Commercial Sheet Update: The overall outlook for resilient sheet products is good, but the category is not without its challenges – Oct 2023
By Jennifer Bardoner
With the overall commercial market on fairly even footing this year, producers of commercial resilient sheet report that business is good. And given the outlook for healthcare and senior living, they expect it to stay that way for the foreseeable future. Though it is not without challenges-or challengers-sheet will always have a place in such environments thanks to its cleanability and seamless infection control, a benefit that has taken on new meaning in the wake of the pandemic.
MARKET ACTIVITY
Healthcare and education represent the largest segments for resilient sheet offerings in the commercial arena, and suppliers say both markets are seeing strong and continued activity.
With renovations in health-related environments stifled during the pandemic, pent-up demand has been working its way through the pipeline. Meanwhile, the country’s aging population of Baby Boomers and a shift in healthcare service types and environments are leading to new construction and expansion projects.
“You’re seeing a significant diversity in healthcare; it’s no longer just medical office buildings or hospitals, which used to be the two big segments,” says Mannington Commercial LVT and sheet vice president Whitney LeGate, pointing to a growing number of boutique cosmetic service providers and community-centered outpatient clinics. She also notes add-ons at existing hospitals as they seek to offer more specialized outpatient services amid reduced Medicare rebates and escalating staff costs. “With all that said, they are still building new hospitals, because they have to,” she adds, referencing shifting population centers and overall demographics. “I would say it’s not as much as it was, but I do think growth is there in new builds.”
And, outside of acute care areas, where infection control is indispensable, the pandemic brought a renewed interest in the protection that sheet products provide. This is helping to stem some of the square footage lost to, primarily, LVT in the broader healthcare segment, as well as in schools.
“After being flat for many years, we have seen movement back [toward sheet] in healthcare and education,” says Jeff Collum, president of HMTX Commercial, noting that while education represents a smaller percentage of sheet business overall, each project is very large. “There was more attention given to infection control during the pandemic, and we have not seen that subside at all. In fact, we’ve seen it grow.”
“We have seen significant growth in our sheet goods compared to 2022,” reports Kährs Americas marketing director Renee Tester. “And the outlook for 2024 is highly optimistic as we are targeting continued growth in these categories. Healthcare, healthcare-related facilities and education continue to drive this expansion, and it grows consistently year over year.”
AHF and Mohawk both bolstered their commercial sheet offerings with the acquisition of different portions of Armstrong’s former business last year, signifying both current and future demand. Yon Hinkle, AHF’s vice president of resilient products, says the firm will bring 30 new commercial SKUs to market by the end of the year, targeted at healthcare, education and mainstreet “because the demand is there.” Citing double-digit commercial growth for AHF, he notes that some of that growth is due to the baseline from which the company started and the focus now being placed on it. While AHF gained commercial LVT products with its acquisition of Parterre in 2021, its acquisition of Armstrong Flooring’s brand name and most of its North American assets essentially represents a zero-to-60 ramp-up in the resilient sheet category.
Amid dwindling residential sales and with the workplace segment still finding its footing following the pandemic, education and healthcare are bright spots. “Overall, we feel like the business is very strong,” LeGate says. “There are economic conditions outside of the flooring world that are taking place-going into an election year is always a bit volatile with capital spend-but it feels like the economy is holding fairly strong, particularly in those key market segments like healthcare and education.”
Jason Mckee, Tarkett Commercial’s senior director of commercial resilient, claims single- to double-digit growth in the company’s sheet goods over the past year, and he expects stable sales for the foreseeable future. “For homogeneous and heterogeneous, there’s been some disruption in the marketplace, as well as with the manufacturers we compete against, so we believe we are taking share,” he notes. “Generally, a lot of these products are very healthcare driven. As our population ages, it is a good indicator of need for homogeneous, heterogeneous, even linoleum, so we think the outlook for these categories is really good.”
Like sheet, VCT has lost share to LVT in healthcare and education, but that, too, is shifting, reports Hinkle. Having acquired Armstrong’s VCT business last year, demand is such that AHF is putting “significant investment” into expanding its VCT production, with the additional capacity expected next year, he says.
“Even though it’s taken some hits in terms of marketshare over the last five years or so, maybe even a little longer, it’s flattened out a little bit,” Hinkle says. “Sometimes, the alternative products that somebody went to are not performing in the way VCT does when you’re talking about the test of time. We’re seeing somewhat of a boomerang effect.”
He cites a large school system in Texas among the “heavy-use customer types” returning to VCT, which also has a home in retail and certain office environments, thanks to the surface’s unique ability to be revived indefinitely. Its domestic supply chain is another selling point, says Hinkle.
While Mckee has not necessarily seen customers returning to VCT, he does note “very strong” category sales this year for Tarkett, the only other North American VCT manufacturer. Despite the material’s prescribed routine maintenance being more involved than LVT’s, which has led to some of VCT’s decline, “VCT has always had the advantage of being the lowest initial upfront cost of any product, so we think that VCT will always have its place in the market,” he says.
MATERIAL SELECTIONS
What material someone specifies may come down to where they are located, with certain products and brands enjoying more prominence in regional pockets, whether due to familiarity or guiding design principles, like PVC-free. But, by and large, homogeneous sheet enjoys exclusivity in sterile environments like operating rooms (ORs), giving it an edge over heterogeneous products. The only real alternative in such environments is rubber sheet, which costs a few dollars more per square foot but is a PVC-free option.
“I don’t think anybody inherently wakes up and says, ‘I want to use homogeneous sheet everywhere,’” says Gerflor managing director Jeff Krejsa. “Form is following function for many of the resilient products. It is recognized that those products and solutions are delivering something in terms of value, and we see that continuing.”
Mohawk saw enough value in the category that it purchased the exclusive rights to Armstrong’s imported homogeneous sheet products last year, following AHF’s acquisition of the company’s North American business. The Chinese products are being marketed under Mohawk’s Medella line (Hues, Fleck and Well), and AHF just released a revamped version of Armstrong Flooring’s Medintone homogeneous sheet line featuring new colors. Additionally, AHF recently debuted the brand-new Natralis homogeneous line under the Armstrong Flooring brand.
Whereas homogeneous sheet will always have a place in high-need health environments, “a lot of heterogeneous business has been replaced by other things, like LVT,” says LeGate, “and we believe that is continuing. It’s still a good business, but we’re not seeing growth there like we are in some other categories.”
LVT remains a formidable force against heterogeneous sheet products, which are less specialized than homogeneous. Additionally, its predominantly wood visuals offer a homey feel, prized in today’s environments, which are moving away from the institutional aesthetic imbued by the sheet products of old.
“Plank, in particular, has its own design opportunities and innovations that you can’t really achieve in sheet,” says Kellie Ballew, vice president of global sustainability and innovation for Shaw. “I think sheet is crossing over into some other areas, and plank is crossing over into sheet, so the lines where you would use those are blurring. Education, where you might have had less initial aesthetic, is now a place where designers are truly trying to improve the experience for kids. Whether that gets solved by better design in sheet or plank, or by another hard surface, is still a frontier.”
Mohawk Group director of commercial hard surface product management Ben Wojcikiewicz reports that “the markets for resilient in general are growing enormously and quickly,” but he notes that sheet products have some inherent drawbacks, which are limiting their growth. Pointing to the products’ bulk and technical installation requirements, he says, “There are a few things that make sheet a little bit trickier of a category in general, which aids in it not growing beyond where it is in specialized locations.”
Another competitor is linoleum, which has an inherent sustainability story thanks to its bio-based construction. “In a lot of instances, linoleum is driven by regional requirements for non-PVC, so where those regional requirements need to be met, it’s pretty much the entire facility,” says Mckee.
Tarkett, Mannington and Gerflor offer linoleum, and Krejsa says it has gained in strength over the last decade, primarily in healthcare and education, where more end users are seeking alternatives to PVC-based flooring. But as that conversation has evolved, so, too, have the options. And he points out that linoleum can have a higher carbon footprint than PVC products due to the energy-intensive finishing process.
Krejsa says, “Lately, sheet’s been value engineered for LVT, not because of the product side of it but because of the installation cost. It takes a different skillset to install resilient sheet. I think that’s been a contributor to the smaller market size for it today.”
According to Dave Garden, executive director of education for Certified Flooring Installers (CFI), the industry-wide installer shortage is disproportionately affecting sheet goods, which used to draw experienced installers from other categories thanks to its higher pay grade. LVT’s ease of installation and widespread application mean they can now make more on that front, luring both new and existing installers to the competing material.
Meanwhile, the average installer is nearing retirement age. Garden adds that, although installers are not retiring as young as they used to, in Michigan, where he lives, there are just a couple of installers on the eastern side of the state skilled at heat welding, which is responsible for sheet’s unique performance story.
Seeing the need, CFI recently introduced a resilient sheet training program, with the first class scheduled for October 11. The three-part module covers best practices for the installation of both homogeneous and heterogeneous commercial sheet vinyl, flash coving and seam construction. The courses can be taken individually if desired.
Garden also notes that the organization can tailor training programs for retailers with specific needs or new converts to the installation side.
PVC-FREE
Sustainability is an increasingly sticky point in today’s specifications, and sheet manufacturers are responding with a variety of new products and evolving constructions. This year’s NeoCon was rife with related new introductions, including Patcraft’s Meaning II, which won the HiP Award for Health and Wellness; Shaw Contract’s Dappled Light, which brought home the NeoCon Silver and Sustainability awards for healthcare flooring; and HMTX’s Mycelium LVT collection, which won the NeoCon Sustainability award for specialty flooring and is being translated into a sheet version that will be available next year under the Teknoflor brand.
“I’ve been working in the PVC-free category for over 20 years, and this is the fastest and most widespread attention I’ve ever seen given to it,” Collum says, pointing to both market demand and investment from manufacturers. “It has been a niche product, and it still is, but the niche has grown substantially, to the point where it’s pretty much mainstream. We see it involved in every major healthcare project we’re involved in.”
Healthcare companies Kaiser Permanente and Advocate have banned PVC flooring from their campuses, with regional systems beginning to follow suit, and leading design firms, including Perkins&Will, no longer allow PVC-based flooring samples and literature in their specification libraries.
“If you can’t click that button to say, ‘Yes, we have a PVC-free solution for you,’ you can’t ever talk about the broader portfolio you have,” says Krejsa, noting that a different product may actually be better suited to a particular project or specific portions.
Beyond the healthcare arena, Ballew cites education (both K-12 and higher ed), office space and workplace, government, senior living and hospitality as areas where PVC-free products are increasingly getting specified. “But it matches the business growth in those areas, too,” she notes.
“In the homogeneous and heterogeneous sheet category, I still think it’s fairly isolated from a demand standpoint, but we certainly recognize that a wave of non-PVC demand is emerging,” says Mckee, noting that PVC-free LVT and even carpet tile, alongside linoleum and rubber, are helping to meet that demand, based on the segment. “It’s either driven en masse by design firms where the entire company has a non-PVC goal, or it’s regional based on end-user requirements.”
Collum says non-vinyl products represent less than 25% of HMTX’s specifications, but sample requests, “a true sign of where it is,” are up dramatically for the company’s variety of PVC-free Naturescapes products. “It’s the single biggest growth category we have,” he says.
Manufacturers are preparing with a host of new options. Gerflor recently added Mipolam Evo to its PVC-free platform, which it launched in 2011 with Mipolam Symbioz. Kährs, whose only commercial sheet is PVC-free-responsible for all of the company’s aforementioned growth-has continued to build onto its Upofloor Zero collections since its purchase of the brand in 2012. HMTX has continuously expanded its portfolio of PVC-free products since 2015. Shaw is adding to its lineup of coordinating PVC-free plank and sheet collections, first introduced in 2018, with Dappled Light and Meaning II, and is now the exclusive North American commercial distributor for Classen Group and its PVC-free products. Mohawk’s Medella Well is a PVC-free sheet introduction, and Tarkett is working to develop standard non-PVC offerings for the U.S. market, which Mckee expects to be introduced in the next couple of years. (Tarkett’s European-made iQ One PVC-free sheet is available through special request.)
While price and performance have historically held the emerging category back, growing demand and the resultant growing volume of related products have whittled away at the cost delta, and more products and time in the market have led to better constructions. But those two fronts remain challenges.
Our sources’ estimates on the current cost difference between PVC-free and traditional products range from 25% to 50%, but as Hinkle puts it, “The cost delta on most products is still such that it eliminates that as an option for many customers.” That is likely one of the reasons healthcare and, now, education are leading the market in seeking such solutions, since those projects tend to have bigger budgets.
“The value engineering (VE) is getting better, because it is getting specified-it’s not just a conversation we’re having with design firms,” Ballew says. “If it is getting specified, it is surviving the process.”
Says Collum, “Five years ago, I would’ve said it gets VE’d 50% of the time. Today, I would say it gets VE’d 20% of the time.”
Citing a study involving hospitals and design firms, David Thoresen, senior vice president of product innovation and business development for Nox, believes that if the differential got down to 15%, “you’d have to be ready for a massive switch.” Our sources agree that the delta will eventually narrow down to a small premium, but when is unclear.
“When you get that product that works every single time-and I think people are getting close, including us-demand will create capacity, and once you get capacity, cost comes down,” says Thoresen. Beginning with its LVT, Nox is working to replace its raw material supply with Bio-Circular Balanced PVC, made using waste cooking oil and other discarded resources.
While cost is a major determinant in whether someone will initially buy a product, performance determines whether or not they will keep buying it, and pressure from the market has created a paradox in this regard.
“People are really trying to settle in on what that PVC-free product of the future looks like, and I think you’ve got to be careful about that,” says Wojcikiewicz. “They’re not all created equally.”
Sources cite tearing, dimensional instability, improper adhesion, delamination and shorter lifecycles as issues seen in the market. However, they also note that healthcare is one of the most risk-averse and performance-driven sectors, so that means pressure to get it right.
“We’ve passed on a lot of non-PVC options, because we believe those products should perform as well as anything else we offer,” LeGate says. “I can’t step foot in a hospital for less than $100,000 if I have to replace something.” Mannington, which has long offered rubber and linoleum products, introduced a PVC-free alternative, Proxy, in the form of an LVT at this year’s NeoCon. It uses the company’s standard LVT adhesive and carries the same full warranty and performance specs.
HMTX’s forthcoming PVC-free sheet product represents a new category for the company: TPU, or thermoplastic polyurethane, which makes up the material’s core. It is topped with a PET layer made from upcycled plastic bottles and backed with a cross-linked polyurethane foam.
“Our TPU category is not as driven by ‘PVC-free’ as people would imagine,” Collum says. “I think it’s going to be more about the visuals, where it is manufactured and how we source it, how it performs, and how easy it goes on the floor.”
Ballew agrees that not being made out of PVC is not enough and says Shaw is exploring additional non-vinyl options, as opposed to the bio-based model of its current PVC-free offerings. Beyond products’ market-driven characteristics, she notes that company principles and end-of-life options are also important factors in the evolving discussion around PVC-free.
DESIGN TRENDS
Whereas Krejsa calls homogeneous sheet “fun with speckles,” heterogeneous sheet offers more sophisticated design options, lending it enhanced applicability in education, healthcare and senior living.
“For heterogeneous, we’re always trying to decommoditize products through design,” says Wojcikiewicz. “If you’re talking healthcare, you’ve got waiting rooms, patient rooms, ORs, all these different spaces that have different aesthetics and different ways you want people to feel in the space.”
While Ballew notes that the segment drives the visual, general trends are toward abstract designs and textile looks. Woodgrain still represents a majority of visuals, but they are on the decline, and suppliers are branching into wood look-adjacent visuals. Collum pegs linears reminiscent of woodgrain as those seeing the biggest growth.
“Resilient sheet is coming into its own from a design standpoint,” Ballew says, citing an ancillary trend toward intricate installations that help to elevate wayfinding and zoning, as well as the overall mood of a space.
Color serves in this regard, as well, amplifying designs while providing a throughline between product assortments, both in terms of the various flooring materials and the other finishes. Whereas bold colors help to energize educational environments and enliven children’s hospitals, most healthcare is gravitating toward soft colors in therapeutic hues.
“What we find in healthcare, specifically, is that color drives choice more than pattern, because in healthcare, particularly when you start looking at patient rooms, the biggest investment is all the casegoods that go in there,” says Krejsa.
It is also worth noting that the kinds of designs now popular, particularly in healthcare environments, require more seam welds.
“Some of those intricate designs are very time consuming to cut on-site,” Ballew says. “Shaw is trying to understand the role manufacturers can play in helping in situations where innovations in installation could help the product category.”
Krejsa points out that many of today’s spaces are now being used in different ways, adding to the opportunity such innovations could unlock. Gerflor has managed to engineer its Taraflex sports flooring-which he cites as one of the company’s highest-growth commercial resilient offerings-as a portable high-performance floor that can be rolled up when not in use. He alludes to similar opportunities with traditional sheet products, “whether you’re going to take it up and use it somewhere else or send it somewhere to be reclaimed without adhesive on it,” but he notes that Gerflor has developed many looselay sheet products that it has chosen not to introduce in the U.S., due, in part, to the preference for gluedown installations.
Even in spaces that have moved away from PVC as a flooring component, the material is ubiquitous in our lives.
“With all the scrutiny around PVC, there hasn’t been a revisit as to why it’s a product of concern to begin with,” says Shane Totten, director of sustainability for Mannington Commercial. “Yes, it has volatile organic compounds, but it depends on how they’re managed. We know that a lot of the bad-acting chemicals-heavy metals, conflict minerals, orthophthalates-none of that is in our product, because we make our product, and we make it in plants we control with a supply chain that is domestic.
“There is a distinction in the vinyl market between what is made domestically, subject to the U.S.’ environmental laws and labor laws, versus what is being imported, which is not subject to the same laws, transparency or disclosures.”
This was laid bare with the Uyghur Forced Labor Prevention Act, which has caused Asian shipments of resilient products-primarily LVT-to be detained at the U.S. border. All of the sources with whom we spoke report no related impact on their commercial sheet business.
Copyright 2023 Floor Focus
Related Topics:Armstrong Flooring, Mannington Mills, Parterre Flooring Systems, HMTX, AHF Products, Tarkett, Mohawk Industries, Shaw Industries Group, Inc.