November 10/17, 2014; Volume 28/Number 11
By Ken Ryan
Everyone in the industry knows that luxury vinyl tile—LVT, as well as LVP and LVF—has been the single biggest star in the flooring galaxy for the last few years.
The question remains about how long this stardom will last as more companies jump on the LVT bandwagon. This ever-growing field threatens to degrade pricing, and, with that, margin over time.
At least for now the consensus among leading distributors is that LVT will continue to grow robustly at the expense of some other products, including laminate, sheet and VCT in particular.
Minneapolis-based Herregan is one distributor betting big on LVT, with an impressive 35% of its business spread across vinyl tile and planks. Pat Theis, vice president of sales and marketing, said LVT/LVP has been growing at a 20% to 30% clip in recent years, which he admits is unsustainable. “There are so many more competitors in the market today and, therefore, there is a lot more price pressure. Everyone is in the game. For the long term we feel a lot will come down to domestic producers.”
Similar to Herregan and some others, Adleta of Carrollton, Texas, has enjoyed four to five phenomenal growth years with LVT. John Sher, president, said his LVT growth has slowed down percentage wise because those initial growth years were so substantial. He also noted there are many more competitors today than a few years ago.
Drew Mittelstaedt, partner at Longust Distributing in Mesa, Ariz., said he believes the growth of LVT will continue, although its rapid expansion will likely simmer downstream. While obviously impacting sheet goods, laminate and VCT, “The looks, performance and ease of installation and maintenance of LVT will continue to be a draw for designers, contractors and end users alike,” he said. “Once the multi-family industry cools, so will some of the huge growth spikes, but the category will be relevant as an important solution for many years to come.”
While some suggest LVT could become a commodity product similar to laminate, the majority said the two products are different, with LVT being more versatile and offering more application possibilites. “LVT is the superstar of the decade, an exceptional product in terms of performance and aesthetics that can give you the visuals that blur the real thing,” said Jeff Striegel, president of Elias Wilf, based in Owings Mills, Md. “And you can cross pollenate it across all channels. LVT has bigger applications than laminate, and thus a larger upside. You can use it in all places, you can grout it or not; it really is an incredible product.”
Jeff Jaeckle, president of Jaeckle Distributors, Madison, Wis., said given LVT’s design/aesthetic features, it’s a category that will continue to grow at a moderate pace in single-family residential and commercial for the foreseeable future. “But a large part of the growth has also been in multi-family,” he said. “At some point, I believe multi-family will be overbuilt and LVT will stabilize or decline depending on how abruptly construction changes. As for the timing, I don’t have a crystal ball, but I’d say we still have another solid year of higher growth for multi-family.”
While more competitors enter the fray, leading manufacturers continue to raise the bar with new styles and designs to separate themselves from the commodity players. Theis said Mannington and Metroflor have done great jobs to innovate and find ways to build value while demanding a premium price. “Our bread and butter is the middle to upper end. Expert patterns, styles and design, and going click, have allowed LVT suppliers to stay ahead of that commoditization although it is looming out there. Every year you have to think of ways to keep that separation.”
While virtually all the attention is being paid to LVT, 2014 was also a good year for sheet vinyl. Jaeckle said it did well with Mannington’s LVS (luxury vinyl sheet) offering, specifically Capri Basalt, which was its top-selling sheet product.
“LVS is a very innovative product,” said Paul Clark, product and marketing manager for Jaeckle, who handles the Mannington line. “Sheet vinyl has needed some kind of jolt for some time and it appears that this is it.”