Laminate: Dealers find new methods to generate profit

Home Inside FCNews Laminate: Dealers find new methods to generate profit

June 8/15, 2015; Volume 30/Number 1

By Nadia Ramlakhan

Although laminate seems to have lost some of its popularity—due in part to the rise of competing products, namely LVT—the category still carries with it a number of benefits that appealed to consumers in the first place: durability, ease of maintenance and simplified installation. Retailers who still generate a large profit from laminate focus on its advantages, along with exceptional customer service, training and attention to detail that comes with owning a specialty floor covering store.

One—and maybe the only—major drawback of laminate is its susceptibility to water and moisture, which can often cause swelling at the joints. While LVT offers a waterproof solution, some laminate manufacturers have taken on the challenge in order to keep up.

“Durability is the key with laminate,” said Ron Rogers, founder of America’s Carpet Barn in Traverse City, Mich. “But if an ice cube melts on the seam, it’ll ruin it. Right now we are only selling Balterio from IVC—it’s waterproof and I think that’s going to be the only thing to save laminate flooring. When IVC combined durability with waterproof features, it took off like wildfire.” Rogers also noted that Balterio is very affordable, allowing it to compete with the various types of LVT on the market today.

Independent flooring dealers provide a personalized shopping experience for the customer, a perk specialty retailers should optimize when selling laminate. While big box stores and major home centers are known for low prices, it is recommended that retailers stop competing with major outlets altogether and concentrate on delivering a simple, easy and painless buying process for the customer.

“The best thing a specialty retailer can do is stop trying to compete with the big boxes and focus on selling their strengths,” said Eric Mondragon, hard surface buyer for the flooring division of RC Willey Home Furnishings, with multiple locations throughout Utah, Nevada, California and Idaho. “They should staff professional sales associates who can correctly qualify the consumer to products that best meet her needs. Consumers will gladly spend a little extra to have a great shopping experience.”

Despite recent allegations against Lumber Liquidators and Lowe’s claiming their laminate flooring contained high levels of formaldehyde, laminate sales haven’t dramatically declined. In fact, the curiosity and concern sparked by the news helped some retailers in differentiating their product assortments. “I think the Lumber Liquidators exposé has actually helped specialty retailers sell better goods,” Mondragon said. “Consumers now question the origin of product and are no longer making buying decisions based on price alone.”

At RC Willey, laminate sales have increased by 20% over last year, although units are down 13%. This translates to consumers opting to buy higher- grade laminate. The sentiment is the same at America’s Carpet Barn, where laminate offerings consist only of high-end product, benefitting both the business and the customer.

“I make a nice profit out of laminate because I don’t offer the lower end,” Rogers said. “The key is to only offer the nicer laminates and make it about quality instead of price points. We don’t sell $0.69 or $0.99 laminates because we wouldn’t make money if we did, and those are the ones we typically have issues with. We don’t want our customers to have problems so it’s not worth it.”

When it comes to selling, dealers agree that laminate has a story to fit multiple consumer needs. Whether she is trying to maintain a clean home while juggling an active lifestyle or wants the latest styles and designs without incurring the high cost, the category attracts all kinds of consumers as its visuals have evolved over time. No longer targeted toward the budget-conscious, first-time homeowner, new technology and sophisticated looks have made laminate an ideal fit for a larger audience, opening the doors to new opportunities for retailers to profit.

“Initially laminate was all the same regardless of the manufacturer; it was a wood plank look,” said Dawn Iversen, president and owner of Jerry’s Floor Store in Fridley, Minn. “Since then it has expanded into stone, different sized tiles—even patterns of stone mixed in with wood. As the product category was growing, we started to see the return of our past customers. A few years ago it may have been the younger customer attracted to the price but with the evolution of style and design, 40- to 50-year-olds are coming in interested in the product.”

Iversen makes sure to promote all of laminate’s advantages including those that come with the forgiving nature of the material, allowing it to be installed over existing products. “Instead of tearing out underlayments and tearing the customer’s home apart, laminate is a better solution,” she continued. “It takes less time and is less of a headache. It could cost several hundred dollars or more for some units to accept a new sheet vinyl, whereas laminate floors may be installed over existing conditions. It offers a more efficient solution and could be cheaper for the customer in the end.”

Another surefire way to generate a larger profit from laminate is to simply have it in stock. Product that is ready for immediate installation is desirable for customers who want to make the process as easy as possible. Jeff Macco, co-owner of Macco’s Floor Covering, with multiple locations throughout Wisconsin, has a designated area in the showroom for in-stock products, in addition to manufacturer displays. By ordering them truckloads at a time, Macco is able to offer customers a better value. “The items that we inventory really give us a competitive advantage. The goal is to show our inventoried products first and explain to our customers that it’s the best value for them. They like that it’s readily available, plus it’s much cheaper.” This tactic allows Macco’s to compete with the pricing of big box stores without having to offer lower grade materials.



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