May 28/June 4, 2018: Volume 33, Issue 25
By K.J. Quinn
In many ways the commercial contractor flooring market is like an onion—as you delve into each sector, one layer at a time, you start uncovering macro issues impacting flooring choices that go beyond traditional metrics. Sustainability, wellness principles and environmental impacts are among the major factors affecting facility design across the board, experts say.
“Manufacturers have increased focus on the impacts of their products on occupant well-being and productivity, offering a wider range of aesthetic and functional solutions to deliver against the requests of designers’ clients,” said Matthew Miller, president, Interface Americas.
Industry projections indicate the commercial market is on pace to experience similar growth as last year, with some segments faring much better than others. To put it in perspective, soft surfaces generated an estimated $3.6 to $4 billion in sales and upwards of 300 million square yards last year, according to industry estimates. Carpet tile claimed approximately 50% of volume and 60% of the value over broadloom—increases of 9% and 10%, respectively, over 2016.
Many trends that impacted commercial segments last year are carrying over into 2018. “I think the market for carpet will continue to lose share to hard surfaces,” said Brenda Knowles, vice president of marketing for Shaw Industries’ commercial business. “We’ll continue to see an emphasis on product design across all segments and more offerings that combine soft and hard surfaces.”
Nonetheless, there is still a good amount of broadloom being sold into commercial spaces, especially in sectors that demand a luxurious look and feel underfoot. “We still see some higher-end broadloom sold to the hospitality, legal and financial services sectors,” observed Richard French, vice president of sales, Bentley Mills. “At the high end of the spectrum, carpet tile is still not able to meet aesthetic needs.”
Hard surface seizes share
The market size for hard surfaces is nearly as much as carpet, estimated at $3.7 billion in sales. But that’s where the similarities end. Sales and volume grew by double digits, led by ceramic tile and stone ($1.45 million in 2017 sales), rubber ($650 million) and luxury vinyl tile ($600 million), according to industry estimates.
LVT is the fastest growing sector, with sales rising by double digits and usage expanding across all segments. “Hard surface growth in the commercial segment is being driven by LVT and ceramic,” Jeff Fenwick, president and COO, Tarkett North America, told FCNews. “LVT is showing up in more commercial spaces and design features of ceramic are taking it out of the ‘back of the house’ and letting it be utilized in other spaces.”
VCT, estimated at $250 million in 2017 sales, and sheet goods, which generated about $300 million, remain viable options. Healthcare and education, long strongholds of the sector, are reportedly losing market share. Hardwood, laminate flooring and linoleum are being specified for certain niches, although each category accounts for only a small percentage (less than 5% apiece) of the overall commercial market, statistics show. “For people who want that visual a little different and want to make more of a statement than a neutral gray floor, then linoleum is your answer,” said Denis Darragh, vice president, North America, Forbo Flooring.
While LVT dominates the headlines, one category maintaining steady growth is ceramic. While it’s difficult to determine sales and volume due to fragmented distribution channels, anecdotal research indicates tile commands approximately 15% of total commercial flooring sales and volume, with specified contract accounting for about 70% of the business. Growth rates are projected to mirror last year, when the category grew an estimated 6% in sales and 5% in square footage.
End-use activity
There are diverse applications for flooring within the five major sectors of the commercial business, the majority of which (an estimated 70% to 75%) is specified contract and the remainder Main Street commercial applications. Each has its own set of issues, trends and requirements which, in some cases, are unique to specific areas. As such, flooring choices and volume are expected to vary this year in some segments while remaining constant in others, industry watchers say.
“Traditional hard surface markets like retail and healthcare still are very strong, and non-traditional markets such as offices and hospitality are shifting toward hard surfaces in many areas they did not consider before,” said Robert Brockman, segment marketing manager, commercial, Armstrong Flooring.
The largest sector remains corporate/offices, representing roughly 40% of commercial flooring sales. Design strategies have traditionally centered on integrating natural elements into work spaces that help energize employees, encourage collaboration and make them feel more at home. “The goal is to leave work at the end of the day feeling recharged,” said Sharon Steinberg, AIA, LEEP AP, a principal architect at Stantec’s Houston office. “The design of the space, including flooring materials, can contribute to these feelings.”
Carpet tile has emerged as the top flooring choice, representing an estimated 55% to 60% share of the segment. “Carpet tile reduces sound transmission and provides underfoot comfort,” Interface’s Miller stated. “Carpet tile is also easy to upkeep and maintain—and since it is modular, it can easily be replaced or redesigned, providing the flexibility to update or refresh flooring as needed.”
Industry observers report the use of hard surfaces such as LVT, hardwood, porcelain tile and polished concrete is expanding beyond coffee and bar/break areas and into more diverse office environments. “While tile usage is typically limited to areas such as lobbies, bathrooms and kitchenettes, we predict there will be more tile being used in traditionally unexpected spaces,” said Gianni Mattioli, executive vice president, product and marketing, Dal-Tile. He cited advancements in the tile printing technology space as one of the primary reasons.
Another sector to watch is healthcare, which some believe represent the greatest growth potential for LVT. “Slip/fall issues help LVT vs. other hard surface options as well as infection control,” said Paul Eanes, vice president of new business development, Metroflor. “The segment is now more receptive to LVT in most places except operating rooms.”
Ceramic, porcelain and terrazzo tile are commonly found in hallways, making it easier to maneuver rolling equipment and mobile aids. “The health benefits and low maintenance of tile makes it ideal for this space, and our advancements in manufacturing have allowed us to make tile slip resistant through our proprietary StepWise technology, catering to residents’ safety needs,” Dal-Tile’s Mattioli said.
Fashion and function are paramount in hospitality, an industry reportedly investing millions of dollars to remodel their properties. It is expected to remain a bedrock segment for broadloom in particular as high-end products are the norm for guest rooms and public areas. “People still want to feel a soft surface when they hit the floor,” Shaw’s Knowles pointed out. “So even though the trend is towards hard surface, we’re seeing a combination of the two—and we’re providing solutions for that.”
LVT is reportedly growing at a faster rate than broadloom as the product gains wider acceptance, especially in guest rooms. “Most of these hospitality end users are also looking to make a change to something more timeless in terms of pattern and color,” observed Al Boulogne, vice president, commercial resilient business, Mannington Commercial. “That, coupled with the easier maintenance requirements, make it an ideal product for these environments.”
Further fueling usage is hotel owners’ interest in switching to interior decorating products that blend with the latest design styles and last longer—a big reason why ceramic is making inroads. “Designers in the hospitality space demand unique designs, and we are taking style and design to the next level through our latest introductions,” Dal-Tile’s Mattioli said.
One segment at the forefront of design is retail as end users not only seek products that are trendy, but also address performance/functional issues.
“You can create a pattern in a hardwood or stone look that leads you into different departments of the retail store,” noted Milton Goodwin, vice president of commercial sales, Karndean Designflooring. “There’s a lot of mixing and matching of SKUs.”
Even the education sector is getting a little more sophisticated in terms of the design aesthetic, observers report. “It’s copying what we’ve seen in other public segments by trying to become a little more trendy with their looks,” Mannington’s Boulogne stated. “So that pushes more and more business to the LVT category, where there are more design opportunities.”
R&D efforts center on beefing up performance levels to ensure flooring meets the varying needs of each space. “Designers can take LVT into places that maybe they hadn’t considered before,” added Melissa Quick, product and marketing manager, AVA by Novalis Innovative Flooring. “All of this has contributed to more confidence in the use of LVT in Main Street and specified spaces.”
Simply put, LVT has succeeded in the property management channel because it provides longer life than carpet. That’s according to Jerry Hosko, president and COO of Redi Carpet, which bills itself as America’s largest multi-family flooring provider. LVT has been widely accepted on first floor units of apartment communities because there are no acoustical issues to be concerned with. “It is not being used as widely on upper floors for the acoustic reasons although the underlayments on the market have helped somewhat,” he said. “WPC is not used as much due to additional cost above and beyond standard LVT products, but it is gaining acceptance in certain applications and is expected to gain more interest for its waterproof qualities, especially in the wake of recent flooding.”
Of course, LVT goes well beyond aesthetics. LVT is a much more family-friendly product than wood or laminate, proponents say. “LVT provides style with much more realism than laminate,” Noel said. “You don’t hear the tapping sound you get with laminate when you walk over it, and LVT is more forgiving than laminate.”
U.S. Census Bureau data showed businesses with fewer than 20 workers made up 89.6% of American businesses in 2012. Factor in 23 million non-employee (sole proprietor) businesses, and the share of U.S. enterprises with 20 workers or less workers is a staggering 97.9%.
To help its dealers succeed in Main Street, Mohawk introduced multiple resilient sheet and LVT products along with new carpet tiles—product types that represent the fastest growing segment of the market.
Early adopters of Armstrong’s Elevate line of Main Street-driven products (FCNews, Nov. 21/28, 2016) are hopeful it will translate into more business opportunities and, thus, additional sales. The program not only offers a diverse product assortment that draws from the company’s extensive residential and commercial portfolio, but it is also heavily supported by training assistance and certification opportunities as well as sales tools and merchandising systems.
Small business has been the catalyst for the modest growth in the United States following the economic downturn. That trend bodes well for a Main Street commercial sector that includes small retail shops, cafes and other enterprises that are experiencing an uptick in business activity.
Quathamer cited Shaw’s 5th & Main LVT collection as a good example of a fashionable product engineered to withstand the rigors of any commercial environment—including Grand Central Station, where it was first installed. Today it is found in commercial areas such as churches, boutiques, barber shops, banks, schools and hospitals—150 styles and colors in all.
Another new entry is EnviroStrand, a 100% solution-dyed PET fiber made with Mohawk’s Continuum process that uses the highest grade FDA-approved PET bottle resins and requires less energy to produce. Among its many benefits, Post said, EnviroStrand SD has a Class I rating for improved flammability and smoke density.
