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Surfaces Carpet Coverage: Despite hard surface surge, mills double down on soft

February 5/12, 2018: Volume 33, Issue 17

By Ken Ryan

 

Traditional carpet mills invariably face this decision: Do we ride the hard surface tide and introduce our own products, or do we stick to our knitting and stay soft?

Surprisingly many are choosing the latter, and they are not apologizing for it. While Dixie Group, Phenix Flooring and Marquis Industries expanded their hard surface assortments at Surfaces—while Engineered Floors officially entered the category—many are passing on the opportunity to jump on the bandwagon.

“We make no bones about it, we are soft flooring,” said Brian Warren, executive vice president of sales and marketing for Foss Flooring, which showcased carpet tile and indoor/outdoor broadloom under a “carpet reinvented” theme.

The way Warren sees it, Foss’ business is good, so why disrupt the flow? “Our tile business has grown double digits each year for the past six years. Our tile business is through the roof. We have some unique technologies and have found a way to position these technologies in such a way that retailers get the advantages.”

Foss introduced DuraKnit, a broadloom line that can be installed over pad. “We’re selling $40 looks for less than $6 with a great performance story, a product that won’t fray, wrinkle or unravel. We’re pushing the attributes that only we have. We’re screaming that it is carpet reinvented. Bottom line—we love giving retailers a selling story they can position against competitors.”

Stanton is another mill sticking to soft surface. “Not now. You can’t do it just to do it,” Jonathan Cohen, CEO, said when asked if the company was contemplating a move into hard surfaces. “We are way too protective of the brand to do that.”

Stanton, which is introducing 125 soft surface products in 2018, is entering the commercial Main Street market through Stanton St. Decorative Commercial. Stanton Street is located in the Soho section of Manhattan, near the location where company founder, Sy Cohen, grew up. “We always liked the idea of getting into commercial but it had to match our identity,” Jonathan Cohen explained. “This fits for us. We can be competitive with price, and as long as we stay decorative we feel like we can have a place within the market.”

Couristan has been a soft surface company for 92 years and has no plans to deviate from that course. That’s according to Len Andolino, executive vice president–residential division, who rejoined the company last fall. “We are a soft surface company, that is who we are. The hard surface [surge] has actually helped our business. For example, our broadloom business is heavily fabricated. More than 50% of our business will be fabricated rugs. We’re pushing the envelope with the fabricated rug business.”

Southwind, a carpet and hard surface supplier, focused more of its efforts on soft at Surfaces with six new LCL patterns and six new colorpoints using its soft yarn system. “People are starting to talk about carpet again,” said Tim Gilmore, Southeast regional vice president. “With this new line we wanted to give dealers some options over the typical beiges and grays.”

Prestige Mills is another tried-and-true soft surface company with no plans to make the leap to hard surfaces. But like so many other mills Prestige is looking to leverage the growth of hard surfaces. Peter Feldman, president, said a good deal of its broadloom business ends up as rugs, in some cases cut by their dealers after shipping. “While cutting broadloom carpet into rugs is good for the rug business, you are only using part of the room with rugs, so more carpet is required if you are going to go that way,” he explained. “It is a challenge, but we are up for it.”

Surfaces 2018 marked the return of Gulistan, which went under in 2012 but has been resurrected by Lonesome Oak. John Sheffield, recently of Godfrey Hirst, has taken over as vice president of sales. Tom Mathis, most recently with Lexmark, serves as strategic sales director. The strategy going forward, Mathis said, is to focus strictly on broadloom and to be selective with retail distribution. Its lineup of 20 products is divided equally between Stainmaster offerings and solution-dyed PET. “We are pretty careful who we are partnering with,” Sheffield said. “We are looking for meaningful partners who can grow the business.”

The return of this venerable brand was well received at Surfaces, Mathis said. “Not a single person said, ‘Oh, I don’t want these guys again.’ The Gulistan brand has more equity than we ever imagined. It’s pretty synonymous with Stainmaster, so that is a plus. And despite the fact carpet is losing share, we are a breath of fresh air and we are starting with a clean slate.”

Crossover continues
Long-established carpet mills that have ventured into hard surfaces and, in some cases, expanded their offerings, have not given up on soft surfaces. Quite the contrary. Phenix, for example, introduced 25 new residential carpet products–PetProtect and polyester—and announced its entry into the area rug business under the Cleaner Home Rugs banner. “We all know carpet is the largest category, and we are expecting carpet to lose share again,” said Mark Clayton, president and CEO. “Our challenge is to keep producing unique stories around the products. The business we are serving—what we call the belly of the country, states like Oklahoma, Texas, Colorado, Utah—is still very strong in carpet.”

Clayton said the jump into rugs is a nod to the explosive growth of hard surfaces. “With so many beautiful patterns in our line this is just a natural addition to what we are doing for hard surfaces.”

The bedroom remains one of the last bastions for carpet in the residential sector, and consumers have shown a willingness to spend more for higher-end goods. To address that trend, Dixie Home launched several Stainmaster offerings with differentiated PetProtect loops and patterns as well as some multi-colored textures. “We think the consumer is buying carpet by the room, not by the whole house, and that leads to better opportunity for better goods,” said T.M. Nuckols, president, residential division, The Dixie Group. “The market is looking for better goods and products that work well with hard surfaces.”

The Masland brand showed new PetProtect collections as well as Masland Energy, a broadloom and tile program for the commercial segment for retailers targeting the upper end of Main Street.

Mills agree Main Street commercial is hot these days. Engineered Floors’ Pentz brand of broadloom and modular tile is keeping pace with several new products, including some from the former Beaulieu’s commercial division. EF’s new 500,000-square-foot carpet tile plant will be in full production in the next few weeks and has already been graded for expansion.

At Surfaces EF touted PureBac, its premium, no-latex backing system. “The dealers say they can get more money on it,” said Will Young, director of national accounts. “PureBac offers a complete story on cleanability, with no latex and a hypo-allergenic face fiber. It is a very installation-friendly product.”

 

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Interceramic spring collection debuts 18 product series

Carrollton, Texas—Interceramic is making a statement regarding the dynamism and contemporary strength of company’s brand and product strategy for the U.S. market with a spring tile launch consisting of 18 collections.

The 2018 spring launch illustrates the company’s distinct advances in manufacturing with its Durabody ceramic tile collections that meet the needs of the customer by combining high design with innovative and functional ceramic tile. Interceramic also continues to excel in the wall tile category, offering a new collection out of its Garland, Texas-based manufacturing facility, while significantly enhancing its porcelain offering.

Interceramic is committed to servicing the North and Central American customer and has established an extensive distribution system in the U.S. that includes 13 company-owned showrooms, three distribution centers and 53 independent distributors throughout the U.S. and Canada, as well as more than 300 retail locations throughout Mexico, Asia and Central America.

 

 

 

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Distributors, retailers upbeat about 2018 prospects

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

By Ken Ryan

 

Flooring retailers and distributors are all but guaranteeing that 2018 will be a banner year for business, with signs pointing toward healthy growth both residentially and commercially. While the known (shortage of skilled labor) and the unknown (geopolitical strife) could threaten the feel-good story, the consensus among flooring observers is 2018 will be the best year in the last decade.

There is evidence to support this. The Conference Board forecast calls for 2.8% growth during the final quarter of 2017 and 2.5% growth in 2018. This would represent the economy’s best two-year run since 2005.

“I hate to jinx something, but I will eat my hat if 2018 is not a great year,” Sam Presnell, owner of The Rug Gallery in Cincinnati, told FCNews. “Seldom does everything line up. There are so many positive signs—consumer confidence, housing sales, remodeling, interest rates, great products and lower taxes. I am very excited about 2018, and we are ready.”

Presnell’s bullish sentiment was shared by fellow retailers and distributors. Many point to the generally favorable trend of the economy and housing; others view the pending tax bill as the elixir for what ails them.

“I believe the tax bill—if it passes into law in a recognizable form of today’s description—will definitely have a very positive effect on 2018 business,” said Sam Roberts, owner of Roberts Carpet & Fine Floors, with 12 locations in the Houston area. “I believe it will stimulate economic growth and, almost as importantly, increase consumer confidence. For my fellow carpet and flooring dealers with Subchapter S corporations, income should increase nicely and tax expense should sharply decrease.”

Scott Rozmus, president and CEO of Romeoville, Ill.-based FlorStar Sales, a top 20 distributor, believes business will be good in 2018 and could be strong if the proposed tax reform goes through. “The reductions in corporate tax rates in particular would likely generate significant investment across the board, including investment in interior finishes,” he explained.

Beyond the potential benefits of tax reform, flooring observers note that 2017 is finishing on a high note, with residential new construction among the sectors leading the charge. More of the same is expected in the new year. “I think people will continue to spend money on their existing homes and that new construction will also continue to grow,” said Chris Kemp, owner of Kemp’s Dalton West Flooring, with three Georgia locations.

According to Jim Walters, president of Macco’s Floor Covering, Green Bay, Wis., residential new construction and commercial should remain strong in 2018. And while residential retail growth will be more of a challenge it also has the potential to grow, he noted. “As a full-service retailer the key to success is to continue to create value for our customers in a very competitive market that includes big box, Internet retailers and outlet stores.”

Great products drive business and flooring leaders expect the high-octane LVT/WPC/rigid core category to continue to grow and take market share from all other segments in 2018. Companies are adjusting accordingly. “In our business, we saw a rapid change with our product mix from other products, especially hardwood, to a mass migration to LVT,” said Scott Roy, president and CEO of Jeffersonville, Ind.-based Gilford-Johnson Flooring, a top 20 wholesaler. “Given our strong push with LVT, especially the new WPC and rigid core products, we are optimistic about 2018. We believe having the right products at the right prices and a strong style perspective will be important for our customers.”

While an improving economic climate and the potential benefits from a new tax bill may lift flooring businesses to a certain degree, there are challenges specific to each market that could impact 2018. For Roberts Carpet & Fine Floors, it stands to benefit from what Sam Roberts called “a backlog on the urban development side and Hurricane Harvey-related business that should impact us positively in all areas of the business through the first half of 2018.”

Several distributors with operations in the oil-producing states are keeping a watchful eye on the price of oil. “We need oil to stabilize over $50 barrel to see more activity,” said John Sher, president of Adleta, a top 20 distributor in Carrollton, Texas.

A concern for all is the continued shortage of skilled labor. As Macco’s Walters explained, “Having enough qualified installation to meet our sales demand and projected growth continues to be our No. 1 challenge.” Adleta’s Sher agreed, noting, “Labor shortages in the construction trades will be an issue. This could hinder growth in our area.”

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Bostik introduces Pro Rewards contractor loyalty program

Wauwatosa, Wis.—Bostik has created an incentive program specifically tailored for installation professionals. Bostik Pro Rewards offers contractors the opportunity to earn reward points which ultimately may be redeemed for thousands of brand name items, travel rewards and much more, all while growing their respective businesses.

“Bostik offers specialty installation products and systems for any flooring project, commercial or residential,” said Scott Banda, Bostik’s director of marketing and business development. “We want our contractor partners to work with the most high-performance, professional materials. And, for doing so, we want them to be rewarded.”

To join Bostik Pro Rewards, visit: awardlink.com/Bostik. Online prompts will take visitors through this simple registration process. Ultimately, once registered, all members’ purchases will automatically be deposited into the member’s individual account, from which awards may be redeemed just as easily.

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Chameleon Power debuts next-gen software at NAHB International Builders’ show

Novi, Mich.—Chameleon Power, a leader in photorealistic visualization technology in 2D, 3D, Virtual Reality and Augmented Reality, will debut the next generation of its comprehensive set of software applications for home builders at the NAHB International Builders’ Show in January (Booth #W7271). This suite of tools helps builders to market their homes more effectively, and assists home buyers through the entire design and selection process.

Chameleon Power builder’s software includes: 

  • Lead Generation Tool – a photorealistic visualizer that helps buyers to find and decorate available homes in a community. Buyers can save and share their designs, generating leads for the sales center/team.
  • Kitchen & Bath Visualizer – online tools that allow buyers to view and select materials in standard room scenes, and in their own home during the selection process.
  • Virtual Reality (VR) – a VR toolkit to help home buyers with selections and design with a 3D model of their homes in a fully immersive environment. Reduces the need for model building, lowering the cost of developing communities.
  • Digital Selections Guide – a web-based tool that allows the buyer to select and organize home options and upgrades. The guide is accessible by both the builder and buyer in real time.
  • Augmented Reality (AR) Lot Selection– a mobile app that allows buyers to view and select model homes on available lots in a development.

All applications are built on Chameleon Power’s proprietary asset management system and visualization engine. In combination, this software platform will manage and configure a nearly infinite amount of product and image data, and allow it to be leveraged through Chameleon Power visualizers in 2D, 3D, VR and AR viewing environments.

For additional details, contact Chameleon Power at info@chameleonpower.com.

 

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Retailers recall top intros of 2017

November 27-December 11, 2017: Volume 32, Issue 13

By Lindsay Baillie

 

FCNews asked retailers to name the top flooring introductions of 2017. It should come as no surprise that the responses covered a broad range of products across the spectrum—LVT/WPC, wood, laminate and carpet. Some of the products identified were updated designs and looks from intros of 2016, while others were completely new launches.

Following is an overview of the new products that stood out in 2017:

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Starnet fall conference: Members look to finish the year on a high note

October 23/30, 2017: Volume 32, Issue 10

By Reginald Tucker

 

Screen Shot 2017-10-27 at 12.30.48 PMAtlanta—The momentum generated at Starnet’s spring conference and silver anniversary celebration earlier this year (FCNews, May 8/15) appears to have carried all the way over into the group’s fall meeting here this month as members expressed widespread optimism that business will finish strong to close out 2017.

“2017 has been good for Starnet members overall,” said Jeanne Matson, president and CEO, citing collective growth in the single-digit range. “Members have been busy this past summer and we expect a strong finish for the year.”

In terms of product categories, Matson said much of the action has been driven by hard surfaces. “We’ve been experiencing the shift from carpet and that’s been an ongoing trend. But this year I feel it has been a little more marked, especially with the LVT explosion and so many of our vendor partners getting into that business and hard surface in general.”

Ceramic is another hot category for Starnet members, Matson reports. When she joined Starnet about 11 years ago, roughly 30% of membership was active in the category; today that number is probably close to 60%. “We’ve had consistent good growth with Daltile, and a lot of that has come from more of our members doing ceramic work. Some of our members—particularly our larger ones—have built their ceramic business to about $1 million within a year. It’s a different kind of product to install, you need different technical labor and skills in estimating, but it’s very lucrative and it gives the end user a one-stop shopping experience.”

Contractor members like Randall Weis, CEO of New York-based R.D. Weis, can attest. “There is a visible shift from soft to hard surface. LVT and ceramic are the big winners and continue to take more share.”

That’s not to say that carpet is no longer desirable. “Carpet is being impacted by hard surface for sure, but we believe it will always be a factor,” Matson stated. “Obviously there are certain environments where soft surface is necessary. The area rug category, for example, has generated opportunities for our vendors and members alike.”

Starnet members are also benefitting from thriving end-use markets. “For our membership overall, corporate is a very strong market,” said Leah Ledoux, director of strategic accounts. “Hospitality is up and education seems to be coming back. Multi-family housing is still very strong, but that’s kind of at its peak right now. Healthcare, however, is down a little bit but continues to be an important market for us.”

But given the fact membership varies by region, it’s hard to paint the market in broad brush strokes. “Because our membership is so diverse, you may have some members doing a ton of work in education and others doing well in hospitality,” Ledoux said. “But we continue to look at the progress we’ve had in all these categories so we know where we need to be.”

Common interests, goals
Many longtime Starnet contractors attribute some of the success they have achieved over the years, in part, to benefits that group membership brings. Attending conference meetings also provides members with an opportunity to share practices that they might bring back to their own businesses. “I enjoyed meeting with my peers and manufacturing partners,” said David Meberg, president and CEO of Consolidated Carpets, New York. “Catching up and discussing the current events of the industry was the most valuable part of the conference.”

Screen Shot 2017-10-27 at 12.30.57 PMIn that spirit of cooperation, Meberg shared some of his insights with the group during the lead-off session, “Building profitable and sustainable business relationships,” along with Max Cavalli, director of education, Mannington Commercial; and Kathi Kennedy, business developer, Howard’s Rug, San Diego. Starnet’s Ledoux, who moderated the panel, explained the thought process behind the group session format. “The goal of the presentation was to put a member’s perspective on the three different positions of being a flooring contractor. For owners like Meberg, you’re driving business and specifying materials. A lot of the owners within Starnet are part of the process, they have their own accounts and they’re driving their own businesses and engaged in the process.”

It’s a position other longtime Starnet members can readily appreciate. “In my business I’m managing the cash flow, scheduling jobs and setting the strategy for the growth of the company,” said Jason Adams, president of Kingston Tile Co., Romeoville, Ill.  “The points I stress within the company are awareness of business opportunities, measurement of our initiatives and holding people accountable.”

The key to success for other members like Chuck Rajner, owner of Ohio-based Commercial Flooring of Toledo, hinges simply on taking care of the customer. “Our gross margin is enhanced by our relationships with our customers. If we make our clients’ jobs easier, then we’ll usually get the business.”

Regardless of the particular strategy, members stand to take away something of high value by learning about other contractors’ experiences. “People told me it was interesting to hear about different business models during the sessions,” Ledoux said, citing presentations that touched on various topics such as profitability, technology, management and environmental issues. “We may have 174 members but that’s really 174 different business models.”

It’s precisely that sharing of experiences that keeps members coming to convention. As Weis explained: “A key benefit of two live Starnet meetings per year is for the members/shareholders to get an update on where we stand with our vendor partners, and how the co-op is doing overall. For me, one of Starnet’s biggest values is it provides professional training, education and networking that no other group provides its members.”

Even new members are already reaping some of the benefits of aligning with Starnet. Such is the case with Athens, Ga.-based DCO Commercial, which joined the group back in January. “The networking and relationships we have built with vendor partners, members and Starnet staff over the past 10 months has well exceeded our expectations,” said Curtis Blanton, vice president. “The networking amongst like-minded individuals is always the best part of these events. It is tremendous for companies to come together, network and share best practices for the good of the overall industry and to strengthen our alliance.”

The main goal, according to management, is to put members in the best position to succeed. “We’re always looking to grow the group both organically and in terms of our vendor base,” Matson said. “I think we’re poised for growth into 2018 and 2019.”

 

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Living Product Expo: Tarkett pushes boundaries of sustainable building

October 9/16, 2017: Volume 32, Issue 9

By Ken Ryan

 

Screen Shot 2017-10-17 at 9.43.16 AMPittsburgh—There are flooring companies that like to stake their claim to the “green” label when, in reality, their products mostly meet baseline certification for sustainability. And then there are those few companies that take responsible manufacturing to an entirely different plane.

That short list includes Tarkett.

From eco-design and installation to recycling and reuse, Tarkett has demonstrated over decades a commitment to continuously developing products with the planet and people in mind.

Tarkett North America has applied cradle-to-cradle principles to product development since 2011 and today holds more product and material certifications (175) than all other flooring manufacturers. “Having so many products and materials cradle-to-cradle certified demonstrates our commitment to both the built environment and the planet as a whole,” said Diane Martel, vice president of environmental planning and strategy for Tarkett North America.

Martel was a presenter at the Living Product Expo in Pittsburgh in September. She took part in a seminar titled: “Can PVC be made into a Living Product?” PVC, which is used in most manufacturing of vinyl flooring, has several advantages, including low cost and ease of replacing individual tiles. However, PVC is not inherently green, experts say. In fact, it has been called “the poison plastic” because the emissions from PVC—at certain levels—can create health hazards such as dioxins and furans, two of the most toxic chemicals on the planet.

During the discussion, Martel argued that PVC could be a sustainable product if done responsibly. “It’s about cleaning up the chemistry of PVC. We’re taking other people’s wastage streams and finding potential use for it. PVC is extremely easy to recycle. We should be closing the loop on PVC.”

By “we” she means the flooring industry at large. Tarkett wants to work with other companies to find solutions that will benefit the planet. “We can only solve this if we collaborate and people adhere to something that is actionable and reasonable,” Martel explained. “We find that opening the door to collaboration and cooperation is really the path to take. You have to be in a place where everyone is rowing the same direction. As a company, as an industry, as a planet and as a world, we have to be doing that.”

Tarkett will be doing its part. “We value our position as a global leader in sustainable flooring, and see these certifications as a way to guide our industry toward creating products that are better for people and better for the environment,” Martel added.

Among Tarkett’s achievements:

  • It is a partner of the World Economic Forum on circular economy, climate change and quality of life in the urban environment.
  • It was the first flooring producer to deploy phthalate-free vinyl flooring in North America.
  • Tarkett launched fully transparent Material Health Statements in 2016.
  • The company continually improves the chemistry within products to improve the built environment, including removing ortho-phthalates from products and developing Eco-Ensure, a fluorine-free soil protection technology for all Powerbond and modular products.

Sustainability’s evolution
When Martel took on her role as VP of sustainability a decade ago, she said sustainability was a lot about the planet (i.e., waste reduction, water reduction) but today it is a more balanced, holistic approach.

Rudi Daelmans, director of sustainability for Tarkett, said sustainability is evolving to what he termed “system thinking,” where everything is connected—the nutrients in the water, the safety materials, indoor air quality. “It is still evolving. It is a continuous drive toward sustainable business, which will drive innovation and new products. Staying on top of things and concentrating on sustainability makes you push your boundaries. If sustainability drives innovation you will have a company that is profitable and lasting.”

On the subject of innovation, Tarkett recently launched a backing material through its Tandus Centiva brand called ethos Modular with omnicoat technology. According to the company, ethos products are PVC-free and made from recycled PVB film commonly found in the abundantly available waste from automobile windshields and safety glass. In addition, ethos Modular is cradle-to-cradle certified Silver v3.1 and SCS Global Certified NSF 140 Platinum. Depending on the specified product, the total overall recycled content ranges from 26% to 51%. ethos is 100% recyclable through Tarkett’s ReStart program.

Paul Evans, vice president of R&D, Tarkett North America, said ethos addresses one of the most long-standing issues in new construction and renovation, namely moisture or other adverse flooring conditions that require costly delays in time as well as the potential for testing and remediation.

“Just as importantly, we make the backing using PVB derived from the recycling of film found in windshields and other safety glass, because a product that’s good for the health of those who use it and is made with respect to the environment begins with quality materials sourced properly.”

 

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Private-label programs support distributors, dealers

August 28/September 4: Volume 32, Issue 6

By Reginald Tucker

 

Screen Shot 2017-09-05 at 12.42.20 PMFor many floor covering distributors, private-label programs provide opportunities to differentiate themselves in a marketplace or region where competing companies might offer the same, or similarly constructed, products. By that same token, some specialty retailers—particularly those who are buying group members—see private-label offerings as a way to compete against the big boxes that often carry well-known manufacturer brands. While some major manufacturers service a variety of retail channels, developing differentiated offerings goes a long way in managing potential channel conflict.

In realizing the importance and significance of these trends, manufacturers are positioning themselves accordingly. “Private-label programming is all we do—that’s our specialty,” said Allie Finkell, executive vice president of American OEM, a U.S.-based custom hardwood flooring manufacturer. “Everyone who buys product from us basically puts their own name on it.”

Like other private-label suppliers, American OEM saw an opportunity in the marketplace to fill a void. While many companies see advantages in importing entry-level, low-quality product, American OEM prides itself on better-grade products that present high-margin opportunities for its distributor partners. “Our customers are looking to buy more of the high-design products, not the low-level commodity items,” Finkell told FCNews. “In fact, we can’t even get down to the price some of them are looking for.”

Effective private-label brand strategies extend to other product categories as well. For instance, LVT supplier Nox Corp. offers customized programs for some of the biggest names in wholesale distribution—some of which are top 20 distributors.

According to a company spokesperson responsible for sales, Nox offers distributors an advantage because it manufactures product in the U.S. This addresses distributors’ concerns about having a consistent source of supply. “Our plant in Fostoria, Ohio, is brand new and state of the art. Our lead times are very acceptable to our customers and shipping out of northern Ohio is pretty good. It’s very convenient for trucking routes.”

Another advantage, according to Nox, is its experience in LVT production and the diversity of its offerings. “There’s so much LVT out there,” the spokesperson said. “With us, distributors don’t just get a white box that they can find at 15 other distributors around the country with the same décors. We offer distributors a complete program that allows them to build their own designs.”

For floor covering dealers, private-label programs represent another way to differentiate themselves from big boxes. At the same time, it’s an opportunity to charge more money based on exclusive programs. Just ask dealers like Birmingham, Ala.-based Ted’s Abbey Carpet & Floor, where Ted Gregerson, owner, puts more emphasis on the Abbey-branded offerings or private-label programs such as Alexander Smith. “We find promoting ourselves, our store and our story carries more weight with customers than simply a brand name. Many flooring companies believe their brand names are well known, but they are not as renowned as they would like to think.”

While private labels can certainly help improve profitability, some believe exclusive brands are the way to go. “We provide our members with exclusive brands, not just private-labeled products,” said Eric Demaree, president, Carpet One Floor & Home. “We add exclusive colors, product attributes and guarantees that cannot be offered by simply slapping on a private label.”

This approach was on full display at the recent CCA Global Partners summer convention, where Carpet One dealers previewed extensions to a few established exclusive brands (i.e., Lees and Invincible H2O) as well as altogether new private-label offerings manufactured by Armstrong, Hemisphere Imports, Mohawk and Shaw, to name just a few.

As Jim Aaron, CCA Global’s vice president of merchandising, put it: “At the end of the day, our exclusive products, brands and warranties all help differentiate us from our competitors.”

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Resilient: State of the industry—LVT, WPC remain primary drivers of category growth

July 31/Aug. 7: Volume 31, Issue 4
By Lindsay Baillie

The resilient category continues to follow its blazing path from 2016 with aggressive growth just six months into 2017. Industry observers attribute this activity once again to the industry’s “darlings”—LVT, WPC and rigid core.

Screen Shot 2017-08-07 at 11.14.42 AMBased on FCNews research, LVT and its subcategories accounted for 42.3% of residential volume and 67.6% of residential dollars in 2016. Observers expect numbers in 2017 to reflect similar—if not more—control of the category. In 2016 the resilient category as a whole saw a 19.7% increase ($3.499 billion) over 2015’s $2.924 billion. This percentage is almost four times the growth of the overall industry. In addition, resilient captured 16.5% of the total flooring industry in dollars—the highest among all hard surfaces. Industry experts predict resilient numbers for 2017 will continue to rise, especially as waterproof products capture consumer interest.

In fact, many of the fiscal trends seen in 2016 have continued into the first half of 2017. For example, most experts have noticed residential sheet is still relatively flat, and felt is continuing to lose market share to fiberglass. Meanwhile, LVT continues to gain market share at the expense of sheet and other flooring types such as laminate and hardwood. Furthermore, LVT and its subcategories continue to gain market share as more manufacturers ramp up U.S. production for faster lead times and greater product control. Lastly, with the soaring popularity of WPC-type floors, more companies are adding rigid core to their portfolios.

Overall, success in this category is often attributed to the various innovations in printing and design, allowing manufacturers to create visuals that are almost indistinguishable from the natural materials they mimic. In addition, these designs can be achieved at a fraction of the cost. “Style is the point of entry to any design decision, but then cost quickly becomes a factor,” said Gary Keeble, director of marketing, Metroflor. “The ease of installation, the durability of LVT and associated easy care and maintenance have all assembled in a bit of a perfect storm.”

Looking at the trends, it’s easy to see why the industry is bullish about the category’s growth in 2017. “As a luxury vinyl specialist, 2017 has fared very well for us, both in terms of our glue-down products and with the introduction of our rigid core product line,” said Larry Browder, CEO, Karndean Designflooring. “The tremendous growth LVT has experienced confirms what we’ve known all along: Luxury vinyl provides the beauty and realism of natural wood and stone in a more practical format.”

All types of manufacturers, even those that produce multiple types of flooring, have seen impressive increases so far. “Resilient continues to be a very strong category for Shaw and is showing no signs of slowing down in 2017 or the foreseeable future,” said Clark Hodgkins, resilient director.

Sheet, felt feel the squeeze
FCNews research shows residential sheet vinyl had a less-than-stellar year in 2016—coming up relatively flat with a 0.2% decrease compared to 2015. Most industry observers attribute this subpar performance to the rise in demand for LVT, WPC and rigid core products.

“Sheet vinyl has lost share to LVT for several reasons,” explained John Wu, CEO, Novalis Innovative Flooring. “More manufacturers are adding LVT to their product offerings, so LVT is promoted more than sheet vinyl. Secondly, handling and installation [of LVT] is easier, especially for DIY applications.”

Screen Shot 2017-08-07 at 11.15.10 AMEasier installation is one major factor sheet vinyl manufacturers need to consider when developing new products, according to executives such as Jeff Fenwick, president and COO, Tarkett North America. As it stands today, “[installing] sheet product requires a level of expertise that tile does not.”

Fenwick also believes improvements in design are needed to help capture the consumer’s eye and break the stereotype that sheet vinyl is “what’s laid down in grandma’s kitchen.”

While some experts see the slight decline of sheet continuing in 2017, many manufacturers believe the category is still viable.

“There’s some softness on the sheet vinyl side but we firmly believe in the category,” said David Sheehan, senior vice president of product management, IVC—a division of Mohawk Industries. “Sheet in general is going to have to innovate. As manufacturers of sheet we need to do a better job of stepping up by innovating not only from a product standpoint but also in terms of how we talk about these products.”

For some manufacturers sheet still holds a certain value proposition. “Sheet is still the best value per square foot in flooring,” said Kurt Denman, chief marketing officer and executive vice president of sales, Congoleum. “This is the original waterproof flooring and it delivers an exceptional value.”

Instead of simply dismissing the segment most sheet vinyl manufacturers are working on ways to innovate their product offerings to compete with LVT, WPC and rigid core. Investments in manufacturing, processes and technology are ways suppliers are seeking to re-invigorate the segment.

“Regardless of what the market is doing, we’re focused on growing our business by bringing innovative products to market,” said Matthew Savarino, senior product manager, resilient sheet, Armstrong Flooring. “We have already introduced new innovations in 2017, specifically Diamond 10 technology across select residential and commercial sheet.”

Sheet innovation at Mannington Mills involves finding answers to the question: How can the company push style and design? “You can make really innovative looks with sheet vinyl,” said Jimmy Tuley, vice president of residential resilient. “I know that has not been the popular perception in the past, but if you look at a couple of our new collections they really do a fantastic job of mimicking incredibly high-end looks with embossed in register, very realistic visuals at a very reasonable price point.”

Despite the overall segment’s slight decline, some manufacturers reported seeing an uptick among their sheet offerings. “We continue to see good strong performance and actually growth out of our sheet category,” Denman noted. “We’ve spent a fair amount of time really targeting the builder/multi-family market. A couple of years ago we introduced the ArmorCore line, which was designed specifically for them. We’ve invested [heavily in] the category and we continue to see growth.”

Just as sheet continues to fight against LVT and its subcategories for market share, felt continues to battle fiberglass. In 2016 fiberglass saw a 4.8% increase in dollars while felt was down 6%, according to FCNews research. Most manufacturers see this flip from felt to fiberglass continuing through 2017, but do not see felt completely disappearing.

“Growth in felt market share is going to come from specific market segments,” Armstrong’s Savarino explained. “Felt-based products still provide, generally speaking, greater durability over fiberglass-based vinyl sheet. The comfort tradeoff has won out with homeowners—which is why we have seen such a large shift in the market [to fiberglass], but segments such as property management and builders still put a high value on rip, tear and gouge performance. The installation benefits of fiberglass over felt have also been swaying some buyers in that segment, but picking between durability and ease of install is still a tough decision for many customers.”

LVT output rises
LVT is still singing 2016’s hit song as it continues to drive category growth and take market share from other categories. Based on FCNews data, LVT had a strong year in 2016, capturing 48.1% of residential market share in dollars. With only six months left of 2017 most manufacturers are reporting strong growth in LVT. This is most commonly attributed to the aggressive nature of it subcategories—WPC and rigid core.

As LVT remains a category favorite more manufacturers are expanding into domestic production. Experts have taken notice of the increase; however, most do not expect import production to disappear.

Screen Shot 2017-08-07 at 11.14.53 AM“With the significant growth in the category, both domestic and import production will continue to expand,” said Lindsey Nisbet, head of product marketing and development, EarthWerks. “With the increased demand on the market today, many are finding it possible to produce in the United States. However, the technology for this category continues to be derived from Asia, as well as many of the components that make up the products. I foresee a nice balance of the category across the globe.”

Mannington is a company dedicated to U.S. production and has seen success from its acquisition of Amtico. “It’s important for several key suppliers to be able to produce here in the U.S.” Tuley explained. However, he also sees a need in the industry for balance between domestic and import production, specifically in regards to keeping up with consumer demands. Tuley cited the rapid expansion of the market and the need for technical innovations as some of the reasons for a balance strategy.

Manufacturers invested in domestic production see a number of benefits that are not always available when importing. A few examples include greater product control, faster lead time and a Made-in-the-USA story.

“In today’s market end users and consumers want product faster,” said Michael Raskin, president and CEO of Raskin Industries. “Domestic production provides shorter lead times. Another point to consider is younger consumers with children are asking where the product is made and the perception is ‘made in the USA’ is better quality and safer. It’s also very hard to guess right with inventory management since we are in a fashion business and as trends develop, distributors and retailers can react much faster with supply/demand when product is made in the U.S.”

For some, the issue is not so cut and dry. For instance, Jamann Stepp, director of marketing and product management for USFloors, there are both positives and negatives to domestic and import production. In addition to the benefits listed previously, Stepp cited greater quality control with domestic production. When importing, he explained, a manufacturer is able to eliminate the capital required to set up, run and maintain a manufacturing operation.

Others see more benefits in importing products. “Importation can actually be more flexible and responsive to the needs and trends in the marketplace,” Novalis’ Wu explained.

Even though importing products may result in longer lead times and less control over manufacturing, the vast majority of LVT products are still coming from overseas, observers say. “If you’re importing it allows for quicker response for changes in construction processing,” Congoleum’s Denman said. “There’s no capital expense investment. You can also get fairly competitive bidding between [businesses]. The number that exists allows a brand to have a lot of choices and opportunities to building the product that it wants.”

In addition to the increase of LVT domestic production, some manufacturers are also bringing rigid construction to the U.S. One in particular is IVC, which announced last year that it is building a rigid plant in Dalton.

“We expect to be up and running the first part of 2018 and getting product out through the latter part of 2018,” IVC’s Sheehan reports. “We’re going to be at the lead of that movement which makes sense from a lead-time standpoint and not having to tie up a lot of inventory, work, capital and being able to serve the needs of our customers in a better fashion.”

Even though a growing number of manufacturers are investing in U.S. production, some say the effects of their shift away from importing has yet to be felt. “Most of these factories are still coming on line,” Metroflor’s Keeble said. “With that said, the overwhelming majority of LVT sold in the USA remains imported, and with the category growing as it has, imports will likely remain a very large part of the overall market.”

WPC’s performance edge
Experts predict the aggressive growth of WPC and rigid core products will continue as long as waterproof products continue to capture the hearts and eyes of consumers. As these subcategories achieve meteoric growth other flooring categories will continue to lose overall market share.

“The growth in LVT has come at the expense of many categories including sheet vinyl, hardwood and especially laminate,” Karndean’s Browder said. “With the advent of WPC/rigid core, laminate is taking an even bigger hit. The fall of laminate flooring due to water and noise issues created a market for WPC and rigid core products.”

The success of WPC and rigid core can be attributed to multiple factors including the categories’ abilities to solve certain performance problems. “Rigid core products have helped to solve for additional challenges that regular LVT could not,” said Jeremy Kleinberg, senior product manager, Armstrong Flooring. “For example, telegraphing of minor subfloor texture.”

Ongoing developments
In 2016 WPC and rigid core products saw what many industry experts have called phenomenal activity. In fact the subcategories, combined, have more than tripled in volume from 2015. Most industry experts expect this growth to continue well into 2018.

Screen Shot 2017-08-07 at 11.15.01 AM“I wouldn’t be surprised if WPC/rigid core becomes the larger sub-segment of LVT,” IVC’s Sheehan said. While he sees these subcategories still gaining market share, he does expect the WPC/rigid core craze will eventually level off and allow for an increase in sheet market share.

As fairly new subcategories, WPC and rigid core are expected to see at least two more years of aggressive innovation. In fact, Mannington’s Tuley sees these subcategories still in the early, steep part of the growth curve.

“There’s also a significant amount of innovation that’s going to be coming,” he added. “I wouldn’t think that even in the next two years that will stop. You will see a significant number of entrants moving away from WPC and going toward rigid core.”

Tuley has a good point. As WPC and rigid core continue to grow, more manufacturers are adding the products to their resilient offerings. New rigid core and WPC introductions—as well as additions to existing collections—are already being brought to market only six months into 2017. For example, Novalis has introduced its High Performance Core (HPC Technology) line for WPC/rigid LVT. Wu sees these newer introductions taking market share from other categories as well as developing a greater presence in the commercial sector.

Manufacturers such as Karndean have developed new rigid products to meet dealer demands. “Our dealers had been asking for a rigid core product with Karndean designs,” Browder said. “With Korlok we have the perfect combination of industry-leading technology and our renowned design quality.”

Shaw Floors has also taken advantage of the success of WPC and rigid core with a mid-year launch of the company’s new Floorté PRO collection.

WPC and rigid core have managed to attract almost every manufacturer. One concern regarding these products is the possibility they might cannibalize traditional LVT. According to the experts, higher-end traditional LVT may take a hit; however, low-end LVT should be able to withstand the “perfect storm,” as one executive described it.

“While multi-layer flooring is definitely taking share over the click options of LVT, the traditional glue-down LVT is also growing,” EarthWerks’ Nisbet explained. “The multi-layer flooring options are taking place of the original click LVT, as well as alternate flooring categories. With the enhanced technologies and realistic attributes of these designs, the affordability and performance of multi-layer flooring, the vinyl option has become a clear competitor in the overall choice for flooring.”

USFloors’ Stepp doesn’t see the subcategories cannibalizing LVT; rather, they are providing the consumer or end user with various choices. “[WPC/rigid core] merely offers the end-user and consumer a choice based on functionality, application and budget. The consumer will make the choice as to what best suits her needs in terms of performance, fashion and cost.”