There may be signs of life in the economy, but the overall pace remains sluggish. Add to that a drastic drop in wood prices— especially from imports—the continued surge in popularity of luxury vinyl tile (LVT) and an overcapacity problem, and the laminate category continues to struggle to regain the momentum it had just before the financial and housing crises hit.

Research conducted by Floor Covering News to see how the category has fared over the first six months of 2010 compared to the same period last year has rendered mixed results. On one hand, product is starting to move through the channel as more consumers break from their shells and once again begin to shop for home improvement items. On the other hand, dollar volumes and profits remain sluggish as the post-recession consumer searches for products that will give her the most performance at the lowest price.

As such, for the first half of the year sales in terms of units sold appear to have been ahead of last year by close to 10%, while actual dollars resulting from those sales were essentially flat. That is largely attributed to the influx of lower-priced Asian imports and a home center channel supplied primarily with less expensive goods from Pergo and Kronotex. In fact, there has been an ongoing shift in retail channel share. For example, FCNews learned that nearly 15% of the business is now done through price clubs like Costco and Sam’s Club, courtesy of companies like Pergo and Quick•Step. Then there is the impact Lumber Liquidators is making on the category. The end result: FCNews estimates the average square foot price of laminate at wholesale dropped about a dime from $1.24 to an all-time low of $1.15.

While the economy and housing market are showing signs of stabilization, no one is ready to predict a laminate resurgence just yet. “It is still shaky ground out there,” said Milton Goodwin, vice president, laminate and ceramic, Armstrong. “There’s gravitation toward the lower end since people are being more careful with their money. That’s not unusual. It started with the collapse of the economy and it has gotten worse.”

Goodwin and other industry leaders said the biggest challenge for laminate has been price. “Low demand and overcapacity, which puts pressure on price despite the fact that the cost of the product is going up,” he said. “You have rising costs being laid up against overcapacity so it is very challenging to make sure you are maintaining margins.”

The irony, said Roger Farabee, senior vice president of marketing at Mohawk Hard Surfaces, is that laminate is under duress from the very same categories from which it once took market share. Now it is payback time. “In general, as LVT has improved its looks and as people have become more value conscious, they have gravitated back toward vinyl, particularly LVT,” he said. “You have also seen people go back to carpet because of the price point. And you have also seen some of the inexpensive wood products take share from higher-end laminate.”

With consumers cautiously opening their purse strings, a number of executives with whom FCNews surveyed said demand for higher end goods is starting to slowly come back. As a result, most feel the disparity between units and dollars will not be as great by year’s end. George Kelley, president and CEO of Pergo, agreed consumers “remain cautious with their discretionary spending” and demand in value products increased in the first six months of 2010. “But, we expect demand for our premium and branded products to continue to improve as consumer confidence grows and products up the value chain are sought.”

Kim Holm, president of Mannington Residential, called sales “bipolar,” noting upper-end goods are starting to be bought alongside the so-called value products. But, there has been an erosion of price at the high and mid levels so, for example, a traditional 8mm product is now thought of as entry level.

Since laminate flooring burst onto the American landscape in the mid 1990s, perhaps no other category has reinvented itself more. And though manufacturers do not see any “game changing” advancement coming out, they note the segment continues to evolve, from the new long plank products, first introduced this year, and more realistic designs to easier installation methods.

Wood visuals account for between 85% and 90% of the industry, and as such nearly all new styles introduced at Surfaces 2010 were concentrated in wood looks, with the exception of a couple of mills which also unveiled tile designs. But not everything is going in that direction. In its biggest tile launch in laminate since 2006, Armstrong said it is charting new territory in stones and ceramics. “We evaluated what was going on in the marketplace and saw an opportunity to improve on current technology and provide retailers with a differentiated product,” Goodwin said.

When it came to mimicking wood, this year’s operative word in laminate was “long,”—as in the overall length of each plank, in many cases exceeding 7 feet. As for other style and design trends, the color palette has been subdued some with more focus on strong neutral grays, while the overall texture has been softened to reflect a more contemporary distressed feel. Wide widths are still in vogue, and technology is allowing many to use thinner formats—down to 7mm— while still maintaining the overall integrity of the product.