Article Number : 4405 |
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| Date | 4/21/2009 9:56:37 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=4405 |
| Abstract | By Sarah Zimmerman In the aftermath of what industry heads are calling one of the most difficult years in flooring history, manufacturers, dealers, distributors, specifiers and installers alike find themselves again withstanding the storm that is... |
| Article | By Sarah Zimmerman In the aftermath of what industry heads are calling one of the most difficult years in flooring history, manufacturers, dealers, distributors, specifiers and installers alike find themselves again withstanding the storm that is 2009. However, a positive attitude coupled with true business savvy, continued investment and overall innovation will prove victorious, according to leading hardwood mills, which, as a category, survived approximately 20% unit declines and 25% sales drops in 2008. “Though 2009 will be another challenging year for wood— expecting the economy and industry to fall further than last year—our focus will remain on those things we can control: product, quality and service,” declared Daniel Call, vice president of Armstrong’s wood product management. “We will maintain our investments in consumer advertising, merchandising and programs that drive demand. Today our strategy is to offer the widest assortment of products in the industry.” Harris Wood is another mill standing up to the current climate in preparation for the future. “We continue to be very careful with our spending, ensuring we focus on activities that will drive sales and retail placements for our distributors, positioning growth once the economy turns—we will likely start to feel the results of the stimulus package in late 2009—but within the parts of the market that are still active, there is a polarity of activity,” explained Tim Tompkins, vice president of sales. Luc Robitaille, vice president of marketing at Boa-Franc, makers of the Mirage brand, also seconded the notion of prevailing through the tough times by looking toward the “bright spots. Since the wood flooring business is closely related to the building and construction market, we noticed the same overall situation in quarter one of ’09,” he said. “However, we are starting to see positive signs and think we will see a very slow increase in the second half of this year.” Bright spots So what exactly are the “bright spots” of ’09? In this arena, leading suppliers remain focused on product. Higher-end products— those that provide a unique visual—still shine some light in the category, noted Ed Duncan, vice president of residential marketing for Mannington. “Consumers are, first and foremost, looking for hardwood floors that are beautiful—one of Mannington’s core strengths, design and styling,” he explained. “This will continue throughout 2009.” In agreement, Dewevai Buchanan, vice president of hardwood for Unilin Flooring, said, “If the flooring industry as a whole is divided into the categories of good, better, best, the ‘better’ and ‘best’ segments have actually held relatively steady despite these challenging times.” He explained the consumer’s need to make her home more comfortable as she plans to be there for a longer time partially drives this. On the contrary, extreme low-end products also remain stiff market share competitors, Robitaille noted. “The products now selling are either on the high or low end. Demand for wood flooring is still good in both extremes.” He also noted green, and innovative and diversified products as current pack leaders. And taking high end vs. low end a step further, NWFA’s Ed Korczak and Harris’ Tompkins justified price and value as a large part of any product appeal today. “Prices remain very competitive right now,” Korczak explained, “and this should help low-end sales.” He also noted due to the weak dollar, the U.S. domestics should feel an increase in business. Tompkins, on the other hand, said people really have an eye for value in today’s economy. “They are focused not just on the cheapest price, but on the best value for their money.” He added because of this, consumers are actually willing to spend more to purchase a high-quality product with unique looks. However, quality, value and price are by far not the only issues affecting the wood category in 2009. Leading mills also ostracized sustainability—both on a moral and legal level—a shift in imports vs. domestic and of course style and trends asmajor instigators on the road to recovery. Moral, legal obligations “Sustainability and green are two words that have been and continue gaining importance in the hardwood segment,” said Brian Greenwell, vice president of sales and marketing for Mullican Flooring, who noted with all things being equal, a consumer almost always chooses the green option. And not only should mills be eager to join the green revolution to appeal to consumers who are compelled to buy green from a moral standpoint, but with recent legal actions— Lacey Act, CARB, etc.—Don Finkell, president of Anderson, said sustainability and environmental recognition are now being forcefully mandated. “This [the green movement] represents a positive direction the industry is taking regarding the environment,” he said. “And now, with legal ramifications being enacted, we’re really starting to see the movement take effect—better economic practices overseas, a more level playing field for domestic producers, etc. And looking at it from an economic standpoint, Shannon Fuller, president and CEO of Baker’s Creek, said the green story definitely adds something, a bit of ambiance. “We all can only go so far on price,” he explained, “but sustainability and an environmental backbone are outstanding practices and stories to have in your artillery.” To the same point, Unilin’s Buchanan said consumers have become increasingly aware of green issues ranging from indoor air quality to the destruction of our planet’s rainforests and exotic trees, which has affected their shopping habits. “Consumer shopping habits have begun to reflect a new responsibility in purchasing choices, which we anticipate to continue growing stronger with time. Therefore, recent regulations such as CARB and the Lacey Act make environmental aspects a factor in the products a distributor or retailer wants to be associated with.” Armstrong’s Call added dealers need to be aware of their products’ sources because they are now legally responsible for ensuring the legality of their hardwood and laminate. “The old adage, ‘If it’s too good to be true, it probably is’ will be much more meaningful for the exotic species today and in the years to come.” Keeping it local The recent laws, combined with tight funds and consumer confidence, have not only affected the issue of green, but also begun changing the import/domestic ratio in the U.S. “Though slight—figures are still not complete and therefore we cannot calculate a percentage change—imports have declined in the first quarter of 2009 versus the same period last year,” Korczak said. “This trend will likely continue given the weak dollar and potential impact of the Lacey Act.” And though Boa-Franc’s Robitaille said the company has not noticed a significant decline yet, he thinks consumers will buy more domestic products when they fully realize the impact on the economy and environment. Anderson’s Finkell also noted a probable slight downturn in imports, but said leading hardwood countries, like China, will step up to the plate and stand by the higher standards. “Foreign competitors, like China, are smart, creative and hard working,” he said. “Once the rules are defined, they will continue to play the game accordingly.” Baker’s Creek’s Fuller said it’s these rules that will ultimately decide who’s left standing. “We’re just now— quarter one—starting to see the increase in demand for domestic products. However, customers are looking for certified, eco-friendly, legal products at similar prices, and whoever is on point with all of this is set for success.” Trending ahead Looking ahead, Fuller also noted an overwhelming demand for value. “People want more bang for their buck.” And it’s this—value—that seems to be the trendsetter heading into round two of ’09. “As aforementioned, value-priced, basic and high-end products will continue taking market share,” said Tompkins, who noted click systems, quality and interesting colors and textures as key drivers among the products offered. Buchanan noted the mid to premium price points will remain the steadfast sellers throughout the year. In the segment, he said hickory, maple and walnut— domestic exotics—medium to darker designs and wider widths with low-gloss finishes will gain market share. “Greyer wood tones currently popular in Europe may make their way into upcoming product launches in the U.S. as well.” And, regardless of price point, Call said a wide variety of stains and finishing systems that help to create a large selection of visuals—including many exotic looks— along with antiquing, distressing and wider-width products will appeal to consumer senses. However, he noted traditional U.S. species continue to lead the market. NWFA’s Korczak addressed both high- and low-end tendencies, which he said will continue doing better than mid-level products. “Customization trends are still going to be popular on the high-end—borders, medallions, handscraping, etc.—but a return to traditional looks such as oak strip seem to be resurfacing at the low end.” Expanding, Robitaille said traditional moderns or “casual glamour is a strong trend as people are tending to look for quality products that add beauty to their homes without being too ostensive.” |