Article Number : 606 |
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| Date | 9/3/2005 2:41:38 PM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=606 |
| Abstract | Hicksville, N.Y... |
| Article | Hicksville, N.Y.—With the possible exception of carpet, the resilient segment has been hit hardest by raw material and energy price increases, but it hasn’t stopped manufacturers from putting their resources into research and development to create products and merchandising elements that will spur consumer interest. And, while sales in resilient may not be lighting up the world compared to the other floor covering categories, they are increasing at a steady rate and manufacturers are poised for a productive finish to the year. “The key in both the residential and commercial segments is continued profitable growth through innovative new products and new technology,” noted Frank Ready, president of Armstrong World Industries. “We’re positioning resilient floors to compete better with other product categories, primarily by improving visuals to be competitive, particularly with laminate. “In fact,” he added, “it’s pretty hard to tell the difference between our designs with Masterworks Technology and most laminate floors.” “Our ongoing challenge is,” said Stephan Guindon, Domco’s vice president of sales and marketing, “to keep seeking new innovations in both design and construction that will continue to energize our line and add excitement to the category.” He noted that unlike some of the other flooring categories, which have either been in existence for a little more than a decade or have been experiencing a sort of renaissance among consumers, “the resilient segment is very mature and one often overlooked by the younger consumer. By using color, design and technology to both attract a new consumer base and to speed up the current replacement cycle, we will be able to reinvent the category and grow sales at the same time.” Mannington Mills’ David Shaheen, director of marketing for resilient products, agreed the key to keeping the category strong is by improving the overall visual as well as make-up of the products, something the company has been concentrating on for a number of years. “We’re giving the consumer what she wants in resilient,” he said, “a floor that looks incredibly real.” This can been seen in some of the new products introduced in 2004 and the first half of this year. “The successful introduction of our Realistique collection has exceeded expectations and is our best selling resilient launch since NatureForm, which came out in 1997.” In addition to pushing styling, Shaheen noted having a brand that consumers recognize and trust can also help boost sales, (FCNews, Aug. 8/15), especially when it involves the best known name in flooring—Stainmaster—and is backed by a large advertising campaign, such as the one done by Invista earlier this year. “The huge ad campaign put together by Invista for the Stainmaster Spring Fashion Event,” he explained, “delivered predisposed consumers into the store and this had dealers very excited.” Tarkett’s Mark Brown, director of marketing for its residential business operation, said one of the highlights over the first half of 2005 was “the continued industry acceptance of our branding efforts, such as FiberFloor and mostly through our Tarkett Select retailer program. In fact, growth has been fueled by the Fiber-Floor category expansion and growth.” Ready said his company feels the same way, especially considering the Armstrong brand is still one of the most known flooring brands at the consumer level. So, to augment the manufacturer’s product launches, “we have initiated a broad-based marketing program aimed at building consumer awareness of the array of new products we have and increasing retail sales.” This strategy, he added, “includes a multi-million dollar advertising campaign with a media buy more than double last year’s.” In order to get to this level, mills have invested heavily into their operations to bring in state-of-the-art machinery and tools to allow designers to push the proverbial style button on new collections. For example, at the end of last year, Tarkett broke ground on a $20 million, 30,000-sq.ft. expansion to its facility in Farnham, Quebec, Canada to produce FiberFloor in North America (FCNews, Nov. 8/15). Domco’s Guindon was also excited about the expansion at the Canadian facility (editor’s note: Though Domco is run independently of its parent company, Tarkett, the two share the same manufacturing facility in Farnham). “The expansion of the facility will be a plus factor for us in two ways. First, it will allow us to further streamline our manufacturing operations and stabilize production costs, and, secondly, it gives us the ability to develop and produce new products with advanced glass-backed construction that offer the excellent styling and performance features our customers want.” At Armstrong, Ready noted some of the company’s investments include “$5 million to expand and improve capacity at the VCT plant in Kankakee, Ill., to produce specialty tiles such as our anti-slip Safety Zone tiles and static dissipative tiles. In addition, we have expanded the loading and warehousing capacity of our Kankakee plant as well as the one in Jackson, Miss., and have installed a new computer system to improve order tracking and better serve our commercial customers.” While the resilient sector is investing millions of dollars into research, development and marketing, executives noted that like 2004, the first part of this year has not been so easy for the mills due to all the rising energy costs. “As is well documented,” noted Brown, “the unprecedented raw material increases have had a dramatic impact on margin contribution as we have absorbed a significant portion of these cost increases.” Shaheen agreed: “The biggest challenge for the category—and the industry—continues to be the escalating cost of raw materials.” Ready added that while higher prices and productivity improvements have helped to offset some of the raw material costs, they can only go so far, when, for example, in 2004, Armstrong experienced $20 million of raw material cost increases and they continued to rise rapidly in the early part of this year.” Despite the unprecedented rate hikes and costs, mill executives appear very optimistic the category will finish the year on a high note and once again post gains. FCNews research showed that in 2004, the resilient category, which includes vinyl, linoleum and rubber, saw sales increase 3.6% over 2003, from $2.358 billion to $2.443 billion (FCNews, July 11/18). Most cited the fact their companies are planning major product and merchandising launches and marketing initiatives for the upcoming fall selling season. Strong Finish “Looking further ahead into 2005,” Ready said, “we expect a somewhat stronger market for residential and commercial products. Generally, the commercial marketplace overall was ‘soft,’ but we are seeing stronger sales now and expect business to be robust as we move through the second half. For Armstrong, we have a great deal of excitement in the back half of this year thanks to a variety of product launches which should no doubt positively impact sales.” Beyond the new products, he noted the company “will continue to lower our manufacturing costs, improve productivity of our workforce and meet customer needs with high quality, innovative products and services.” Domco’s Guindon, said the addition of 40 SKUs to its offering helped the company’s first-half sales “outpace projections. In short, we’re having a good year and anticipate maintaining the momentum through year’s end. “Our biggest challenge is to use our innovations to attract a new generation of consumers to features and benefits of today’s products, which define a new age in resilient flooring.” “This year is shaping up to be a very good one for Mannington,” said Shaheen, “and we are quite optimistic about the rest of the year. We have a number of very exciting new products and promotions planned for the fall and think Mannington is positioned for an even better second half. “Last year,” he continued, “we had the best fall launch ever assembled. But our styling and product development team raised the bar even higher with what we have set for this fall.” Finally, Tarkett’s Brown said, “we anticipate being up significantly from last year with double-digit growth targeted and are very bullish on the balance of the year. The remodel and construction marketplaces have, with some regional exceptions, been strong.” As with the other manufacturers, he said, the biggest hurdle “is finding ways to create efficiencies and cost-savings to soften the impact of continued raw material price increases.” Those that can do it the best will reap the most benefits through higher profits, they concluded, which means a company can continue to invest in research and design and create new and innovative products. —Matthew Spieler |