State of the industry: Laminate hit hard but still has plenty of life left

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While every category has been hit hard by the recession and the new attitudes of the consumer as the country slowly recovers from the economic downturn, it seems like laminate has been taking some low blows lately and executives are fighting back, telling FCNews there is plenty of life left in the category going forward. “Low end continues to attract the most volume,” noted Travis Bass, executive vice president of sales and marketing for Kronotex, parent company of Formica. “However, there has definitely been a trend back toward the higher price points with consumer confidence growing.”

While other executives agreed, they also noted the category is under severe pricing pressure from several factors, most notable are a new influx of low-end products coming in from overseas—something that had actually slowed just prior to the economic downturn—and an industry-wide problem of overcapacity, which has forced some players to “drive” prices down in order to keep their machines running and justify the investment in equipment. Kim Holm, president of Mannington Residential, said among the challenges facing the category, the first and “probably most significant is the influx of imports in the marketplace. The laminate category has become flooded with lower-end products, and competing against those at specialty retail has required us to be flexible and innovative with the line.”

On the issue of capacity, Allen Cubell vice president of residential sales for Armstrong Floor Products, explained, “We do have an incredible amount of it.” This has not only driven prices down, it has kept many companies from putting money into research and development. “There hasn’t been any real innovation since Armstrong launched the high gloss look with Grand Illusions. There are still products that are innovative. For instance, the long planks have seen some success, but there has been nothing that is going to get the consumer excited.”

Bill Dearing, president of the North American Laminate Flooring Association (NALFA), added, where there was once a “flurry” of innovation within the category, “it has certainly fallen off recently. The longer board was the most recent, and while it provides a beautiful look with all the performance attributes of laminate, it has challenges, such as displaying and stocking it, that limit its mass appeal.”

Another area of concern facing the category is alternate products, such as luxury vinyl tile (LVT) gaining popularity among both retailers and consumers.

“The market is certainly tough out there for the retailers,” noted Eric Erickson, laminate category manager for Shaw Industries. “They are certainly having challenges [but] there is certainly still an extremely large market for laminate and we want to give dealers every opportunity to be able to compete against [such factors as] the big box stores.”

Back to its roots

Executives were unanimous in saying the only way to fight these pressures is for the entire category—from the mill to the retail salesperson—to return to promoting laminate’s advantages over other products, something they say the industry has forgotten about in recent years.

“It seems like people gloss over the product’s benefits,” Cubell said, “and go right to price. Laminate still has plenty of advantages over other products, including LVT and engineered wood.”

Dearing agreed, but cautioned while it is important to stress the durability and aesthetics of the product, along with its environmental story, “an area in which laminate has always been on the ‘right’ side of from the start,” it should not be sold as bullet-proof like it was in the early days. “We certainly don’t want to go back to that. But we do need to make sure those who sell it do not get discouraged and keep selling it. That means NALFA, and the manufacturers, have to keep pushing information stressing laminate’s positive qualities.”

Pergo’s David Hartman, vice president of sales and marketing, said the biggest opportunities for laminate brands are to continue improving product design and performance and “to find the most compelling ways to communicate these value- added benefits. Only by continuing to invest in innovative product and branding will the category avoid becoming a commodity product.”

Dearing added, “Laminate didn’t start out as a commodity. It was brand driven with unique stories. The category as a whole needs to reposition itself—as a value product, not a commodity—for when the market fully comes back.”

Despite all the challenges, executives remain optimistic the category still has plenty of good times ahead, even for specialty retailers. “There a number of things in development,” Cubell said, “that will be coming in the next year that will hopefully spice up the market. And these evolved products will be put in specialty stores since retailers are the ones best suited for promoting and selling their advantages.”

The industry as a whole has been challenged for the past four or five years and the laminate category has been as well, Holm concluded. “Laminate flooring is a great product and continues to get more and more realistic. As the economy improves, laminate will survive and thrive.”

-Matthew Spieler

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