FCNews: A quarter-century of evolution and progress Article Number : 6687

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Date	6/10/2011 10:40:58 AM
Written By	LGM & Associates Technical Flooring Services
View this article at:	//floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=6687
Abstract	By Matthew Spieler When 1986 got under way, few in the industry had any notion it was going to be a landmark year, one filled with changes unlike anything they ever experienced. It would lay the groundwork for a wild ride that continues to...
Article	By Matthew Spieler When 1986 got under way, few in the industry had any notion it was going to be a landmark year, one filled with changes unlike anything they ever experienced. It would lay the groundwork for a wild ride that continues to this day. The year began innocently enough, but in April the first seeds that this was not going to be a normal year were planted as Al Wahnon, the industry’s eyes, ears and voice for the previous 31 years, launched his own publication: Floor Covering News. Because it came at the urging of many distinguished flooring executives, the publication was an immediate success. Shortly after those seeds were planted, they were given a shot of steroids when DuPont rocked the world with Stainmaster and its groundbreaking marketing campaign that is still studied to this day. Allied (Worry-Free) and Monsanto (Wear-Dated) quickly followed suit with their own stain-resist yarns, and the fiber war had begun. While Shaw’s acquisition of WestPoint Pepperell in 1987 is credited as being the first salvo in what has come to be known as the industry’s Consolidation Age, one only needs to look back a year to realize the war had already begun as mills jockeyed for market share though vertical and horizontal expansions. A quick glance tells the story: Burlington buys Masland, making it the largest mill at the time; Mannington acquires Linwood to branch out to the wood category, and Armstrong purchased glue maker W.W. Henry. One other significant happening worth noting that year, which also was a sign of coming changes in the products consumers purchased, was the first general meeting of the National Wood Flooring Association (NWFA). At this time, specialty retailers sold mainly carpet with resilient as their secondary product with wood, ceramic and rugs (laminate did not exist in the U.S.) rarely entering the mix. So the stage was set, but little did anyone know just how often the scenery would change. Consolidation is still taking place, but for a 15-year period starting in 1987 the pace was so frantic it was hard to keep up with who was buying, who was merging and who selling. At points it almost seemed as if certain companies were trying to one-up each other as the deals went from millions to billions. Even the trade publications had trouble keeping up with the action. (The Internet boom and era of instant communication would not happen until the turn of the millennium.) At times there were multiple stories in the same issue about a particular company making an acquisition and selling a division. While most of the activity centered around manufacturers buying each other, no one was safe and no part of the industry left untouched. Distributors and contractors did their part to gobble up market share and make themselves as relevant to as many customers as possible. During the early part of the consolidation period there were a number of fiber companies— Amoco, DuPont, Allied, Monsanto, Hoechst Celanese and BASF—armed with new styling and performance technologies, and they launched an all-out assault to become the preferred supplier. Throw in 3M, whose Scotchgard treatment was an integral part of the production process, and it was a marketing free-for-all. The beneficiaries? Retailers and consumers. Dealers were being courted from every angle to get them to carry products bearing certain brands while end users had the best-looking and performing products from which to choose than ever before. It was not just from these new fibers. With their increased size and revenues, mills invested in manufacturing technologies that allowed them to create products like never before, and at a fraction of the cost. Even though the number of manufacturers shrunk precipitously during this time—in carpet alone upwards of 75% of the mills doing business at the start of 1986 were eaten up and absorbed into the remaining 25% by 2000—overall capacity continued to rise thanks to a seemingly ever-expanding market as the U.S. experienced what would end up being its greatest sustained period of economic growth in history. Into the ’90s With newfound wealth, consumers started seeking more luxury-oriented products as the ’80s gave way to the ’90s, and flooring was no exception. Also, the 1990s saw the beginnings of the environmental movement as well as what came to be known as “cocooning” with end users bringing the outdoors in. This made consumer desire for more natural products like wood and ceramic increase dramatically. As the ’90s wore on, more and more specialty dealers added hard surface products to their selections at the expense of carpet and resilient to capture as many sales as possible. Helping them make this adjustment were two entities. The first were distributors who were more than eager to find new suppliers to replace their lost carpet business from mills going direct. They not only brought in an array of product from wood and tile companies around the world who were just as eager to capitalize on the growing consumer demand, they began offering exclusive lines and private-label collections. The other was the influx of buying groups, which started sprouting up as dealers grumbled the mills were not doing enough to help them compete against their newest enemy: big box stores. Abbey had been around since the 1950s and Carpet One came into existence in the mid ’80s, but the ’90s saw one group after another form, from specialty stores to shop-at-home van franchises. The field got so crowded there was even consolidation in this area by the 2000s. Nonetheless, these operations altered the retail landscape so much even mills started to form their own dealer groups. Actually, manufacturer groups were given a boost when Shaw turned the industry upside down by entering retail. The strategy did not sit too well with most independent dealers, plus it turned into a harder-than-expected venture for the mill. So much so that within a couple of years the strategy was abandoned and a closer working relationship was formed between mill and dealer. In the case of the big boxes, companies such as The Home Depot and Lowe’s essentially replaced the department stores— Sears, J.C. Penney, Macy’s, et al— which had gotten out of the flooring business. They hit upon a successful formula of servicing small home contractors/repairmen and the growing do-it-yourself market, and proceeded to generate sales that eclipsed anything the industry had ever seen. Laminate revolution Besides wood and tile, there was a hard surface product that floated ashore and caused a bit of a stir to say the least. The mid ’90s were approaching, consolidation was still raging strong, dealers were scurrying to buying groups and distributors were trying to find the next big thing. An innocuous article in the Feb. 14, 1994, edition of Floor Covering News told of a new concept in flooring that was being brought over from Europe after experiencing a great deal of success. Then at Surfaces the laminate storm began. It was a light rain at first but with a promise of higher profits and less claims along with a myriad of consumer marketing, it revitalized an industry that had grown stagnant. Mills were demanding non-branded fibers, thus causing suppliers to lessen and virtually stop their advertising. Mills themselves weren’t picking up the slack as they were mired throughout the early part of the decade in protecting the carpet industry from health and environmental concerns. It created the perfect storm that quickly turned into a blizzard as the innovative laminate sector took full advantage. In fact, at Surfaces ’97, the category dominated the exhibit hall, occupying 40% of the space despite an industry market share of less than 5%. It was growing so fast at one point it seemed as if every mill in the industry started to offer its own laminate collections. Even those who said it was just a fad eventually realized it was a legitimate category with plenty to offer. It’s been more than legitimate. It’s been a mover and shaker in all areas, from marketing and merchandising to technological advancements that have since been incorporated by other categories, with two of the biggest being the use of aluminum oxide in wearlayers and the advent of glueless locking systems. As wood, laminate and other hard surface products continued to gain favor by consumers, an influx of imports started making their way in from Asia. First laminate, then wood, tile and now resilient. Part of this came from Asian companies, particularly those in China seeking new markets. But distributors and buying groups turned here for their private- label products in order to compete with mills that also started sourcing goods from around the world to feed their low-cost models. Speaking of Surfaces, the brainchild of the Western Floor Covering Association in the late ’80s, it would come to knock out nearly all the local and regional markets that proliferated the landscape to become the industry’s national show. Regional markets have started to make a comeback thanks to the major mills holding concurrent events in different cities and the local distributors piggybacking with their own events. But specialty markets such as Atlanta’s rug show, Coverings for tile and NeoCon for commercial continue to do well, while Surfaces remains the national showcase for most. Green movement Today, the world is awash in green, but the flooring industry got involved in the movement in the early 1990s when carpet came under attack as having a negative affect on health. Fighting this misperception gave birth to the industry’s Green Label program. Then, rising energy prices resulting from the first Gulf War, had mills searching for ways to cut expenses. The result was a decrease in water and other resources without compromising the product, making manufacturers believers they can be both sustainable and profitable. As such, when the country and world started to become environmentally conscious in the new millennium, the flooring industry was ready to lead by example and has done so admirably. One area of the environment that did truly hurt the industry, specifically the resilient sector, had to do with asbestos. Class action lawsuits caused two companies to file for bankruptcy protection—even though they were financially solvent—in order to stay in business. 2000s and beyond The rise of laminates and the green movement, coupled with consumer desire for hard surface products along with technological advancements, have helped fuel growth for alternative products such as bamboo and cork. The housing bubble and subsequent crash dominated the first decade of the 2000s at least in terms of overall business. As the bubble expanded, industry-wide sales reached all-time highs in every category, but they have been virtually wiped away, first from the crash and then the prolonged recession from which the world is still trying to dig out. Despite so much happening and so much change the last quarter century, if a couple was plucked from the world at the end of 1986 and dropped back in now it is interesting to note they would find a few things haven’t changed: Stainmaster is still the No. 1 brand in the industry and Floor Covering News is still the most accurate and trusted media outlet for news and information.