By Steven Feldman
Barnwell, S.C.—The
Formica Flooring brand re-entered the flooring arena in the third quarter of 2006 under the auspices of
Kronotex USA. Now it is ready to play the game.
Liken the situation to an expansion team preparing for its first season, a group of players acquired via the expansion draft supplemented by a sprinkling of free agents. It takes time to acquire the requisite talent to compete at the highest level, and then there’s the challenge of fielding a cohesive product. And that’s the Formica Flooring story, only it’s taken less than 18 months for it to compete with the heavyweights.
It all has to do with having the right product mix, according to
Ken Peden, president and CEO of Kronotex USA, the world’s largest laminate manufacturer. “When I got here we didn’t have the right styling for the consumer,” adding that he voiced that sentiment to his distributors from the get-go. “I promised we would introduce the best styling in the industry, but it was going to take time.”
That time has come. Need proof? The reborn Formica Flooring that launched with 38 SKUs will have had 30 of them replaced by Surfaces ’08. “We immediately worked diligently to change the design as fast as we could. The only frustration was the amount of time it takes to do that—it can take as much as nine months, depending on the product.”
Peden believes the collection retailers will see at Surfaces—now totaling 48 SKUs—is just the beginning. Within five years he envisions Formica Flooring as the dominant laminate flooring player in North America. This from a man who built
Quick•Step into a $300 million brand before being purchased by Mohawk two years ago.
To get there, Peden has put together a sales and marketing plan for Formica:
1. Get national distribution, and that will have happened by the time Surfaces starts.
2. Get 5,000 displays placed “by at least June 1.”
3. Start spending money on a controlled basis in consumer advertising, “which we will begin doing in 2009.”
Given his track record, the industry is taking note. Especially because this time around, Peden says he has even more weapons in his arsenal. “This is one of the top brands in North America. We have great distribution, great programs and great products. And now we have great styling to get the consumer excited. Our commitment is to make this the best styled laminate line in North America, and I think we are rapidly approaching that. We have some surprises for the third quarter of 2008.”
He is particularly excited about Cordelia, a product launched about 90 days ago he claims offers a tremendous value proposition and hits a key price point. “People talk about the hourglass effect in laminate, where the business is only at the high and low ends. But we feel the reason is our competitors aren’t focused on good styling in [the middle]. Due to our manufacturing superiority, we felt we had a competitive advantage here.”
Cordelia retails for $2.99, “the most popular consumer price point.”
Cordelia is an 8mm, two-strip wood with a soft sculptured surface. The line is offered in six colors in species mimicking Amendoim, oak and hickory. “In my entire laminate career, I’ve never been involved in selling a product to distributors like this one,” Peden said. “They have said the color, styling and surface texture is so unique for this price point. And they have already sold many truckloads to retailers.”
Bob Weiss, president of
All-Tile in Chicago, told
FCNews he is seeing great retailer response, including stocking dealers. “People speak with their wallets, and our dealer base has said this is the product they want in their stores. It’s the looks, the price point and the brand name. Plus, it is only being shown in the independent retail channel.”
Also new is Mirabella, which debuts at Surfaces. The 10mm rookie offers a semi-high-gloss piano finish and beveled edges. “It’s the prettiest product I’ve ever seen in laminate flooring,” Peden said.
“And unlike many of our competitors’ high-gloss products, ours is a class 4, which means it can be used for light to medium commercial.” He also sited the colors and species in the line—walnuts, plums, pears, mahoganys—and the 30-year warranty with a topical moisture guarantee.
Weiss is also having success with Mirabella. “Again, when you have the look, price point and brand where you can differentiate, it’s a pretty good combination for our target markets. When you have a consumer in your store and want to close her, a brand is a point of differentiation.”
While Cordelia and Mirabella are the hot-shot rookies, Quintessa is still the superstar. With a 12mm thickness, Quintessa offers the G5 locking system, which Peden says is the easiest product to install in the industry. Five new styles will be introduced at Surfaces, including a merbau, spiced apple, walnut and maple. Quintessa retails for $4.99.
“Quintessa is the star of the line,” said Harold Traister, vice president of sales, Bayard Sales. “There’s nothing around like it near the price. It’s bullet proof. It looks like handscraped wood, and the large planks allow for quicker installation. Also, that interlocking mechanism at the end of the plank lends itself to easy installation.”
Sienna, the ceramic tile visual, will be enhanced with four high-gloss granite looks. “I’ve never seen anyone respond to the looks of a product like they have with this,” Peden said. “If a retailer sells laminate tile, this is a product he would have to have.”
Positioning
Peden sees at least four competitive advantages with Formica:
1. The brand. “Formica is recognized as one of the top-10 names in this country. It offers a certain comfort level. In fact, 92% of women are aware of the Formica brand, and of those who intend to purchase laminate flooring, 78% will look at Formica Flooring.”
2. Exclusivity to specialty retail. “Craftsmen tools became known as the Sears brand. We will build Formica as the brand exclusive to specialty retail. It will not be allowed to be sold on the Internet or in home centers. That gives retailers a competitive edge. They can’t make money with many of our competitors’ products because they are in the big box or on the Internet.”
3. Leadership in color, style and design.
4. Value matrix selling. “Our prices offer better value related to the consumer than any competitor we have seen. Formica dominates the price/value relationship.”
Having the resources of the world’s largest laminate manufacturer is yet another advantage. In fact, Kronotex recently spent $3 million at the Barnwell facility to improve quality and consistency of the company’s product.
“One of the issues we have is that our equipment runs so fast it must be totally automated,” Peden said. “For example, we run 168 feet a minute. Competitors will run between 60 and 100. So if we used an inspector at the end of the line like our competitors, at that speed we would not be able to produce as much.”
To that end, Kronotex invested capital for equipment that automatically inspects the surface and profiles. In addition, Kronotex invested in new equipment to handle the new, high-tech designs like hand sculpted and to enhance the performance of the product.
The Barnwell facility is also on the verge of becoming totally vertical, just like Kronotex’ other eight facilities across the globe. “The advantage to this is cost improvement, but the real big thing is the ability to control our own raw materials, so that we are manufacturing consistent product with our own internal raw materials,” Peden said.
Weiss may have summed it up best: “I think the new Formica products are exactly what the market is calling for. They are priced right, have excellent quality and a name brand attached. It is everything we were hoping for when we took on Formica.”
