Laminate: Category continues to hold its own amid pressures

July 02, 2015

June 29; Volume 30/Number 1

By Nadia Ramlakhan

While the laminate segment seems to be the category most vulnerable to the onslaught of LVT and, more recently, WPC (wood plastic composite or wood polymer composite), it is still holding its own. Yes, the gains of the mid-2000s are long gone, but rumors of the category’s demise are greatly overstated. In fact, FCNews research reveals the segment has posted the slightest of gains in dollars in each of the last three years and in volume for six consecutive years.

Screen Shot 2015-07-02 at 3.39.00 PMOf course, throughout the years we have seen laminate prices plummet with an average selling price down from $1.30 in 2006 to $1.05 in 2013. The good news is there seems to be some stabilization as specialty flooring retailers concentrate on selling higher-end goods to make up for the increasing volume through the home center channel and Lumber Liquidators. In fact, FCNews actually shows the category up a penny to $1.06 in 2014.

“This indicates to us that consumers are willing to pay a bit more for innovation and design, which they weren’t a few years ago,” said Bill Dearing, president of the North American Laminate Flooring Association (NALFA). “We are coming out of a horrible recession and real estate is moving so people are increasing their budgets, especially for home improvement.”

More specifically, FCNews research found that sales in 2014 increased 1.1% to $1.135 billion, up slightly from $1.123 billion in 2013. In terms of volume, the category was generally flat in 2014, rising 0.6% to 1.066 billion square feet from 1.06 billion in 2013.

Further testament to laminate’s challenges lies in market share. In 2014 it commanded a 5.8% share of the total flooring market in dollars, down from 6% in 2013, 6.4% in 2012, 6.6% in 2011 and 6.9% in 2010. The overall market share decline in square footage parallels dollars as its 6% share in 2014 and 2013 is down from 6.2% in 2012 and 2011.

What was once a category that was primarily comprised of imported product, laminate is now nearly two-thirds domestic thanks to Mohawk/Unilin and Mannington plants in North Carolina along with the Kronotex facility in South Carolina. Then there are the Shaw and Faus facilities in Georgia. Add Clarion in Pennsylvania, which manufactures a plethora of private-label brScreen Shot 2015-07-02 at 3.39.09 PMands, and domestic laminate production is strong.

China is still responsible for the largest portion of imported product, estimated to account for about 70% of all imports. Germany is a very distant second with between 10% and 15% share of all laminate flooring imports.

The most significant reason for laminate’s lack of movement is product competition, notably from LVT, which served as laminate’s main opponent in 2014. Although an increasing number of styles can be created through advancements in digital printing technology and manufacturing processes, the waterproof features of LVT give it an advantage over the sophisticated designs of laminate. Other competitors include new hybrid products, such as COREtec from USFloors, which offer a durable and affordable alternative.

“The category is under a lot of pressure,” said Steve Roan, sales and marketing director, North America, Beaulieu Flooring Solutions USA. “But the people who think laminate is going to go away are incorrect. It definitely has a place in the market; as new products come in it needs to adapt, and we’re making changes to quality and design.”

Other industry leaders believe that LVT has hindered the growth of laminate more than anything, leaving little room for expansion. “The laminate business has been very stable for the last three to four years,” said Travis Bass, executive vice president of sales and marketing for Kronotex USA. “I would say we have missed growth more than we have lost share. Maybe laminate would have grown if LVT didn’t come on as strong, but on the other hand we didn’t lose.”

Push toward higher end

Joe Bondi, vice president, residential, Armstrong Floor Products North America, added, “Laminate sales were hampered last year by the sluggish start in the remodel market and competition from LVT, but benefited from improved style and design on the higher end which helped increase the average unit value on the units sold.”

Screen Shot 2015-07-02 at 3.39.19 PMBig box stores still take the cake when it comes to sales volume, with specialty retail representing 30% of the market. This is due to home centers’ appeal to customers who want lower priced products, whereas specialty retailers are known for their expertise; the shift toward high-end products allows retailers to compete on customer service and knowledgeable staffs rather than price. “When consumers are looking for a vScreen Shot 2015-07-02 at 3.39.31 PMalue product, they are trained to look to the big box,” said Jeff Striegel, president of Elias-Wilf, a top 20 distributor. “When they’re looking for something they want installed or if they’ve got a little more discerning taste, they typically go to a flooring retailer.”

For most dealers 12 mil offerings seem to be the sweet spot, giving customers an ideal option in a good/better/best scenario as opposed to choices being driven by price. In addition, dealers can offer unique and on-trend products including reclaimed wood looks, wider widths, longer planks, lighter colors and textured surfaces such as embossed-in-register selections. Compared with other resilient alternatives, premium laminates usually offer the most realistic visuals on the market, experts said, often confused with real wood.

“Specialty retailers continue to gain ground by focusing on high fashion options and a variety of constructions and visuals,” Bondi said. “With premium laminate, customers can’t believe it’s not wood. Quality laminate still has that advantage, as well as performance benefits due to its scratch-resistant nature.”

Newfound opportunities

It came as no surprise that the laminate category remained predominant in the remodel market last year. What was unexpected, however, was that it also had some penetration in the builder segment with builders opening up to the possibility of installing the product as an entry-level or first-upgrade option. Its easy installation features make it ideal for installers to get the floor in place in a timely manner before bringing in other furnishings. Builders also consider laminate an ideal product for replacement; while it used to be difficult to replace a damaged floor, most of the training now centers around replacing a single plank.

“The remodel market was still a little tepid in 2014 although it got stronger in the second half,” said Dan Natkin, senior director, residential products, Mannington. “In a new home, 8-inch wide laminate looks almost like the real thing and is more scratch resistant. As a result, more builders are open to considering it.”

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