August 8/15, 2016; Volume 31, Number 4
By K.J. Quinn
After a good start to kick off the year, many resilient flooring suppliers say they are cautiously optimistic about the category sustaining its current growth rate through the end of the year. Industry observers and manufacturing executives point to a variety of factors, including leading economic indicators, new product development trends and consumer buying habits—all of which are pointing in the right direction.
In particular, observers cite the success of two game-changing products that are driving interest and demand for resilient not seen since the late 1980s.
“LVT has seen a tremendous resurgence,” said Scott Rozmus, president of Romeoville, Ill.-based Florstar Sales, a top 20 flooring distributor. “The variety of installation methodologies and ever-increasing design enhancements really have invigorated this segment, affording retailers a wide range of options.”
Following more than a decade of volatile sales and overshadowed by the emergence of ceramic tile, hardwood and laminates, resilient suddenly has recaptured center stage. The reinvention of LVT and the new WPC/composites/rigid-core products are providing dealers with plenty of flooring choices to capitalize on the shift in consumer preferences from soft to hard surfaces. “End users are now open to installing LVT in various areas of the home, meaning it is no longer limited to spaces like kitchens, bathrooms and laundry rooms,” said Jamey Block, vice president product management, resilient, Armstrong Flooring.
The proof is in the pudding as total resilient sales grew nearly 14% last year and are up a staggering $1 billion over the last five years, accounting for nearly 13.3% share of total flooring sales and 16.8% of volume, according to FCNews research. Leading the charge is LVT, whose sales skyrocketed by almost 39%, representing nearly 57% of residential resilient sales. “The residential resilient flooring category continues to grow at a pace greater than the total residential market,” reports Jeff Krejsa, senior vice president, marketing, Tarkett. “This growth has come through a continued transition from soft surface to hard surface materials within the home as well as conversion of laminate share to resilient share.”
Resilient flooring’s (particularly LVT’s) encroachment on other hard surface categories is well documented. “With the tremendous detail in design and performance attributes we are able to incorporate into LVT, it has become a strong competitor for all hard surface options,” said Jonathan Train, president and CEO of EarthWerks. “The ease of installation, durability and overall styling has lifted this category to find a home in all sectors.”
Indeed, LVT’s meteoric growth is gobbling up share from all corners of the market, including other resilient products, industry members say. Which raises the question of how much category sales are increasing organically and how high is the LVT ceiling. By comparison, sales of sheet goods—the sub-segment that remains the leading resilient flooring option in both sales and volume—were either flat or slightly up over last year, FCNews statistics show.
“While residential sheet remains valid and viable, projects or opportunities that leaned towards higher-end residential sheet years ago today tend to gravitate towards LVT,” Rozmus said.
Other types of resilient floors, including linoleum and DIY vinyl tile, continue to retain a small niche within different parts of the home. “We see nice growth in all [linoleum] categories; however, the modular product is seeing exceptional growth and the floating click flooring product is currently surging in sales,” reports Denis Darragh, vice president North America, Forbo Flooring N.A.
Market sector movement
Industry watchers believe the future growth for resilient flooring in the residential arena will hinge largely on the strength of the new housing market and extent of residential remodeling investments. Observers say market conditions were spotty through July and opinions are divided on how well they will fare the remainder of the year. “The economy is still not as strong as we would like,” said Dan Natkin, senior director, residential products, Mannington. “Consumer demand started well this year but has lagged somewhat coming into the summer.”
There is good news from the home front. New home construction, a sector that represents about one-third of total flooring sales, saw housing starts rise nearly 5% to a seasonally adjusted rate of 1.19 million units in June, according to the U.S. Commerce Department. Meanwhile, housing starts for the multi-family segment increased 5.4% and are on pace to reach approximately 411,000 units.
“On balance, the North American residential remodel segment is performing modestly, showing strength in key metropolitan areas but softer sales in less populated areas,” said Kurt Denman, chief marketing officer, executive vice president, sales, Congoleum. “The builder/ multi-family market continues to be the shining star by delivering strong sales in both sheet and LVT.”
Forecasting residential remodeling is a trickier proposition as purchasing habits can change on a dime, depending largely on consumer confidence levels. Among the many factors impacting confidence, expert say, are: the broader economy, the job market/employment levels and election year uncertainty. The July Consumer Confidence Index, conducted for the Conference Board by Nielsen, remained unchanged from the prior month at 97.3% as consumers were slightly more positive about current business and labor market conditions, suggesting the economy will expand at a moderate pace, economists say.
“We are seeing all channels participating in this category,” said Eric Erickson, vice president of marketing, Beauflor. “That is part of what has contributed to its success, all the channels see the benefits of the various resilient products, even luxury condos with million-plus price points.”
Activity is not just brisk on the residential front. Resilient flooring—and LVT in particular—continues to make headway on commercial applications—whether it’s full-scale contract installations or Main Street market projects. As a case in point, John Wu, president of Novalis, cited the acceptance of its AVA line of commercial LVT products at Surfaces earlier this year. “Our distributors are very excited about the product,” Wu said, noting the focus on these specific formats reflects the company’s confidence in the Main Street commercial sectors. “This is one of the strongest click products on the market.”
While Wu stresses the fact that Novalis spends significant resources on researching design trends to develop what the company predicts will be the hot colors and patterns, it’s not taking all the credit for the inspiration behind the new 2016 offerings. “Every year we invest a lot of money into developing new designs, but we also couple that with feedback from our distributor partners as well,” he explained.
Emphasis on innovation
Many manufacturers are ramping up their marketing efforts to not only drive interest in the resilient category but also to position themselves to capitalize on pent-up demand. A big part of this strategy hinges on continued investment in R&D to develop new products and technologies that genuinely excite consumers.
One such innovation in COREtec, the leading WPC product created by USFloors. Featuring a waterproof core “sandwiched” between a top layer of LVT and cork underlayment, the product has ushered in a whole new level of performance and durability. “The success of this newly emerged floor is phenomenal, even surpassing the speed by which laminate flooring got accepted by retailers and consumers nearly 30 years ago,” said Piet Dossche, CEO of USFloors. “The product is beautiful, performs and resolves problems associated with regular, solid LVT flooring products.”
Another innovator in this field is Shaw, which prefers to call its “WPC-style” product an “enhanced vinyl plank.” Dubbed Floorte, it requires virtually no acclimation prior to installation; can be easily installed over imperfect subfloors without conforming; and features strikingly realistic visuals that replicate hardwood, stone or other natural materials.
The stream of innovations and new product developments don’t end there. They also extend to increased realism in resilient visuals. “Continued improvements in film printing technologies combined with in-register embossing are blurring the line between LVT products and the natural materials they replicate, such as hardwood and stone,” observed Gary Keeble, director of marketing, Metroflor.
In their attempts to continually raise the bar on innovation, suppliers are concentrating their efforts on the new WPC subcategory. These products made a big splash at Surfaces as resilient suppliers introduced lines that received rave reviews from flooring dealers. For example, Congoleum’s new Triversa LVT collection is a 100% waterproof product featuring a rigid core with SmartLock Clic installation, 20 mil urethane wear layer and cork backing. “Orders for retail displays and field collateral have been incredible and driving significant order volume,” Denman said.
Then there’s Mannington’s version of WPC, Adura Max, a rigid core LVT featuring 6 x 48-inch planks and based on technology that boasts exceptional water and noise resistance. Not to be outdone, Armstrong reports “tremendous interest” in its new enhanced flooring—Vivero with Diamond 10 Technology, a Best of Surfaces winner—citing the product’s durability, stain and spill resistance and aesthetics. “Our best-selling Luxe Plank product is garnering additional attention as well with its new Rigid Core technology,” Block said.
The Pure Collection from Beauflor is another line that’s generating excitement at retail. “The technical and visual advancements in the resilient category, including cushion vinyl and LVT, along with the value compared to other products is what is really helping drive demand,” Erickson said. “The durability, the various applications and aggressive price points bring a lot of value to this category.”
Focus on installation
While R&D remains a key driver for resilient, a longtime industry bugaboo threatens to compromise customer satisfaction. The lack of qualified installers is an ongoing concern, considering not all hard surfaces are created equal and installation methods vary. “Everyone connected with the hard surface market is challenged with finding, training and establishing a meaningful relationship with existing and potential installation professionals,” Denman explained. “Natural attrition and the Great Recession delivered a one-two punch from which the industry is still struggling to fully recover.”
Suppliers say they are committed to working with trade partners and associations to attract and train the next generation of installation professionals. “Our firm has worked with our key vendor partner, Armstrong, for many years to sponsor residential sheet installation schools across our 10-state geography,” Florstar’s Rozmus said. “The training and authorization we provide in these schools has helped our retailers continue to field qualified installers within the category.” Florstar is also working with local unions to provide installation training and materials for use in these programs.
At the same time, manufacturers are working hard to produce products that are easier to install. “On the installation front, there continues to be innovation in locking systems for floating applications, as well as other technologies that promote ease of installation and fast room makeovers for do-it-yourselfers and professionals alike,” Armstong’s Block explained.
While innovation is viewed as part of the solution for resolving installation issues, there is also a movement among resilient suppliers to become more cost efficient. “LVT, unquestionably, has seen perceived value and pricing drop quickly across all product categories,” Krejsa observed. “Combine this with the amount of new manufacturing capacity in the U.S., and it has put pressure on all manufacturers to reduce costs.”
Some of this capacity is the result of suppliers seeking to produce LVT more cost effectively and improve service levels by shifting production from offshore to U.S.-based facilities. The irony is while American brands and manufacturers have increased domestic capacity and reduced their reliance on foreign suppliers, the latter is reportedly attempting to fill the void by exporting products to more distributors. The entry of non-traditional LVT suppliers into the U.S. market has also created concerns about commoditization and the impact on pricing and consumer expectations, industry members say.
“It would be naïve, of course, to think that as a ratio of LVT sold, domestically produced goods would not continue to grow in the future because of this added capacity,” Metroflor’s Keeble said. “However, with the correct supply/distribution chain, coupled with beautiful, high-performing and cost competitive products, imported goods will also continue to thrive.” Metroflor’s Aspecta Commercial LVT line is inventoried in the United States, allowing the company to ship product anywhere in the country within three days while distributors carry deep, localized inventories of its other brands.
Along those same lines, Armstrong Flooring is shifting the balance toward U.S.-made LVT with its new facility in Lancaster, Pa. The company anticipates new product developments will further distance domestic manufacturers from Asian imports. “We believe that there will be a surge in domestic popularity thanks to shorter lead times and more trusted goods, as U.S. production in the industry fully ramps up,” Block said.
Some industry observers who track the market closely believe we are only on the cusp of possibilities in terms of the potential that domestic production holds. “Hardly any of the domestic production we saw last year was up and running,” said Paul Murfin, CEO of IVC. “I think in 2016, as domestic production starts to come on stream, the market will continue to grow substantially to the point where it will absorb U.S. capacity.”
Looking ahead, a challenge for U.S. producers is to create differentiated products and stay ahead of the high level of innovation in imported products. Resilient flooring innovations are expected to center on products which provide high style and fashion. Leading the way will be LVT, experts say, which offers consumers endless design and installation options to choose from.
“The trend toward hard surfaces in the home will continue to fuel growth in resilient, both sheet and LVT,” Natkin stated. “The ease of maintenance, waterproof nature of the products, and amazing design possibilities make these the products of choice.”