Wholesalers ride resilient’s coat tails

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By Ken Ryan

It would not be outlandish to suggest the flooring industry has never seen a product category quite like LVT in all its permutations. While some observers like to compare the LVT phenomenon with that of laminate in its heyday, distribution executives say there is no comparison.

“Laminate was strictly a retail product—it never made it into commercial,” said Jeff Striegel, president of Elias Wilf, Owings Mills, Md. “On the other hand, LVT is cannibalizing every channel. It may be the most disruptive product in the annals of flooring.”

In the past five years, distributors have almost completely flipped their merchandise mix. Whereas LVT as a category apart from resilient once accounted for about 10% or less of the overall mix, in 2019 it is in some cases four or five times that amount. In 2018, 33% of Elias Wilf’s business was in the LVT segment. This year, it is closer to 40%.

Others have a higher percentage, with B.R. Funsten at greater than 50%, and Herregan at 52%. “Our mix is becoming less diversified and becoming more SPC/WPC driven,” said Pat Thies, vice president of sales and marketing for Herregan, Eagan, Minn. “We anticipate the category to continue to grow, with SPC leading the way.”

Furthermore, 25% on LVT products have not dampened the enthusiasm, thanks to the many benefits it provides end users in both residential and commercial spaces. As Striegel explained, “Consumers love waterproof, but the real love affair is with the retail sales associates—they love the product and they believe in it. We don’t see anything that will knock that off stride. One, the product is continuing to develop. Remember, the SPC category didn’t exist [three years ago], and now it has taken over the entire multi-family category—and now working into builder.”

That SPC did not exist two years ago speaks to the rapid development taking place within the market today. Executives are now talking about the next wave of changes poised to transform the segment yet again. “Technology from the back to the core to the face plate is what’s happening, and it gets you more authentic looks in ceramic and stone,” Striegel said. “I can’t see how it is not going to take more market share. It is one of those rare products.”

Striegel said he sees hybrids making an impact now and in the immediate future. “We’re not fully ensconced in the hybrids yet,”he said.“As we get into these hybrids that will be an entirely new dimension that we haven’t embraced. This is just unfolding. There will be a second or third evolution of the product with probably two more to come after that—so we’re just getting going with LVT. And we’re not even talking about the mineral core with the magnesium oxide.”

As more players enter the multi-layer flooring space, expect to see price degradation and perhaps a slowdown in the overall market. In the meantime, LVT, WPC, SPC and rigid rage on.

“I see continued growth in the category,” said Hoy Lanning, president and CEO Of Haines. “The mix is changing from ceramic, marble, stone and wood to LVT/SPC. We are growing this LVT business 30% plus. The other products are falling. We used to sell wood/ceramic, for example: $5 per square foot and today we are selling the same look for $2.50 a square foot. We ship the same weight or more on trucks, but our gross profit dollars we take to the bank are less.”

The downside for distributors is the entire LVP/rigid core category has taken share from even base-grade hardwood and is growing at two-and-a-half times that (or even greater) of other flooring categories. A more balanced portfolio is what the industry needs, say executives, not a single product monopoly.

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July 27, 2020