. “People said, ‘OK, I want Tigerwood, Brazilian cherry, etc.’ But a lot of people didn’t realize when they bought an exotic floor that the color changes when exposed to sunlight. So when the homeowner moved the furniture or an area rug, they would notice the color of the floor was lighter than the areas that were previously exposed. That [pulled] a lot of the referral business away from exotics.”

Changes in the overall economy also impacted sales of exotic hardwood floors, according to industry executives. During the heyday for exotics in America (roughly 10 to 12 years ago), there was a solid supply chain in place and imScreen Shot 2016-03-10 at 10.29.06 AMporters were very aggressive with their pricing. But the economic crash in 2008 had a chilling effect on the exotic market. “Customers started buying less product in the wood business,” said Dick Quinlan, senior director of hardwood products for Mohawk/Unilin. “The crash changed the market significantly.”
At the same time, Quinlan noted, the Lacey Act was coming into play. This put additional pressure on exotic hardwood importers and marketers who were now charged with the responsibility of ensuring that their suppliers and agents across the chain complied with new regulations pertaining to sourcing.

Bill Schollmeyer, CEO of Johnson Hardwood Floors, believes two factors conspired to put a damper on exotic sales: a steep increase in prices about two and a half years ago along with a seismic change in consumer tastes. “The color trends shifted from reds to browns, and wider widths became much more popular,” he explained. “Exotics became too expensive versus domestic species and, for the most part, their colors and widths weren’t in sync with the trends. But I’m sure at some point they’ll come back into style.”

Other industry observers also attribute the move away from tropical exotics to changes in consumer preferences. “Exotics were the hottest thing in the market 10 years ago, but it has shifted toward styles like European oaks,” said Doug Leigh, vice president of Triangulo Hardwoods’ U.S. division. “Market conditions and trends can change very quickly in our industry.”

In particular, the trend toward more rustic looks—an aesthetic not usually associated with exotics—is playing a critical role in the shift. “Exotics tend to have a smoother texture and they typically feature higher gloss levels,” said John Himes, president and CEO of Wood Flooring International. “This has made the market for those floors much smaller than it had been, say, 10 or 15 years ago. And with so much migration to texture, scrapes, wire-brushes and larger bevels across the country, more and more people are going to the rustic products.”

Screen Shot 2016-03-10 at 10.28.58 AMJosh McGrane, president and COO of Max Woods, concurs. “The consumer is now shopping for that matte finish that looks like a reclaimed floor or the appearance of an oil finish,” he said, citing species such as white oak and American hickory—both hot sellers in the Max Woods lineup. “She wants a wider and longer board for her home.”

Still, executives like Leigh and Himes believe exotics have their place in the market, the thought process being the more variety for the consumer, the better. “A great showroom is not complete without a sustainably harvested exotic program,” Leigh said. “The exotics category has established itself as a must-have.”

Himes added that while the tropical exotic category does not represent as significant a component of his company’s business compared to six or seven years ago, Wood Flooring International cites strong interest in species such as Brazilian cherry and acacia, especially solids. “Exotics perform well and they look great, but in general the U.S. trend has been toward more texture and a little more rustic whereas the exotics were always a little more formal,” he explained. “Nowadays it’s a much more specialized/ regionalized approach when it comes to exotics.”

One region that still seems to be particularly hot for exotics right now is the Southeast, namely Florida. In the Tampa area especially, dealers are seeing quite a bit of exotic activity in high-rise residential settings as well as luxury new home construction projects. “Some of the popular species we’re putting in homes these days are chocolate pecan, amendoim, tigerwood and Brazilian cherry,” said Pat Adipietro, president of the insurance and builder & commercial sales division of NAFFCO, which also operates three retail stores in the region. “On average these are homes that range anywhere from $750,000 all the way up to $5 million.”

Adipietro, who specifies the Triangulo brand exclusively when working with exotics, admits the trend toward 7- and 8-inch “European” hardwood is slowly encroaching on exotics’ turf. But he’s hopeful that some new products that are currently in development from the Brazilian supplier will help the category take back share. (Triangulo confirmed plans to launch several products ranging from 7 to 9¼ inches wide and 7 feet long as well as a few “specialty” items featuring interesting stains and colors.)

Some executives believe—ironically—that the key to helping tropical exotics take back share is to downplay the fact they are exotics in the first place. “As a distributor, we are actually not trying to pigeonhole the exotics into a separate category,” said Steve Rosenthal, senior vice president of sales and marketing for No. 4-ranked distributor All-Tile, which counts the IndusParquet brand among its four hardwood lines. “Right now exotic isn’t a sexy word to the consumer; it might turn some people off who are misinformed about how the forests are managed. That is, unless it’s a product the consumer really wants. We believe wood is wood, and you open yourself up to a larger customer base if you market it that way.”

Domestic exotics emerge

Meanwhile, demand for homegrown exotic species such as hickory, birch, walnut and maple has been skyrocketing in recent years. Retailers credit the overall trend toward traditional, timeworn looks in home decor, which dovetails nicely with the wide-width, hand-scraped format that’s so popular today.

“We’re not seeing a lot of movement in exotics in our area, but we are definitely seeing strong demand for hickory,” said Gary Cissell, president of Mill Creek Carpet & Tile, Flooring & Granite in Tulsa, Okla. “The barnyard looks in particular seem to be very popular.”

In response to the shift, many hardwood flooring manufacturers have adjusted their product mixes accordingly. It’s not that they are eschewing tropical exotics altogether; they are putting more of the emphasis on domestic species (FCNews, Feb. 1/8). “We do have some exotics in our line, such as Brazilian cherry, but we really don’t promote them heavily because consumers are moving away from the red tones,” said Brian Greenwell, vice president of sales and marketing for Mullican. “But we are seeing a growing interest in hickory and walnut, and our latest introductions reflect that.”

Other suppliers are responding accordingly. At Mohawk, for example, the focus is on introductions that highlight maple and hickory (i.e., the Rockford Collection) as well as walnut looks in an engineered format (satin walnut from the American Designer series). The company is also developing innovative products featuring a fiber core. “The new core actually makes the surface harder so we are able to bring in some new visuals and some dynamite looking colors and styles,” Quinlan said. “This has allowed us to introduce some new species that have more of a tropical look but are domestically grown and produced.”

For its part, Max Woods has focused its new product development on 7½-inch-wide, 8-foot-long planks. “We wanted to give our retailers a look that the consumer wants and sees in the magazines and on TV,” McCrane explained.

Not to be outdone, Shaw is also eyeing the exotics business in response to consumer demand (FCNews, Jan. 18/25). “Shaw has been working on developing a new exotic hardwood program,” said Natalie Cady, hardwood category manager. “We are looking forward to unveiling the full collection soon.”

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Wood: Exotics – Latest looks, styles in changing market

January 5/12, 2015; Volume 28/Number 14

 By Ken Ryan

Screen Shot 2015-01-16 at 12.38.07 PMClearly the entire market for exotics has changed. It is not forgotten, but it is just not the hot category it was a decade ago. Distributors no longer go wide and deep with their inventory, preferring to carry one or two lines that have been successful. “What the market has come down to is minimizing merchandising and turning those boards

as fast as you

can,” said Bruce Hammer, sales manager at Elof Hansson, which boasts an inventory of roughly 80% exotics.

In 2008, Congress passed the Lacey Act, prohibiting the import of illegally harvested wood and wood products into the United States. This legislation set a precedent for the global trade in wood flooring and other wood-related products, ensuring that only legally logged timber for flooring is sold into the United States.

The emergence of Lacey prompted some players to leave the Brazilian market. For companies like IndusParquet, which sources its products from Brazil, this market shift was welcome news. For starters, IndusParquet does not face illegal logging issues in Brazil because of the way it harvests from managed forests; second, the thinning of the herd has allowed it to take market share.

But the company did more than just sit back, according to Jason Strong, vice president of marketing and sales. “We don’t look at ourselves as just an exotics company,” he said. “We bring today’s fashion trends from Brazil into the U.S. market.”

Those trends include soft rustics and wide planks up to 8 feet long. Several of these products were on display at the NAFCD show in November, including Dolce pecan. This best seller features a ½-inch wear layer with a 6¼-inch-wide by 8-foot-long plank. The company sells the offering to distributors for just under $4 per square foot.

In addition, Indus-Parquet is adding a gray stain—gray being one of the trendiest colors—to its Brazilian pecan collection. “We’re taking our species and putting our spin on it,” Strong said.

IndusParquet products are now distributed in every U.S. state. The last region to be filled was the Northwest; Cascade Pacific, a Denver Hardwood company, agreed to carry the exotics line in 2014. The companies forged the deal at Surfaces.

“I have to give credit to Enos Farnsworth,” Strong said of the Denver Hardwood president. “Enos was the one who drove this process, who helped us get coverage in the Northwest.”

Farnsworth said he looked at all the exotics and believed IndusParquet was the clear leader. “We’re going to have a good partnership.”

Distributors were also interested in Elof Hansson exotics during the NAFCD show. Of particular interest is acacia, its leading exotic out of Asia. It sells for $1 to $2 less a square foot than most South American exotics and has been a winner for distributors, Hammer said.

Elof Hansson sources about 85% of its exotics from Brazil, with Bolivia and Peru making up the rest.

Industry wide, Brazilian cherry remains the leading South American exotic. Santos mahogany, another popular species, is said to be in short supply, at least in Peru where Chinese companies have been buying up vast quantities, flooring executives explained.

Out of Africa

Screen Shot 2015-01-16 at 12.38.20 PMArk Floors’ most recent exotics introductions include unique African species such as doussie, padauk, tali, amberwood and African mahogany, which all make up Ark’s Wild Coast collection. “There are a lot of unique species from that region that are durable, stunning and work well over radiant heat, yet for some reason we don’t see a lot of them in the marketplace,” said Laurie Sanfilippo, marketing manager.

Sanfilippo is one who believes enforcement of the Lacey Act and other green standards is postitive, as it has forced exotics marketers to raise their quality standards or face the consequences. “As consumers everywhere become more concerned with the back story of the products they purchase, manufacturers need to respond in order to remain viable. This can only benefit the industry as a whole. For Ark, these regulations have not changed our mindset, as responsible forestry is something that our factory has always been concerned with.”

Despite sourcing 85% of its products from South America, Elof Hansson can lay claim to a U.S. story as well—virtually all of its exotics are finished at a facility in North Carolina. The U.S. connection can be a big deal, Hammer learned, when a customer who was purchasing 4,600 square feet of tigerwood insisted on personally visiting the North Carolina facility to ensure the finishing was done on U.S. soil. “Ninety-eight percent of what we finish is done here in the states,” Hammer said. “It’s more to manage but I like the control it gives us along with the flexibility and recourse to have the raw materials here.”

For Mirage, exotics make up a very small percentage of its hardwood flooring portfolio, but it serves a niche market. The company sources Santos mahogany from Brazil and sapele from Africa. “We like the business we have in exotics, but it’s not the fastest growing part of our business by any imagination,” said Chris Thompson, vice president of sales and marketing at Boa-Franc, makers of the Mirage brand. “I think the consumer demand has lessened; the demand isn’t like what it was a few years ago. A lot of that is due to styling and color. Red—which can be found in Brazilian cherry and other exotics species—has fallen out of favor.”

Still, for those who rely on tropical exotics as their main hardwood flooring line, there are plenty of opportunities waiting to be grabbed.

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Improving economy gives hope

by Matthew Spieler

While every flooring category has been hit hard by the recession, perhaps none more so than wood—in the five years following its high water mark in 2006, the segment is down 40%. So it should come as no surprise as the economy shows signs of steady improvement manufacturers feel the slide is finally over. Continue reading Improving economy gives hope