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Resilient: Felt finds its place within key market sectors

December 18/25, 2017: Volume 32, Issue 14

By Lindsay Baillie

 

Anecdotal research shows fiberglass sheet vinyl continues to capture market share from felt products. But that’s not deterring manufacturers from supporting the sub-category. Many resilient flooring executives believe the product is still finding favor in various markets. What’s more, executives say felt’s unique characteristics will help it stay afloat in the sea of resilient products.

While felt is part of a mature market, executive say it still provides greater durability over similar fiberglass backed vinyl sheet products. As Bill Furman, product marketing manager, Armstrong, explained: “Segments such as property management and builder still put a high value on rip, tear and gouge performance, and felt products continue to do well with these customers.”

Beyond the product’s use in those key end-use markets, felt also appeals to consumers looking for overall value. “Price, design and performance all come together to make it one of the best values in flooring,” said Kurt Denman, chief marketing officer and executive vice president of sales, Congoleum. “It is incredibly durable and is the original child-proof, pet-proof, waterproof flooring.”

Installation is another key factor driving felt growth, experts say. Unlike other types of flooring, felt can be installed with a perimeter fasten. Suppliers say this type of installation is ideal for consumers looking to do a full kitchen remodel or install flooring before cabinets or an island. “Many other types of flooring—fiberglass-backed sheet included—cannot have a perimeter installation,” said Mary Katherine Dyczko-Riglin, product manager for resilient sheet vinyl, Mannington. “This feature can make an installation job much simpler.”

By utilizing felt’s well-known installation benefits and value proposition, manufacturers are able to provide flooring solutions for any budget.

The fate of felt
FCNews research shows felt fell 6% in 2016. Despite this market-share loss, suppliers say felt will continue to hold its own. This is a result of felt’s continued use in particular flooring markets as well as the product’s construction.

“The move from felt to fiberglass is definitely continuing,” Mannington’s Dyczko-Riglin said. “As a large supporter of the felt-backed products, we have experienced a slower switch. However, we are continuing to see increasing demand for fiberglass. We believe there will continue to be a place for felt-backed products in the market.”

Armstrong has also taken note of the slight shift and is taking steps to provide enticing solutions for both product types. “There is a place for felt, just as there is a place for fiberglass, LVT, VCT, etc., as long as it delivers on true value and innovation,” Furman explained. “Not only do certain segments—such as property management or builders—continue to use felt-backed products, but some regions of the country prefer the price and durability benefits they offer.”

Some executives believe the basic elements of construction for felt and fiberglass are relatively similar. For example, both products contain a base or carrier layer, a gel and print layer and a wear layer. However, the real differences between these two constructions can be found in what goes into each layer. “Congoleum uses natural limestone as the base,” Denman explained. “As the name implies, limestone makes for a very dense foundation that does an incredible job of resisting indentation. When we add our UltraTec backing as in our AirStep products, you now have [more] versatility—fully adhered, perimeter install and loose lay. Unlike fiberglass, the limestone base eliminates any restrictions on seaming.”

Even though fiberglass continues to capture market share, its limitations in construction will allow for felt to recapture a certain percentage of market share. As Denman explained: “We have enjoyed significant growth in manufactured housing and the recreational vehicle markets and modest growth in the builder and multi-family segments. Our retail business has remained flat while others have seen significant declines. All told, that means we’re taking back market share.”

To help felt gain market share in a heavily saturated market, manufacturers are developing new products as well as new designs for existing flooring. “2018 is a year of felt revitalization for Mannington,” Dyczko-Riglin said. “We are overhauling the Mannington felt offering to allow retail salespeople to better focus their selling efforts on what consumers want—the most popular patterns. We started this effort this year by offering the Revive collection in base-grade felt lines to allow these high-fashion looks to be accessible to as many budgets as possible. In 2018, we will continue this commitment to style leadership by introducing new patterns into these lines to keep them fresh.”

Armstrong, for its part, continues to see success with its StrataMax flooring, which is the company’s proprietary, limestone-encapsulated, felt-backed product. “StrataMax offers enhanced durability over traditional felt products, and it can be loose laid like a fiberglass-based product, offering the best of both worlds,” Furman noted.

In developing new products for the category Congoleum is taking into account all of felt’s appealing attributes. “In addition to our relentless pursuit of design leadership, we are careful to control costs to ensure our products are competitively priced and deliver exceptional value without any compromise to our long-standing commitment to quality and performance,” Denman stated.

 

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Surging multi-family housing market translates into opportunities for retailers

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

By K.J. Quinn

 

Screen Shot 2017-01-13 at 1.16.04 PMThe housing market lately has been a tale of two cities, as long-term growth prospects for new multi-family homes lags behind single-family startups. Nonetheless, the sector remains important and lucrative for the flooring industry, especially for hard surfaces, industry members say.

“The single-family builder market and multi-family market performed as forecasted,” said David Holt, senior vice president of builder and multi-family/retail and hard surface, Mohawk Industries. “Both segments were up in the 7% to 10% [growth] area, and we continue to see a shift of the percentage of the floor to the hard surface side.”

In October multi-family production catapulted nearly 69% from the previous month to a seasonally adjusted annual rate of 454,000 units, the U.S. Department of Housing and Urban Development and the Commerce Department reported. The National Association of Home Builders (NAHB) Multifamily Production Index (MPI), which measures builder and developer sentiment about the current market, posted gains in the 2016 third quarter, an indication more respondents believe business conditions are improving.

“The health of the market is evident from builders’ optimism about the current state of the housing market and their short-term outlook for construction,” said Anne Thompson, economist, Dodge Data & Analytics. “Builders are also optimistic about the current and future state of the remodeling market as those who cannot afford to purchase new homes are spending more on upgrades to their existing properties.”

Lower unemployment rates and a healthier economy coupled with rising household formations are expected to help sustain growth into the New Year, according to published reports. “In the Pacific Northwest, interest rates remain low and demand high for residential, so there continues to be strong growth in the construction of new apartments and condominiums,” said Randy Rubenstein, owner, Rubenstein’s Contract Carpet/North American Terrazzo, Seattle. The multi-family housing market includes low-rent units, market-rate rental units and condos.

Whether multi-family construction can maintain its current growth rate beyond 2017, however, is debatable. There are economic indicators that reveal the market may already be softening.

“2018 could see quite a slowdown in comparison to the robust market we have had,” said Elizabeth Hurley, director of strategic accounts at Tarkett. “Already indicators show rent rates are slipping and vacancies are creeping up.”

In October multi-family housing permits—which represents the pipeline for new home construction—dropped 3.3% to 467,000, according to published reports. “We expect a small decline for multi-family starts as that market seeks a balance between supply and demand,” said Robert Dietz, NAHB chief economist. Demographics, most notably recovering household formations, are reportedly driving demand for rental apartments.

Flooring sales impacted
A major hurdle facing developers of multi-family housing is finding enough buildable lots to keep up with demand. “There remains an under-supply of housing in this country, and that reality, along with the current trend toward a more urban lifestyle, have combined to foster demand,” said Scott Rozmus, president, Florstar Sales, a Romeoville, Ill.-based flooring distributor.

Screen Shot 2017-01-13 at 1.16.22 PMTightness in construction labor is contributing to keeping both the single- and multi-family housing markets from being overbuilt. “If the new [presidential] administration eases tight credit and provides tax incentives to small businesses, homebuilders will benefit,” Dodge’s Thompson said. “However, limiting immigration and rising rates of deportation would further impede the already tight market for construction workers.”

The average multi-family property is reportedly getting smaller, following years in which builders disproportionately constructed high-end homes. This trend may be short lived as older millennials settle down and start raising families. “Their perceived preference for more urban living, where zoning and land cost issues tend to limit the size of homes, may constrain growth in homes,” Thompson said. “Downsizing by baby boomers, however, may have the opposite impact.”

While carpet is the leading surface for multi-family spaces, flooring choices are trending more toward hard surfaces and higher-end goods, suppliers report. “New technologies in sheet and especially LVT have gained traction in the multi-family environment, which also sees frequent use of hardwood, laminate and ceramic products, along with carpet,” Florstar’s Rozmus explained. “Opportunities vary by developer, owner and market.”

LVT and WPC products are among the most sought after, experts say, as buyers covet their high performance and good looks. “LVT is growing rapidly and WPC is a significant part of the share shift as well, both at the continued expense of broadloom,” said David Gheesling, CEO, FEI Group, a Marietta, Ga.-based network of flooring contractors, cabinetry and countertop dealers, and decorative hardware and plumbing businesses. “While we obviously participate in all these surfaces, the initial concern was the longer replacement cycle this trend could produce for our industry. That is indeed taking place, but we’re pleased to already see replacements generated by changing color and style trends.”

Plank looks are among the most popular in hard surfaces, according to vendors. “Our visuals and technology at Mohawk are so innovative that it is almost impossible to tell wood from plank, sheet vinyl or LVT,” Holt said. “The surface is determined by cost and property use.”

While multi-family is part of the builder segment, it is a distinctly different channel than single-family homes. “New construction—whether it be single- or multi-family—is a specialized market and requires special talents and business models to excel and make large profits,” Holt said. “It requires a lot of money, labor, operational and organizational skills.”

The timing may be right for dealers to enter the business, considering the multi-family sector is expected to thrive at least over the next 12 months, based on the latest housing data and economic forecasts. “At the recent NAFCD (National Association of Floor Covering Distributors) conference, speakers indicated the current population and housing trends would continue to favor the multi-family sector,” Florstar’s Rozmus explained. “So it would seem prudent for retailers and contractors to seek opportunities, develop contacts and acquire product knowledge and training that will allow them to maximize the benefits available from the current tailwinds.”

The price of entry, however, is fairly steep, which helps explain, in part, why this segment remains highly specialized. Market demands are similar to what residential flooring contractors encounter in the single-family builder market, experts say. “The overwhelming majority of the residential contract arena is serviced by large, highly sophisticated, well-financed specialists,” FEI Group’s Gheesling said. “The operational aspects alone are significantly different from the retail business, and it’s not something most retailers are set up to tackle.”

Screen Shot 2017-01-13 at 1.16.10 PMIndeed, inventory, pricing requirements and service timelines are all significant factors and require a substantial commitment in time, resources and investment just to make par. “You have to have a commitment to inventory on hand, something most dealers are trying to get away from,” Tarkett’s Hurley said. “Multi-family customers continue to challenge dealers with not only, ‘how quickly can you get it here,’ but also, ‘how quickly can you install it.’”

Similar to the retail business, the shortage of qualified installers is a thorn in the sides of builder dealers, an issue further compromised for those servicing multiple market segments. Between tenants and trades coming in after the flooring is installed, dealers often need to make several return visits to address issues on jobsites.

Nonetheless, the multi-family channel represents a lucrative opportunity for dealers who are well positioned to service the needs of end users and builders. Vendors attempt to do their part by developing products that are easier to install, so mechanics get in and out of jobs quickly. “Certainly, this trend provides opportunity for flooring retailers and contractors to gain traction, particularly with products like Armstrong’s FasTak LVT, whose all but unique installation methodology provides a huge competitive advantage in the multi-family arena,” Florstar’s Rozmus said. “Products like these provide the realism that residents desire while offering the ease of installation, repair and maintenance that owners and facility managers demand.”

 

 

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Manufacturer Spotlight: DuChâteau stakes its claim at the high end of the market

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

Cutting-edge design and innovation are the hallmarks of DuChâteau’s high-end offerings.
Cutting-edge design and innovation are the hallmarks of DuChâteau’s high-end offerings.

While some manufacturers are content to play the “me-too” game, competing in the realm of commodity hardwood flooring products, DuChâteau is taking a different tack. Instead of chasing the low-margin, small-profit end of the business, the San Diego-based producer of oil-finished European oak products has its eye keenly on upscale, high-profit offerings.

“We’re committed to quality design and aesthetics,” said Misael Tagle, DuChâteau’s CEO and co-founder. “The DuChâteau brand focuses on European wood flooring—oak being the most predominant—with a hard wax oil finish. The brand has a European aesthetic—starting with the name, of course. It’s a look that’s exclusive to DuChâteau.”

When developing the various styles, textures and finishes for its hardwood flooring lines—especially the company’s signature Atelier Series— DuChâteau looks to the logical source for inspiration: Europe’s highly stylized fashion industry. “Branding and marketing is a big deal for us,” Tagle explained. “We take a fashionable, sexy and edgy approach, which is very much in line with European marketing.”

As opposed to taking the obvious cues from within the flooring and interior design sectors, DuChâteau’s objective is to set the pace in terms of both style and innovation. Hence the association with established labels that might appear on the glamorous fashion runways in Paris or Milan. “We identify with upscale brands like Armani, Dolce & Gabana and Versace, to name a few,” Tagle explained. “When you think about products, ask yourself who makes the best watches, cars or clothes? Europe is at the top of their game and that’s who we’re going to follow. That’s what the DuChâteau brand stands for.”

So what does that mean, exactly, for distributors and retailers serving the floor covering market right here in North America? For starters, it translates to higher profit margins for DuChâteau’s partners across the supply chain. And when you’re talking about exclusive products that carry a high price tag, everyone along the supply chain stands to make a good profit.

“With our products dealers can make more money,” Tagle said. “We offer great value and design innovation at a price point that ensures retailers will be successful. We’re not the cheapest out there, and we don’t want to get into that category. We have the brand recognition in the market, and people appreciate the quality of our products because of that.”

atelier-diablo_project2It’s an approach that DuChâteau’s customers clearly appreciate. Amit Shoval, regional sales manager for National Blinds & Flooring, San Francisco, services clients that develop high-end projects in the Bay Area. He has recommended DuChâteau’s products for various installations, including high-rises, upscale single-family homes as well as wineries in Napa Valley.

Aside from the proven quality and unique aesthetic, Shoval also likes the diverse range of offerings. “The DuChâteau lines can work both ways—either very modern or historic looking,” he explained. “People who live in the high-rises tend to go for that more modern look, with a lot of grays and whites and bleached wood. But in the old Victorian properties like the ones in Napa Valley, they’re looking for more of the reclaimed style of flooring. I always find it easy to recommend something in the DuChâteau line for the clients.”

Shoval is not alone. Others who have also specified the DuChâteau brand have been pleased with the results. “The line product continues to be a leader in product design and catches the attention of designers and flooring showrooms throughout the country,” said Craig Badolian, owner, BI Design Studio, El Dorado Hills, Calif. “They stay on the forefront of fashion and innovative designs in floor coverings and beyond. DuChâteau has always intrigued us and our clients with refined marketing and sophistication. It’s fashion first with DuChâteau even with the way they represent the product and the company in general.”

 

Points of distinction
To further differentiate its products from many of the mainstream offerings available today, DuChâteau focuses on the distinguishing characteristics. For instance, products in the Atelier Series are treated with environmentally friendly, all-natural hard wax oils that include sunflower, soybean and thistle oil, combined with natural waxes carnauba and canella for a low-sheen, matte look. The finishes also contain tiny silicone dioxide (glass) beads, which make the floor more resilient while accentuating the wood’s natural character and aesthetic.

“Products in the Atelier Series do not contain aluminum oxide or polyurethane finishes like the typical 3- or 5-inch products you see out there,” Tagle said. “Our focus is on the hard-wax oil visual, which provides a rich patina and refinement as it ages.”

The only exception, he noted, is the company’s American Guild brand, which made its U.S. debut at Surfaces 2016. The line, which is geared toward the middle of the market, features a polyurethane/aluminum-oxide finish and is more in line, aesthetically speaking, with the tastes of U.S. consumers.

“We know a big part of the U.S. market is polyurethane/aluminum-oxide finish, so we created the American Guild brand for consumers there,” Tagle explained. “The branding and marketing is all geared toward the U.S. aesthetic mindset as are the finishes, designs and looks. Also, this is more of a price-sensitive product.”

Again drawing comparisons to the fashion industry, Tagle said the American Guild collection is more in line with Tommy Hilfiger, Ralph Lauren or Polo, whereas DuChâteau-branded products such as the Atelier Series relate better with Armani and Dolce Gabana. “Where DuChâteau is high end, American Guild is more mid- to high end. The lines don’t compete with each other and it gives us an opportunity to open the market.”

Expanding capabilities

Part of the reason behind DuChâteau’s flexibility when it comes to product development is the fact that it maintains control over its manufacturing processes. The company operates several production facilities, including one in San Diego —where The Atelier Series is produced—and two other plants just across the U.S./Mexican border in Tijuana, where its doors, wall coverings and display systems are produced.

In addition, DuChâteau has developed a line of LVT/LVP products that Tagle says are doing “phenomenally well.” The company also recently began manufacturing porcelain floors at one of its plants. “We’re innovating not only in terms of how we go to market but how we design things,” Tagle added.

Not one to keep still, DuChâteau also plans to launch a furniture division and add rug-cutting capabilities to complement its offering in other categories. It’s all part of Tagle’s vision for DuChâteau to become an iconic luxury lifestyle company. “When we started we were basically a wood flooring company,” he said. “But we’ve evolved to the point where the products consumers buy from us can now outfit a large portion of the home. We’re offering wood flooring, vinyl, porcelain, doors and rugs, and they all tie in together under one roof.”