Proliferation of new suppliers runs the risk of commoditization
Nebraska Furniture Mart is pleased with the top brands it carries in the floating luxury vinyl tile (LVT) category—among them Mannington, Armstrong and Karndean—but that hasn’t stopped manufacturers from contacting senior flooring buyer David Snedeker on a regular basis. “There seems to be someone new—or at least new to me—calling every week with versions of their latest and greatest LVT.”
During the long economic downturn, few, if any, hard surface categories demonstrated the promise and robustness as vinyl, with LVT the leader. The popularity of glueless LVT and its various click systems has produced a swath of new entrants, some with little or no flooring experience. “We’ve seen furniture manufacturers getting into the market,” said Yon Hinkle, product manager, residential tile, Armstrong.
Ken Voss, president of private-label supplier, VBA Bamerica, added, “Very early on in mid-2010, there were a number of laminate flooring makers in China who viewed this as the next profit mecca.”
Many resilient industry experts said the market for floating LVT is still expanding, even while some report that a shakeout is already occurring, especially among Chinese suppliers.
Retailers are seeing this, as well. “We believe this may be the single biggest growth category in flooring for us this year,” Snedeker said. “The category potential is there for sure. The issue is the amount of players that are now getting into the category.”
Sam Roberts, president and owner of Roberts Carpet and Fine Floors, Houston, agreed that, in general, the category is maturing “both in terms of aesthetics and practical installation. These products have expanded the range of their appeal and are reaping the benefits with increased market share.”
Voss, whose own company entered the floating LVT market in mid-2010, said many companies “are jumping up and down saying they are in the category when maybe they really aren’t.” Others argue that many Chinese laminate companies moved into LVT thinking it was an easier transition than it really is.
As Niclas Håkansson, CEO of Välinge International, explained, “LVT is, for example, not affected by humidity in the way a laminate or wood floor is, but instead, by temperature with expansion and softening at higher temperatures and shrinking and increased stiffness at lower temperatures (over and under room temperatures).”
With so many new entrants, the biggest concern among industry leaders is the risk of profit degradation. Armstrong executives suggest, at the current rate, floating LVT will be commoditized faster than any product in flooring history and others don’t disagree. “The pricing is very unstable now due to the increased market penetration by so many new suitors,” Snedeker said. “I am worried more about the margin potential for the category than the sales for 2012 and beyond.”
Added Phil Koufidakis, president of Baker Bros, a six-store chain in Phoenix, “The market is more readily accepting of luxury vinyl plank and it is growing; based on this it is becoming oversaturated and thus supply will exceed demand and price pressure will continue on every level, which means profit out of the chain.”
Between NeoCon last June and the recent Surfaces, scores of suppliers introduced their versions of floating LVT products for commercial and residential applications.
For LVT newcomers like Wood Flooring International, which entered the segment in 2011 with a handscraped visual, “the response has been better than we had hoped for,” said John Himes, president.
The same goes for Michael Raskin, president of Raskin Industries. “We have had a very positive reaction and some customers feel Elevations, a loose lay LVT, can be a real game changer. This is due to the fact it is one of the easiest products to install and the look and the feel of the product is very substantial, thus providing an excellent value along with extreme durability.”
Home Legend entered the market in late 2011 after realizing it was an opportunity worth seizing, according to marketing director Tiffany Davis. “It’s a new category for us that just came to fruition; it was a quick turnaround. Most of our products have been on the hardwood side. We’re still learning about this category. We’re testing the waters, dipping our toes in.”
Gary Keeble, product and marketing manager, USFloors, said while his is “not a vinyl company,” it falls within its sustainable nature. The company’s floating LVT is called Aquavina, which Keeble describes as “not your run-of-the-mill product.” Aquavina uses a waterproof-click system that does not require transition strips. “It’s not going to contract or expand like an ordinary HDF core. The locking mechanism is user friendly.”
Shaw Industries is offering products in two categories—locking and adhesive strip, according to Clark Hodgkins, resilient category manager. “Our systems are highly tested and made from the most durable materials offered in the marketplace today.”
Samples of Simplesse, Mohawk’s first-ever branded LVT collection with Uniclic technology, began shipping in March 2012. “We felt it was important for Mohawk to introduce a glueless Uniclic LVT offering this year,” said Roger Farabee, senior vice president of marketing, hard surfaces. “This allows dealers to offer another glueless LVT option and positions them to take advantage of LVT’s growth.”
Despite so many new products infiltrating the floating LVT market, traditional resilient stalwarts such as Mannington, Armstrong and Congoleum continue to shine with new offerings slated for the spring. “We have done well with Mannington’s Adura floors. Great looks and quality,” Koufidakis said, citing one new product.
Adura with LockSolid Technology was among the first interlocking LVT products to hit specialty retail. The “no glue, no fuss, no mess installation system” is backed by a no-gap warranty, according to David Sheehan, Mannington’s vice president, resilient business. He said the second-year technology experienced triple-digit growth in 2011 and strong double-digit growth is expected this year.
Karndean Loose Lay is the glueless version of Karndean’s design flooring that senior marketing manager Mike Lang said solves many of the installation issues facing professional installers today. “It reduces subfloor preparation commonly associated with glue-down flooring, reduces installation time and is 100% recyclable. We introduced Karndean Loose Lay to the market in September to fulfill an increasing demand for a viable, floating LVT, and early indications are that it is being well received.”
Armstrong, which had offered a good, better and best version of its successful Luxe plank, is launching a Luxe Value version to round out its assortment. “Our distributors and retailers have been asking for this to compete head-to-head with the home centers,” said Allen Cubell, vice president of product management for resilient. “The industry has been deluged with floating products and a lot of them don’t work that well. Luxe has been growing significantly and it goes back to the confidence level the industry has in our products.”
In a bountiful LVT market, marketers often use their click systems as a differentiator with Uniclic and Välinge being the standard bearers.
Dealers are split on the importance of click systems as a key selling point, with Koufidakis saying, “Customers don’t care about click systems. They care about quality product and beautiful visuals. A click system is a manufacturer issue. No customers buy one product instead of the other based on click system. They buy look and price.”
However, Roberts sees advantages to the type of click system used. “I’m a huge fan of the new products coming out with Unilin click profiles. I love the advantages it provides versus glue strip products. I would not be surprised to see those glue strip products go the way of glued tongue-and-groove laminate. For retail, and anything other than heavy commercial for that matter, I also much prefer the new click products instead of those installed with full spread adhesive.”
Håkansson said Välinge based its thinking on the LVT loc design on its experience from early tests in 2001 and from the other product categories it is engaged in. “This means that the material characteristics as well as installation has been taken into consideration.”
Välinge designed its system with a high locking angle that enables strength at higher temperatures and a design that has been modified to fit very thin floors.
Bart Van der Stockt, managing director at Flooring Industries, a Unilin/Mohawk company, said Unilin developed the locking system for the first LVT manufacturers that were interested in the idea. “We worked hard on these developments and we learned a lot from it. This knowledge allowed us to give our licensees a head start by sharing this know-how. It is clear that almost all LVT manufacturers are convinced that Unilin is the best partner to work with on locking technologies as we continue to sign up companies within the LVT industry.”