Executive Forecast: Despite obstacles, industry leaders remain optimistic

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By Ken Ryan

The uncertainty of tariffs, a slowing economy and an upcoming presidential election are among the potential roadblocks to continued expansion for the flooring industry in 2020. And yet, despite these challenges, flooring executives are confident the industry will adapt and thrive in 2020 much like it has in previous years. Double-digit growth in waterproof vinyl flooring will be the catalyst to fuel growth in the coming year, executives say.

Brian Carson

President and CEO
AHF Products
I believe the overall floor covering market is going to be up 2%-3% in 2020. We are further along in the economic recovery cycle, so it is natural to see slightly lower growth. Looking to the future, I think the fundamentals are still good. Consumer confidence is strong, employment is high, debt levels are very low and interest rates are low.

But 2020 will not be without its challenges. Installer availability and skill avail- ability is an issue without an easy solution. While there are spectacularly talented folks out there who have been doing this for many years, there is just not as many of them as there used to be. That is an issue, but it is one that is solvable. One approach is to make floor covering products easier and more forgiving to install.

Another challenge is the rapid rise of SPC, which is stealing market share from all other segments. Having said that, I think SPC is becoming more mature. I think the growth is slowing, but I still think it is going to grow next year and still drive the growth of the market. The problem is everybody has it and everybody is selling it. There is really not a lot of innovation and differentiation between [brands] right now.

That begs the question: What is next? The industry is going to look for a new innovation to bring excitement and drive sales as well as margins. We are working to make sure that next thing will be innovations in hardwood flooring—sort of a return to hardwood. As a dealer you certainly do not want to walk away from SPC—it is such a big part of the market. But the reality is, the next five years are going to be different than the last five years.

Russell Grizzle
President and CEO
Mannington Mills

With the economy still doing well and the GDP and consumer confidence both on the rise, we feel the industry will see growth in the 2%-3% range for 2020. There is still a lot of uncertainty, so we think the first quarter will be soft and the increase will come in quarters two through four.

The largest unknown is still the impact of tariffs on imported floor covering products. More than anything, tariffs have caused a lot of havoc and confusion in the market. There is so much uncertainty and fluctuation—a lot of work goes into inventory valuation, for example—every time something changes. Another unknown is the continued growth of LVT and its impact on all other flooring categories.

As an industry, we continue to be challenged by rapid change, but we have been facing that challenge for almost 10 years now. Those of us in multiple product categories continue to be challenged with the changing consumer preferences—some categories are growing rapidly while others are declining just as fast.

However, some of the greatest opportunities lie in connecting with consumers about flooring as a good investment. Our job is to make flooring top-of-mind when it comes to spending home improvement dollars and helping consumers realize the impact it has on their home’s overall aesthetic appeal—and its value.

Paul De Cock
Mohawk Flooring NA

One of the biggest challenges facing the flooring industry today is figuring out how to reach the emerging consumer. The future consumer, the under-40 group, is critical to specialty retail’s success for they are more likely than the average flooring consumer to shop online or at discount retail stores. In order for specialty retail to succeed, we need to use our brands and strength to help them reach the emerging consumer. Opportunity lies in providing our retail partners with the strongest brands, best product assortment and innovative programs to build branded experiences online and in store.

As the world’s largest flooring manufacturer, we benefit from having a significant amount of domestic production capability. As discussion started on tariffs, we expanded our U.S.-based manufacturing as a result. Our goal is to simplify things for our retail partners by launching product faster, offering more intuitive merchandising that is easier to install and providing powerful story telling and product information online. Our big initiatives for 2020 include elevating and driving demand to our master brands: Mohawk, Pergo and Karastan—which includes launching Karastan’s first-ever hard surface lines. Along with a strong product assortment, we are focusing on expanding our dealer programs like Omnify and Five Star to help our retail partners reach more customers through enhanced branded online and in-store experiences. Additionally, we are continuing to increase visibility and create value through our Edge partnership by identifying the right partners, placing the right products and then driving the right consumers into their stores.

Tim Baucom
Shaw Industries

The industry experienced unprecedented change and uncertainty in 2019, and 2020 will likely hold much of the same. As an industry, we are navigating trade wars and a unique political environment, among other external factors. Shifting consumer preferences are driving innovation. However, I think the industry will adapt and thrive through these challenges.

Going forward, I believe the biggest challenge facing the industry is uncertainty—uncertainty as it relates to taxation, tariffs, immigration and other political and econonic issues—and the rapid pace of innovation and change that continue to challenge our industry. As more products enter each sector, saturation in the marketplace and the resulting impact on purchasing decisions can lead to confusion among consumers and RSAs.

As for greatest opportunities, delivering the right product at the right time—informed by consumer research—is what will set flooring providers apart in today’s industry. Core and surface treatment solutions, such as those found in Shaw Floors’ Floorté Waterproof Hardwood, have been key innovations over the last year, and we will continue to drive advancements in these technologies.

At Shaw, we will continue to drive innovation in the resilient and hardwood sectors. These are categories that Shaw has excelled at and will continue to place great emphasis on. We are also committed to the soft surface sector. Carpet tile remains a key initiative for Shaw in 2020. We will continue to bring soft surface investments online at our plant in Andalusia, Ala. These investments allow us to manufacture the fibers and yarns our customers demand and utilize more advanced tufting technology. We have invested more in the past five years in U.S. manufacturing than in any other five-year period in Shaw’s history, with the majority of that being in soft surface manufacturing

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Dec. 9/16, 2019

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