Carpet Tile Report: Pulling back the curtain - Feb 2015

By Jessica Chevalier

 

The carpet tile industry had a good year in 2014, increasing sales in dollar value by 8.1% (mill value) and accounting for 9.1% of total flooring industry revenue, reports Market Insights LLC. While that may seem like a relatively small percentage overall, consider that carpet tile has made very little penetration into the residential market as of yet and commands just under a tenth of the floorcovering market primarily through specification in two commercial sectors: corporate (44%) and education (35%). At present, according to Market Insights, 80% of carpet tile is specified, 16% goes to mainstreet commercial projects and 4% is residential replacement.

Without a doubt, 2014 was the year of transparency for the carpet tile industry. Though a few players, prior to LEED v4, had environmental product declarations (EPDs) and, to a lesser degree, health product declarations (HPDs), last year every one of the major players with whom we spoke rolled them out. 

EPDs are third party verified documents that report “environmental data of products based on life cycle assessment (LCA) and other relevant information and in accordance with the international standard ISO 14025 (Type III Environmental Declarations),” reports environdec.com, which refers to EPDs as “The Green Yardstick.” It’s similar to the nutrition label on packaged foods. HPDs are designed to identify health impacts through material disclosure, which is like the ingredients lists on packaged foods. Together, these tools go a long way toward transparency.

A GOOD MARKET GETTING BETTER
Most of the market players in carpet tile report that 2014 was a good year for their businesses, and that they expect even better from 2015. Says John Wells, president and CEO of Interface Americas, “Last year’s story, for both carpet tile and Interface, was the continued growth of share against the soft floorcovering market and, in places, against the whole floorcovering market. It’s a dynamic category.”

A part of this success is due to further decreases in face weights, which has allowed carpet tile to take share from broadloom and has afforded it entry into segments where it had not previously competed. 

While the corporate segment has been, and for the foreseeable future will continue to be, the primary segment for carpet tile, the flooring is quickly becoming a go-to product for other markets because of the design and installation flexibility that it offers, as well as the opportunity it provides for individual tile replacement. Much has been made of carpet tile’s growth in the hospitality and healthcare sectors, and, sure enough, it is gaining ground. However, as of yet, the sectors account for only 5% and 4%, respectively, of total sales. So, while these may be growing segments, they are not yet major moneymakers for carpet tile players. 

As one might expect, manufacturers create sector specific carpet tile products, hoping that their use and appeal isn’t limited to that single sector.



SECTOR INSIGHTS FROM INDUSTRY LEADERS

Corporate
John Stephens, Shaw: The corporate sector is clearly dominated by tile. 2014 was a good year for the corporate market in the U.S. and other regions. 2015, with its positive employment news and recovering economy, will be robust in this sector. We are extremely bullish on 2015. Corporate, healthcare, education, retail, government: each of these sectors is healthy in North America.

Ross Leonard, J+J: For 2015, the corporate sector is wait-and-see, but we see strong growth potential in healthcare, education, retail and hospitality. Corporate is still dominant and has the most opportunity. It has more square footage than any other sector.

Ralph Grogan, Bentley: Corporate is the top sector for activity, but [carpet tile] is taking share in education and healthcare.

John Wells, Interface: Corporate had a good year. We saw strength in the last few months, and now we’re seeing the growth that we have been waiting for.

Mike Gallman, Mohawk: Carpet tile is continuing to grow in all sectors today, but the most activity remains in corporate. Education
Wells: It was a good year for carpet tile in education, higher education primarily.

Hospitality
Stephens: Carpet tile is taking share in hospitality without question. It’s becoming more important in rooms and public space.

Rob Cushman, Bolyu: Carpet tile has been gaining ground in hospitality, even though it’s a small portion of the total market. It’s both rooms and public space—but more on the rooms side. Carpet tile can be used in combination with LVT or polished concrete, or sometimes it is fully covering the rooms. Wells: In hospitality, the trend used to be ornate and colorful. Today, it’s more modern and subtle, more home like. 

Jack Ganley, Mannington: In hospitality, we are seeing carpet tiles used in common areas; these tiles tend to be more budget-oriented items.

Healthcare
Stephens: Carpet tile is experiencing continued growth in the healthcare sector. Senior living is becoming a stronger player. Three or four years ago, little tile was used in senior living, where there are a range of properties—from memory care to assisted living to independent living—with many different types of spaces and needs. Healthcare is tied into hospitality in both trends and ownership.

Leonard: There is continued growth of carpet tile in non-corporate segments. Even in non-traditional segments like senior living. Acute care has been a battle. We saw the increase of soft surface use in acute care, but now the market might be receding toward hard surface slightly. 

Residential/Tenant Improvement
Stephens: We’re seeing a lot of carpet tile specified for mixed use buildings, urban high rises in cities like Toronto, New York, San Francisco.

Cushman: A lot of lightweight tile is being used in tenant improvement. Where they would have used broadloom, now they are using modular product.  


CREATING VALUE
Ross Leonard, corporate vice president of marketing at J+J, reports seeing a “leveling out of face weights.” He says, “End users are comfortable with low face weights now. It was an education process for a few years. We were fighting against the perception that you need a lot of fiber on the top of the product for performance, but awareness has taken root.” Leonard reports that he has seen the acceptance of lower face weights in the corporate, education and healthcare sectors, and that many of J+J’s new introductions are in the 18-ounce to 20-ounce range. In addition, he reports seeing an increase in the use of carpet tile in tenant improvement projects, much of which is 15-ounce to 16-ounce face weight products. 

Jack Ganley, president of Mannington Commercial, clarifies, “Price point is the real drive in the market, not face weight. In carpet tile, the material price points that are seeing the most significant growth are [in] the $16 to $20 [range].”

Manufacturers use many strategies to meet budget price points. Of course, dematerialization plays an important role, as nylon is the largest cost component in carpet tile, but manufacturers emphasize that reduced face weight does not mean reduced performance. Says Leonard, “These products have all the functionality but weigh 25% less. More doesn’t mean better.”

Other ways in which manufacturers work to achieve value include concentrating the number of SKUs to streamline manufacturing; designing product to run more efficiently; reverse engineering product to meet pricing needs; and, simply, designing product from the ground up with value in mind. 

Explains Rob Cushman, vice president of marketing for Bolyu, “Often, the development team takes ideas and works on pilot machinery, sending the resulting samples into the field for feedback and then adjusting the design according to price expectations.” However, Bolyu reports that it is seeing good demand at all face weight levels. Lower face weight products, which are taking share from broadloom in markets like hospitality and tenant improvement, are growing in demand more quickly than higher face weights products, but the company is still seeing good demand in the 20-ounce, 24-ounce and 26-ounce ranges. 

“Interface designs products that meet performance criteria,” says Wells. “We always bring out the least amount of face weight for the highest performance. We don’t shoot for a specific face weight. We just want to create something that performs and is resource efficient. It’s a sustainability issue.”

Luckily, design tastes also seem to support the trend toward low face weights. Says Leonard, “There is a movement in aesthetic preference for low architectural textures. People don’t want to sink their toes in anymore. Manufacturers have become more sophisticated, as have the capabilities of equipment.” In many spaces, Leonard reports, carpet tile is replacing mid-level broadloom.

However, Ralph Grogan, president and CEO of Bentley Mills, believes that the market may ebb back towards texture, though to a lesser degree than was once preferred. “The industry maybe went too far with textures. Over the last four or five years, budgets kept getting tighter, and people kept lowering face weights,” Grogan says. “Now, as budgets are getting a little better, some of those textures are coming back. People are looking for better performance. The aesthetics and performance are becoming more important again. It goes hand in hand with sustainability. When budgets were tight, people couldn’t afford sustainable products, but today they can.” Interestingly, Bentley reports that its lower face weight products, under 20 ounces, are selling best at present, and the exact opposite trend is occurring in broadloom, where the company’s beefier 28-ounce to 30-ounce products are trending. 

It’s important to remember, of course, that value and low price are not synonymous. Though the hospitality market is, for instance, price driven, Wells explains that Interface focuses on building true value, not reaching a specific price point. “It’s value in a different context. Our hospitality business is growing dramatically, yet we haven’t designed anything specific to any price point. We offer usability and design, and, in many cases, customers will spend more for our products because they will perform better and last longer than broadloom. We bring value, and the people who own the hotels understand that you get what you pay for.”

MILL ROUND-UP
In August 2013, Shaw Industries opened a carpet tile plant in Nantong, China. The plant produces cradle-to-cradle products to serve the Asian market and has proven to be a significant boon for that market, where the pace of building is often fast and customers don’t have time to wait for product to be shipped from overseas. Shaw reports that the plant has been a fantastic success.

In addition, in 2014, Shaw Contract Group also saw the continued success of its hexagonal tile, launched at NeoCon 2013. In fact, since the company launched its first rectilinear product three years ago, it has seen what it characterizes as “exploding” demand for non-square shapes. The opportunity to break up the modularity of the floor and, in fact, use multiple shapes in combination gives designers greater design flexibility.

Regarding sustainability, John Stephens, vice president of marketing for Shaw Contract Group, reports, “More and more clients understand how important materials are in terms of health and safety in the buildings that they design, build and occupy. That has so much momentum in the market. People want transparency, whether it be for what they eat—lettuce or eggs—or for carpet.” Shaw has HPDs and EPDs on each carpet tile platform. 

Mid-2014, Shaw broke ground for a new carpet tile plant in Adairsville, Georgia. The $85 million facility will include a first phase 600,000- to 700,000-square-foot footprint, followed by a 200,000- to 300,000-square-foot addition. The first phase is expected to open in 2016. 

Last year Interface, which sells carpet tile in more than 100 countries, continued in its commitment toward not just supporting a triple bottom line but also becoming a restorative business with the expansion of its Net-Works program, which pays people a per pound rate for used nylon fishing nets—at once supporting impoverished economies, tapping into a non-virgin material source stream and saving the lives of marine animals by removing discarded nets from the ocean. Last year, the company expanded the program in the Philippines and also moved into Cameroon. Make no mistake, this program is not philanthropy. As Wells says, “It’s a commerce project for both the people and Interface. It benefits all people and makes sense economically. It’s thought leadership that connects business and society. It’s good for the folks out there and, of course, it’s continued expansion of our supply chain.”

In 2014, the company had a technology breakthrough on the sustainability front, which Wells characterizes as “a critical step towards our closed loop aspirations.” The innovation has to do with how the company separates the face from the backing in the recycling process, resulting in a much higher yield from both. The process is both faster and cleaner and will allow the company to bring more material in for recycling in 2015 and beyond. Currently, all the company’s recycling is done in Georgia, but Interface plans to open recycling centers on the West Coast as well as in the Midwest and Northeast. Subsequently, new products will have higher post-consumer content values, which will ultimately keep Interface from sourcing nonrenewable materials. The firm has EPDs on its products and offers HPDs on demand. 

Through its Flor brand, Interface is one of the only carpet tile companies with a focus on the residential business. The company has two channels for reaching that market, online and through its 21 retail locations. The company opened a couple of those locations last year and intends to add more.

Mohawk’s big news for 2014 centered on the introduction of a carpet tile system based on interchangeable sizes. At NeoCon, the company launched its 12’’x 36’’ plank size via its Breaking Form and New Vintage product introductions. Designed to complement 24’’x 24’’ carpet tiles, the plank sizes allow for unique installation methods. 

In addition, the company celebrated the continued success of its DuraColor nylon fiber, which features an increase in recycled content and has received industry recognition for its stain resistance, which Mohawk claims resists 99% of stains for the life of the carpet.

Mohawk, a vertically integrated producer, sells to the mainstreet market through its Aladdin Commercial sales force to a dealer base. Last year, the company created ten Declare labels, six HPDs and increased its EPD number to four. 

Mannington Commercial notes continued movement toward different formats in carpet tile, including different sizes and shapes, and has experienced the most growth in its varying plank formats. 

Currently the company has eight EPDs. In addition, it has declarations for each carpet tile backed with rEvolve zero-vinyl backing, as well as for its Infinity high performance PVC backing. Mannington Commercial will be launching its first HPD in the first quarter of 2015. 

J+J Flooring made advancements on the sustainability front in 2014, phasing out the use of coal fly ash in its backing as well as diisononyl phthalate (DINP) in its vinyl backed carpet products. In addition, the company created EPDs and HPDs for its carpet tile products. 

The company reports that it is continuing to see growth in the use of its non-adhesive installation system, TileTabs. Often, customers choose this loose lay system, even for wall to wall installations, because the system is less labor intensive and also environmentally friendly, as shipping is much more energy efficient for the polyester tabs than for adhesive buckets. 

J+J has also experienced strong growth in its hybrid modular line, Kinetex, a textile composite flooring with a polyester face blanket. Just this month, the company introduced a 18”x36” plank format called Umbra. Kinetex has performed particularly well in the healthcare and education sectors, where it was expected to compete, but it has also made strong headway in the corporate and hospitality markets, which was unexpected. J+J anticipates that Umbra, with its more sophisticated aesthetic, will build on that success, especially in the corporate market. 

Last year, Tandus Centiva earned Cradle-to-Cradle Silver certification for its Ethos modular products from the Cradle to Cradle Products Innovation Institute. Ethos is a backing option for Tandus Centiva carpet tile platforms. The material is created using recycled PVB, a waste film from post-consumer windshields and safety glass. As a result of this certification, Ethos will now contribute to LEED v4 credit for material disclosure and optimization. 

Carpet firm Tandus was acquired by Tarkett in 2012. Now called Tandus Centiva, the company offers a variety of products, including Powerbond six-foot goods, carpet tile, broadloom and LVT for the education, corporate and healthcare sectors. 

Bolyu has seen strong success with its hybrid category of tile, the Level Collection, which is a compressed needle punch product made with polyester fiber and comprised of 70% post-consumer recycled material. Both Monogram and Backstitch, introduced at NeoCon 2014, have performed well, and the company reports that its hybrid category is growing at a faster rate than its standard carpet tile offerings. 

Bolyu completed EPDs on the majority of its carpet tile products mid-2014 and published HPDs in the fall. Cushman reports that these items are being downloaded with regularity and notes that Bolyu’s Level hybrid products shine in the major measurement areas of industry standard EPDs. Its Remix line of carpet tile, which has a minimum 40% post-consumer recycled content and utilizes on average 50% repurposed yarn, has the lowest impact in the carpet tile industry for EPD metrics, according to Cushman. 

Over the 2014 holiday season, Bentley Mills temporarily shut down its line to complete an upgrade that would allow it to enter the hardback tile market. The result was Affirma, a cradle-to-cradle product introduced in the first months of 2014. The line took off immediately and has since exceeded expectations. 

Though Bentley primarily serves the corporate market with its mid- to high-end products at present, the company reports an interest in moving into the education, healthcare and hospitality markets down the road. All of Bentley’s products use nylon 6,6. 

Bentley has both EPDs and HPDs, and Grogan reports that these frequently come up in conversation with customers, leading him to believe that they are actively used in the marketplace. 

In 2014, Milliken introduced EPDs HPDs and Declare labels for Milliken’s North American standard modular carpet products. In addition, it provided Declare transparency labels for its softback collections in China—and claims to be the first carpet manufacturer to do so. 

The company also created a continuing education course, “A Holistic Approach to Sustainable Floor Covering,” which reviews these and other third-party certifications to differentiate carpet on multiple product-based and manufacturing-based sustainability features. The course is available for Health, Safety and Welfare (HSW) credit. 

Says Philip Ivey, strategic sustainability leader for Milliken’s global floorcovering division, “As we increase transparency for our customers, we have also looked to our suppliers to increase transparency. Last year we conducted a supplier sustainability questionnaire to gain even more understanding of sustainability-related practices. More supplier transparency with minimum expectations is the next logical step.”

The company is also looking at end-of-life opportunities for carpet tile products. Last year, Milliken began a partnership with PlanetReuse to reclaim used carpet in good condition and started the process of diverting approximately 20,000 square yards of modular floorcovering from the Minneapolis Convention Center. PlanetReuse is helping identify second homes for the material.


A FOCUS ON FORMAT

While the color story in relation to carpet tile remains relatively static—greys still rule, cool and warm combinations are popular, neutrals with pops of colors are in—innovative design seems to currently revolve around format. Non-square formats, such as planks, skinny planks and hexagons, are hot. And the combination of these formats with squares produces innovative and, indeed, couture installations that allow designers to create individual design stories for each space.

In addition, mimicry and non-uniformity are also important tropes today, and designers are thinking about tile not as a unit but as a floor. 

Ganley points out that, as is typical, the day’s most innovative looks are at the high end of the market. In the future, however, it’s likely that we will see them trickle down as manufacturing efficiencies make them accessible at a broader range of price points. 



Copyright 2015 Floor Focus 


Related Topics:Mohawk Industries, Interface, Mannington Mills, Shaw Industries Group, Inc., Tarkett