Article Number : 4651 |
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| Date | 7/14/2009 9:06:16 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=4651 |
| Abstract | By Sarah Zimmerman As the economy continues to affect all industries and categories, the hardwood segment—specifically exotics—has also been shape-shifting as of late due to an increased awareness of green and sustainable offerings and new government legislation, such as... |
| Article | By Sarah Zimmerman As the economy continues to affect all industries and categories, the hardwood segment—specifically exotics—has also been shape-shifting as of late due to an increased awareness of green and sustainable offerings and new government legislation, such as the Lacey Act. And, though generic style trends remain consistent across the board—longer, wider, darker planks with unique visuals— with the new buzzword “domestic exotics” recently entering the scene, leading suppliers’ market predictions for this year’s second half are not set in stone. Ed Korczak, executive director and CEO of the National Wood Flooring Association (NWFA), for instance, saw a leveling off of exotic sales near the end of ’08, which he said has and will continue to hold true through ’09. He lists a severe decline in housing starts, affects of the recession and uncertainties about the Lacey Act as lead causes for this. However, Lukasz Piatek, sales manager for Elegance Exotic Wood Flooring, noted the exotic share of the hardwood market will only continue growing throughout the year and into 2010, saying continued exposure and education will be key. And then, of course, there’s the newfound debate on which “exotics” will outpace the rest, true/tropical or domestic. So, what topics are being discussed as instigators for change within the exotic market, and where exactly is it being pushed? Dan Natkin, director of hardwood business for Mannington Mills, deemed today’s market to be in a state of flux. He said more than any other factor, this is due to the current unfamiliar economic state, which has hurt the entire hardwood sector, including exotics. Expanding the cross-category idea, Korczak said the economy has had several key effects on overall hardwood sales, which in turn has directly affected exotics. “It has caused consumers to be more cautious relative to remodeling and renovation activity, and has severely curtailed new home construction.” Similarly, Armstrong’s Daniel Call suggested general market decline has been a leading cause for a drop in exotic sales. “Consumers are trading down in price in order to save money, and exotics tend to do poorly when that happens.” And, offering a different view, Piatek noted the economy has obviously affected everyone at every level. “However, there are also more exotic products in the U.S. market than ever before and much fewer buyers, which has created price wars and inevitably less competition and better sales for those still standing.” Legal issues Though many leaders agree the wrath of the Lacey Act has not yet been felt, the when, where and how are still up for debate. And, although the government has allowed the recently expanded requirements of the law to be implemented in phases through October, an astounding number of manufacturers have already become compliant. Dewevai Buchanan, vice president of hardwood for Unilin Flooring, a division of Mohawk, explained, the itegrity of the supplier is now more important than ever. “Lacey Act requirements have actually worked in favor of the responsible brands, such as Mohawk and Columbia. Retailers now rely even more heavily on companies and brands that over the years have earned their reputations as honorable and responsible corporate citizens.” He also pointed to the positive effect Lacey has in making a level playing field for both domestic and international business, demanding all wood flooring providers play by the same set of environmentally responsible standards. In agreement that the current regulations are beneficial to the industry, Korczak also pointed to the amount of confusion associated with exotics and Lacey. “The Lacey Act and a general raising of people’s ecological awareness—specifically rain forest deforestation—have made consumers wary of seeming to promote illegal logging by acquiring exotic hardwoods, which are a product of the world’s rain forests. However, once suppliers become comfortable with Lacey Act provisions, processes and requirements, it is likely that exotic sales will rebound.” He also noted a return to domestic species until suppliers and consumers are educated enough to reach a level of comfort. Tropical vs. domestic By the same token, Eric Anderson and Pat Fitzgerald, market and marketing development, and national sales manager for Weyerhauser’s Lyptus brand, respectively, suggested even the connotation of exotic could drastically sway consumers one way or another. “In one sense, with the increased presence of the Lacey Act and sustainability, uninformed shoppers could automatically have a negative association with exotics.” However, they noted the market’s unique and beautiful appeal also lies within its name, making for quite a catch 22. “Therefore, ‘domestic exotic’ seems to be a way of making the consumer feel good about her purchase, while still offering her a rare visual.” Even Piatek, who continues seeing growth across the entire sector—in both tropical and domestic—places domestic exotics at an advantage in today’s market. “Domestic exotic products have a tactical advantage—limitless color options on very stable lumber with very aggressive pricing. People are well informed; this is a buyers’ market.” And, Mohawk’s Buchanan pointed to the recent trend of retailers and distributors keeping lower levels of inventory, requiring more rapid service as “a silver lining for domestic exotic products. Lead time and financial commitment related to imports do not accommodate the quick-turn, short lead requests for inventory replenishments as well as domestic exotics can.” Also in agreement, Armstrong’s Call said though tropical exotics are still a part of the market, “they are fully matured at this point and possibly beginning to decline, not to mention true vs. domestic is not quite a differentiation that’s even recognized everywhere in the industry.” For example, he noted retailers often mention walnut, cherry and hickory when asked about exotics. “These domestic exotics have always done better than tropical exotics due to availability and cost, whether categorized domestic or not. Visual distinction still reigns supreme in the exotics market.” On another note, Mullican’s Greenwell suggested though green and sustainable practices and products have taken root, the economy is also playing a role in the boost of domestics today. “Consumers are being cautious about over spending and are opting to pass on what they perceive as luxury items—tropical exotics—for a more practical solution— domestic exotics.” Similarly, Natkin mentioned an increased interest in alternative woods as well, such as stranded bamboo. “These are other options offering a specific uniqueness and variation that consumers expect from an exotic, but with the assurance that products have been harvested in a sustainable manner. Domestics fall into this category, and while true exotics such as Brazilian cherry, Tigerwood and Santos Mahogany remain popular, their alternative counterparts— domestics—still represent the lion’s share of non-oak sales in the U.S.” |