2017 Hardwood Report: Imitation may be a form of flattery, but it doesn't sell hardwood - Apr 2017

CONSUMER CONFUSION
The proliferation of wood looks in the market has presented another challenge for the hardwood category, making it increasingly difficult for consumers to both understand the product categories and determine which is best suited for their needs. Unfortunately, these challenges aren’t always solved once the customer enters the retail environment. In fact, sometimes a customer isn’t sure exactly what type of flooring they have purchased-even when it’s installed in their home.

Michael Martin, president and CEO of the National Wood Flooring Association, says, “I believe some customers think they have hardwood when they don’t. We answer a lot of consumer phone calls, and, when we drill down, we realize that they have laminate or another wood-look product. With photography becoming so good on manufactured product, it becomes more difficult to tell the difference between products from the consumer perspective.”

This, of course, is problematic for a number of reasons, the most significant being that a poor performing laminate, for example, may become a black eye for hardwood. And don’t assume that that black eye is limited to a single household. Consumers talk; angry ones talk more-and post their gripes on Facebook. If your college roommate publishes a rant about how they went away for the weekend and came home to find their “hardwood” floor ruined because of an icemaker malfunction, you-as well as her other 350 friends-might think twice about choosing hardwood.

What’s more, there is a percentage of consumers who mistakenly believe that engineered hardwood isn’t a real hardwood product, which further complicates the matter. If a homeowner views solid-with its cost and installation limitations-as the only “real wood” option, they may conflate engineered and wood-look products like LVT, laminate and WPC into a single category, considering hardwood out of reach for them, and ultimately making a choice based on faulty or partial information.

Farabee explains how the long buying cycle for hard surface flooring contributes to this problem. “Consumer confusion is absolutely a problem, and it comes down to how much research customers have done before they purchase,” he notes. “This is why it takes so long for consumers to make decisions on hard surface flooring-they are trying to understand the offerings. If you think about it, 20 years ago, hard surface flooring was pretty easy: solid hardwood, sheet vinyl and simple ceramic. That was pretty much it. Now, we have engineered and solid hardwood, laminate, LVT, rigid products, sheet vinyl, ceramic, porcelain and thin porcelain-all these new product categories that didn’t exist the last time the consumer was in the market, given the long purchase cycle. We need to look at further training for retail sales associates (RSAs) to get them to understand. At the end of the day, it is incumbent on all of us to make this web of products more easily understood.”

RSA education is a historically difficult problem to tackle. The NWFA has launched two programs to help address these issues: its lookbook brochure, which explains the differences between the flooring types, and offers a checklist that consumers can use to determine what type of flooring is best suited for them; and NWFA University, launched last July, a retailer certification course for hardwood sales. But these programs alone can’t solve the larger problem. The fact is that the hard surface flooring market is changing rapidly, and all the new products and terminology are confusing-even for retail specialists, and especially if they are new to the profession. The retail sales business is, after all, a profession rife with changing faces.

Manufacturers have a particularly hard time ensuring that the message they work so hard to craft is communicated properly on the sales floor. Says Finkell, “Reaching the RSAs is difficult. We have such carefully crafted messaging, but what they say on the retail floor may be completely different. The manufacturer has to keep it fairly simple.”

Neil Poland, president of Mullican Flooring, elaborates on the challenge and its outcomes, “It’s still our belief that wood flooring is the most desirable flooring type. It’s just that not everyone can afford it. People want the real thing, but they are settling for alternatives. I think the industry fares pretty well when the facts are presented properly in a retail or builder design center setting. If the consumer gets the correct facts about wood versus the alternatives, we compete very well. The American consumer still has an affinity for wood. The problem is when the consumer is confused and thinks they have bought a wood floor when they haven’t.”

While much of this confusion is simply a failure in education, Swanson believes that some may be intentional, “There is a lot of confusion about exactly what people are getting. That’s on purpose. Big companies have oil-based products that they want to sell.”

As a manufacturer, Preverco has worked to reduce consumer confusion within its own line by simplifying the terminology associated with hardwood products. “In 2013, we changed our ten or 12 grades into four different appearances: pure, nuanced, variation and variation with knots,” explains Chabot. “Along with this, we invested a lot of time and effort into changing the mindset of the sales association.” Chabot points out that many manufacturers put species, at the forefront of hardwood sales, but consumers don’t typically approach the sales process looking for a specific species but for an aesthetic that they like.

Chabot entered the hardwood industry in 2011, after several years in furniture, and found hardwood to be exceedingly complicated. He implemented changes to Preverco’s go-to-market strategy under the belief that “the industry needs to stop thinking about grades and species, and think like an interior designer.” He reports that sales results support this transition and that “retailers who start with our line don’t want to stop, because it’s simple.”

Several manufacturers pointed out that though it may be harder to sell a higher-priced product like hardwood, higher ticket sales typically yield a higher commission, so there is an impetus for RSAs to move these products if they are educated on how to do so. “Often for $1 more per square foot, customers can get real hardwood instead of a knock-off product,” says Eagle Creek’s vice president of marketing, Chris Dillon. “A good RSA wants to sell higher-ticket items because 95% of them are on commission.”

Paul Stringer, vice president of sales and marketing for Somerset, agrees and points out that very often style sells, even if it comes with a higher price tag, adding, “As an industry, we have to be conscious of style. Somerset has the highest price engineered on the market, yet our wide-plank handscraped Hand Crafted line, which is $7 to $8 per square foot, is our fastest growing line. When we get samples out there, people buy it. Everything doesn’t have to be fifty cents. It’s about doing transactions for $12,000 rather than $1,200. Often times, retailers take the easy sell. Hardwood can make them more money than WPC. WPC may be easier to sell, but it doesn’t make them the money that hardwood does.”

Interestingly, most of the players that sell multiple wood-look flooring products have their product category design teams collaborate or simply have a single design team. This only makes sense. If a product design is selling well in engineered hardwood, it stands to reason that it will also sell well in LVT. What’s more, it means that the design teams aren’t doubling up on the same research. But it also means that the best looks in one category are interpreted in another, both increasing confusion and, in a sense, commoditizing the look-but that is, of course, the cost of synergistic business.

“Our design teams collaborate a lot,” says Drew Hash, vice president of hard surface category management for Shaw Industries. “If we have a look doing well in a category, we look at where it might fit into another. Consumers don’t even see products as LVT, hardwood and engineered. They see them as wood looks, and that is certainly how we are trying to approach the market, around budget and lifestyle. We are selling LVT into places I wouldn’t have dreamed, like to production builders such as Lennar and D.R. Horton. ” At the same time, Hash points out that many top luxury builders have transitioned from solid to engineered product, another move that he wouldn’t have anticipated in the market.

MIXED MOTIVES
As is the case with every industry and category, there are varying types of manufacturers in the hardwood market. Some, like Somerset, Mullican, Lauzon, Mirage and Preverco, focus solely on hardwood and manufacture in North America. Others, like Johnson and Kährs, import hardwood from their own manufacturing facilities abroad. And still others, like Shaw, Mohawk, Mannington and Armstrong, sell both hardwood and other wood-look products.

These differences mean that the manufacturers have widely different goals with regard to the hardwood category. Those that sell only hardwood have a vested interest in promoting the category, while those that sell both hardwood and wood-look products view hardwood as one of many choices. Both of these perspectives have benefits and shortcomings. Certainly, there is not any one-size-fits-all option in flooring, but with so many cheaper wood-look products in the market, the value of the higher-priced authentic product must be promoted if it is to compete.

“The wood-look and hardwood categories are different animals,” says Schollmeyer. “We also sell LVT and WPC; I love the categories. It’s plus business, and it gives the consumer options. We try to differentiate with hardwood versus WPC. Hardwood has more intrinsic value. WPC is worlds apart from the old sheet vinyl, but it still doesn’t have value of real wood. It’s like comparing a luxury vehicle to an economy car. Hardwood carries a perceived value.”

One hardwood-only player with whom we spoke expressed his frustration that, in his opinion, the multi-product players basically just maintain the hardwood programs, putting little into promotion, and thereby push the category toward commoditization. What’s more, with so much investment in LVT and rigid product manufacturing-and with the threat of over-capacity in the market-these firms must move product in these categories.

U.S.-based hardwood specialists have to run a lean operation to compete with importers and larger multi-category flooring manufacturers, according to Stringer. “We have to reduce cost however we can,” he says. “We don’t have any high-pay employees. We’re pretty lean and mean, and that has helped us. We have to continue to look for ways to reduce cost.”

One factor that has, ironically, been a benefit to these players, according to Stringer, is the fact that several unfinished brands have dropped from the hardwood flooring market, including Shaw-owned Zickgraf and Stuart, as well as Linden. “We are lucky to have the synergy of unfinished flooring in our portfolio,” he says. “Mullican has the same advantage. In the downturn, lots of unfinished plants downsized and lots of capacity was taken off the unfinished market.”

All that said, what U.S.-based manufacturers do not want to see is the dumbing down of engineered hardwood for the sake of competing with low cost wood-look products. “This industry likes to take good products and value engineer them,” says Hash. “We are beginning to see more hardwood products with extremely thin wearlayers. Some larger retailers are selling product with a 0.6mm face-and calling it hardwood-for $1.99/yard. We all remember when carpet got a bad name because builders would install cheap, base-grade carpet in a $350,000 house. [When the carpet wore poorly], consumers started thinking that carpet was a bad product. I’m hoping hardwood doesn’t end up like carpet.”

THE LIFELONG QUESTION
The hardwood industry is fond of saying that hardwood flooring is a floor, while laminate and vinyl plank products are floorcoverings. That statement speaks to both the permanence of hardwood and the value that it adds to a home. Some question, however, whether that permanence is of value to today’s consumer. In other words, are consumers looking for a lifelong solution?

Chabot isn’t sure. “More and more people are buying hardwood like they buy furniture,” he notes. “It is no longer a lifetime purchase in their minds. They want good durability for everyday use but don’t think of it as 50-year purchase anymore. They know they will be renovating to new trends later. If they put wide boards in today, the trend might be toward narrow tomorrow. People want real hardwood but don’t want to pay the big price for it.”

Consumer research conducted by Shaw supports Chabot’s belief. Nicki Rayburn, director of communications for Shaw, says, “In 2016, we initiated consumer research, which included spending time in homes, and we saw this commonality: consumers are finally getting a comfort level for creating an environment that is custom to them. We are seeing more and more that they are buying what they like-not thinking I want something forever. They want to express their needs, looks and desires now. The whole mindset has shifted, and they are realizing, I don’t have to keep this forever.”

However, Poland notes, “There is a hesitancy from the consumer to select a look that they feel is trendy. I still think that they are going to choose a hardwood floor that they feel will be in for quite some time. I don’t think people think ‘lifetime’ anymore because many don’t even plan to stay in a home that long. With the Baby Boomers, we are seeing a resurgence of people who, when they sell their family home and move into their retirement home, won’t skimp on upgrades. The general feeling I get is that Americans are seeking homes that are not as expansive but spending money on upgrades.”

On the flip side of the coin, NWFA’s Martin raises a concern about the fact that ever-thinner wearlayers on low-end hardwood may ultimately yield a product that doesn’t offer lifelong service and lowers the low-end of the hardwood market toward disposability. “Is hardwood becoming more disposable?” Martin asks. “Is it just another option? Most people who invest in the product want a lifelong solution.”

STYLING TRENDS
There is no question that wide and long is where it’s at in hardwood today. “Wide and long planks are hot and in demand,” says Misael Tagle, co-founder of DuChateau. “The wider, the longer, the better.”

Armstrong reports that the classic 21/4” or 3” strip flooring that was the standard for so long is still selling, to some degree, though the wave of demand has migrated towards 5” width product.

Finkell characterizes this trend as “extreme wood” and suggests that it is based not only on consumer demand but on the hardwood market’s drive to differentiate itself from wood-looks, “Ceramic can’t go that big,” he says. “Neither can LVT or WPC.”

Long and wide products were often imported from Asia or Europe until recently, but now some U.S. manufacturers are making them domestically. “We are excited about starting production of wider and longer engineered products at our Melbourne, Arkansas location, where we previously made only solid,” says Farabee. “We feel that these sawn face, longer, wider [planks] will go after the hottest part of the market.”

Hash points out, however, that the trend can present a challenge to the manufacturer. As widths and lengths increase, less of the tree can be utilized, leaving more for waste. “Even though technology and plants have gotten better, minimizing the excess, the industry is hurting because of byproduct we can’t move. If you have to dispose of it, that’s a waste.” In response to this need, Shaw has developed a series of products made of three pieces of hardwood glued together to form an 8” wide product. Shaw has had iterations of the product, which looks like a butcher block from the side, in the market for ten years. Hash reports that even though it is dimensionally stable, distributors and retailers still worry about cupping, a perception that has been difficult to overcome, though the product has had no history of problems. “It’s one of those things that they have to trust us on,” says Hash. “It’s not an inexpensive product either.”

Along with that, demand for grey tones continues. Says Hash, “If you go to the High Point Market or any furniture store, you realize that this mindset is not going away. People are changing entire rooms to fit it. You can debate whether a floor is a permanent change, but if consumers are moving their whole house away from red, I think we can agree that grey isn’t going away.”

Bondrowski points out that market demand has shifted from rustic to cleaner, more subtle looks, and Schollmeyer agrees, “We are seeing the most growth with next generation handscraping, a light wirebrushing on the face, hand-distressed on edges. The heavy handscraped trend is sliding more toward softer texture in many markets. We also notice a preference for two-tone staining.”

“Today, we use many textures-handscrapes, wirebrushing, skip sawn-to create subtle differences,” explains Finkell. “Also, we’re building layers of color onto wood to build depth and richness. That is hard to duplicate in a faux product. It’s all about how to make it beautiful without sacrificing performance. It’s both technology and art.”

Along with this, the trend is toward matte finishes. Finkell adds, “One thing that we have seen is the acceptance of oil finishes, a low build, low gloss that almost looks nonexistent. The difficulty of true oil finish is that it stains and wears out. Consumers have to do maintenance. In Europe, people accept that, but in the U.S., consumers don’t want to polish a wood floor. I think it’s in everybody’s interest to remove maintenance. We try to achieve that look but still have the stain resistance of an aluminum oxide finish. We feel we have achieved that, and we are seeing good acceptance in sales of those products.”

Chabot adds, “Our standard finish is 40º (a semi-luster), but the bigger trend is towards 10º and 20º, which are matte. This is far from 60º or 80º finishes of the ’80s and ‘90s. Today, 90% of new products are 10º or 20º, and 35% of annual sales are from new products. Consumers are accepting new looks very quickly in our customer base.”

Copyright 2017 Floor Focus