Article Number : 4964 |
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| Date | 10/13/2009 9:31:55 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=4964 |
| Abstract | By Matthew Spieler HICKSVILLE, N.Y.—While the Great Recession the country is in has been bad for every part of the industry, the resilient category has actually fared the best. This trend seems to be holding for all of 2009 as the segment continues to... |
| Article | By Matthew Spieler HICKSVILLE, N.Y.—While the Great Recession the country is in has been bad for every part of the industry, the resilient category has actually fared the best. This trend seems to be holding for all of 2009 as the segment continues to pick up market share on the very categories that had chipped away at it for more than a decade. Through the first three quarters of the year, sales of resilient flooring are tracking at a loss in the mid teens with industry estimates averaging at approximately 15% in both sales and units. In fact, up until early this year—when commercial markets started to fall off the map—the category overall was actually holding its own. Unlike other segments of the industry that lean heavily on residential sales, resilient is more evenly split with commercial. While the drop is worse than last year’s, it is still far better than what the rest of the industry is experiencing. Some analysts feel there are categories off more than 30%, while others say the industry as a whole is seeing losses of more than 20% at the manufacturing level. So why, after losing market share for more than 10 years straight and during a recession, is resilient pulling a reversal of fortune? Most executives will cite recent polls and studies, not to mention a simple observation of which types of products consumers are purchasing and the answer is simple: People have turned to buying things that combine high value—performance, maintenance—and low cost, two of the category’s strongest features. Dean Thompson, president of the Resilient Floor Covering Institute (RFCI), noted “VCT (vinyl composition tile) and other vinyl floors offer long term durability at a low cost, providing a better value compared to higher end flooring products.” Along with performance, the category never stopped innovating during the time is was losing market share. Mills are now able to manufacture products that not only have great durability or life cycle stories, but looks and textures that rival all types of natural wood, tile and stone. “From a styling/design standpoint,” Thompson explained, “there have been some impressive advancements in resilient, in particular LVT. Mills have created high-end styles that simulate the appearance of wood, stone, metal, etc., that are flexible to install and fun to use. These fashionable floors combine the best of design and technology in one product.” The result, he added, are “Products that look great, last a long time and are easy on the budget—a perfect match for what consumers are looking for in today’s economy.” Mill executives agree with this assessment. “There is renewed interest in vinyl, for all its traditional attributes,” said Allen Cubell, Armstrong’s vice president of residential resilient. “Vinyl is one of the most economical flooring choices; it offers the widest variety of quality levels and prices, and has the largest variety of styles and colors. It can be used on all levels. It is quiet and comfortable. It is water resistant. It is easy to clean and maintain.” Gary Finseth, director of marketing for Tarkett Residential, pointed out, there are many customers now entering the flooring market with a renewed sense of what value and performance means to them. In turn, “it has opened up the entire category to a large consumer base that may never have thought about these types of flooring products.” He explained, this newfound audience has given those in the resilient segment “a great opportunity to educate them on alternatives that present great design, style and quality while better meeting their budgetary needs.” This chance to educate end users goes beyond creating sales during the recession. It will have long lasting benefits—even after the economy starts turning upward, Finseth added. “We anticipate this trend to continue [because] there will be an entirely new audience exposed to the features and benefits of the resilient category.” Dennis Jarosz, Congoleum’s senior vice president of sales and marketing, attributes the reasons already cited are only part of the story for the renewed interest in resilient. “Another reason would be the continued strength in property management, which although off a bit, is still a mainstay of resilient flooring.” The “new” resilient As mentioned above, the resilient category as a whole has invested heavily in new technology and manufacturing techniques to help make products more attractive to a wider range of end users. And while this push in innovation has opened up new markets and created resilient products that could not even be imagined a generation earlier, it has also created an interesting conflict. Specifically, sales are slow yet companies are being asked to broaden their product portfolios to meet these emerging technologies. Kim Holm, Mannington’s president of residential business, said besides the obvious negative economic issues, “the biggest issue facing the category is the expansion of ‘resilient’ to include fiberglass and LVT. Because of the tremendous growth in each of these sub-categories, resilient is having a bit of a resurgence in the eyes of the retailer. This is unique to resilient, which continues to gain share in the face of a shrinking economy.” As such, he explained the company has been focused on these areas with continued expansion through innovative technological product enhancements and styling that pushes the envelope. “Our efforts are centered around giving retailers products that offer both technological advantages as well as visual ones, offering them easy and logical trade up stories at the point of sale.” Armstrong’s Call agreed technology has opened a new door for the category, pointing to the “strong adoption” of the company’s Alterna LVT product as an example. “We are so excited about the category that we just launched our floating line, Luxe Plank last month (FCNews Sept. 14/21). Even on the sheet side of the business, “we see growth in the newer technologies, including fiberglass and loose lay floors,” he said. “We believe much of the interest is, of course, the great visuals— always the No. 1 selling point —but more so they are different than traditional vinyl floors and provide installation choices, such as the option not to glue it down.” The trade continues to embrace these products, Call added, as he pointed to continued growing sales of the company’s CushionStep (fiberglass) and StrataMax (loose lay) as examples. “Technology also has brought new life to resilient flooring,” confirmed RFCI’s Thompson. “Developments such as Metroflor’s Konecto have helped move the category forward. One of the hottest trends in resilient is fiberglass-backing. The product offers a cushioned, thicker feel than traditional felt-back, as well as the option of loose-lay installation.” The future Based on how it has been performing the last two years most people in the resilient sector are more optimistic than those in other segments. But Thompson cautioned, “We have to be realistic and recognize that consumer spending is the primary driver of our economy. As long as unemployment is in the 10% range, which it is expected to be through most of 2010, we will continue to experience a lack of economic robustness and all home furnishing categories will suffer.” That said, he still feels the category will continue to grow its market share “based on affordability, aesthetics, durability, innovation, and sustainability,” an area Thompson said the category is as strong in as any other, if not more so. Congoleum’s Jarosz said, “There does not seem to be the weakness looming over flooring sales that existed in the fourth quarter of the previous two years. For now, we are forecasting very conservatively and our plan for next year calls for sales to be approximately equal to this year.” Call concluded, “Resilient continues to be very viable. And, the prospects for it are positive. Armstrong is bullish on vinyl. We believe in the category and we anticipate a stronger 2010.” |