ATLANTA—Last year LG Hausys Floors, the resilient floor covering division of LG Hausys America, announced the expansion of its LVT commercial line into what it referred to as the “residential contract” market, or property management and multi-family housing.

The strategy includes a residential retail launch, which is targeted for the second half of 2010. Why does LG believe it can penetrate a crowded segment? In a word, brand. Since the Lucky Goldstar brand was abbreviated to LG in the mid-1990s, it has become a top 100 global brand. And brands inspire consumer confidence. FCNews associate publisher and editorial director Steven Feldman recently sat down with David Thoresen, executive vice president of flooring, and Curt Robinson, vice president of residential business.

Talk about expanding beyond the specified contract offering.

Robinson: The decision was made when I met with LG and realized the opportunity it had in the residential sector. LG is one of the largest PVC resin producers in the world. So it certainly had the infrastructure. There is an $80 million potential for LVT in property management and multi-family housing alone. And total residential is $200 million-plus. So this was a great opportunity to penetrate the marketplace with a great global brand.

Thoresen: I couldn’t understand how residential was overlooked. Curt brought clarity to the situation.

What has been the strategy?

Robinson: We looked at competitive manufacturers—Armstrong, Mannington, Metroflor—and saw what they were producing for these segments, and realized the way to win was to build a better product with a lower price. We are first going after those two segments; the next step will be residential retail in the second half of 2010.

How’s it been going?

Robinson: Pretty good. We’ve hired a team of three very experienced regional managers. All are knowledgeable of property management and military housing. We have specifications in both of those channels that will surprise some people. The reception is just as you would expect. Everyone knows LG; they feel it’s such a prominent brand to put in front of the consumer.

What is the next step?

Robinson: The next step is defining the merchandising vehicles to launch into residential retail.

Will a well-known brand in different consumer segments translate into flooring?

Robinson: Definitely. Consumers understand brand power. With our merchandising, brand and logo, the consumer will be compelled to see what we are offering, no matter the product—“I know they have phones and TVs, they have flooring? I have to look at this.” For the retailer, it gives them a foot in the door with the consumer.

When did the first products hit the street?

Robinson: May of last year for Deco Essential and Advantage LVT.

Tell me about them.

Robinson: Deco Essential is a 120mil product that includes a 6mil urethane wearlayer. We also added a non-waxable coating called LG EasyClean UV, a UV-cured coating that makes the product more soil and stain resistant. Deco Essential is finding favor in property management with product-only price of $1.29 a square foot. Advantage has a 12mil urethane wearlayer and carries a 5-year light commercial warranty. The end user pays about $1.89.

How have they been doing?

Robinson: Deco Essential is doing phenomenal. It’s volume-driven and has already been specified in three military bases.

What separates you from the other LVT players out there?

Robinson: Our attention to detail and the quality of the product. LG is driven on quality. You recognize that through all their products.

Thoresen: Manufacturing in Korea has a significant edge. If you look at most of the products coming out of China, the manufacturing process is very labor intensive. As their cost of labor goes up, China is going to become non-competitive. In Korea it’s all automated. Where a Chinese plant would have up to 70 people on the floor making LVT, in Korea it’s three. That translates into better margin opportunities for distributors and retailers. Also, we are the manufacturer of our products. We’re not sourcing it like other manufacturers. That also allows for better margins, not to mention quality control.

What’s the strategy for going to market? Logistics, etc.

Robinson: Our ultimate goal is to have the country entirely covered by traditional distribution. Right now we have E.J. Welsh in the Midwest, Stiller in New England, Dealers Supply in the Carolinas, and Onthank in Iowa and Nebraska. In the meantime, we are using third-party logistics provider Blue Lynx to fill voids in the marketplace where we don’t have distribution. It’s about 50/50 traditional distribution/Blue Lynx right now. Blue Lynx will also fulfill inventory for our traditional distributors.

What are the benefits of Blue Lynx?

Robinson: The main benefit is their 68 warehouses across the country. Another advantage is its familiarity with flooring given its relationship with CCA Global.

What’s been the biggest challenge so far?

Robinson: Projects continue to get pushed back because of available funding. Some projects have been shut down. Another challenge is distribution. Everyone is fighting for that inventory dollar, so it’s very difficult to find that key distributor in a market willing to take on additional products and inventory.

What is LG’s green story?

Robinson: A lot of companies have some type of recycled content. We have post-industrial content, but we also have a minimum of 14% post-consumer content. We collect vinyl floors in Korea and put back that material in our product. We are probably the greenest PVC out there.

Thoresen: We are also headed for non-PVC products commercially. We’re not there yet, but we’re investigating that possibility.

Short- and long-term goals?

Thoresen: 1. We will be disappointed if we don’t double our business this year given our products, displays, distributors and infrastructure. 2. We want to cover the U.S. marketplace with traditional distribution. 3. We want residential retail presence in the second half of the year, but first we have to identify the correct products for the marketplace. Three years out, we’d like to have a more complete product portfolio beyond LVT and VCT. Maybe natural wood, premium LVT. Ultimately, within three years we want to be a top three LVT manufacturer.