Ceramic Tile Report: Honing in on product innovation and consumer education - May 2018
By Jessica Chevalier
The ceramic tile industry made a good showing in 2017 with a 6.3% growth rate, and that success is a testament to the category’s determination to increase its competitive advantage via innovation and, consequently, striking the right aesthetics chords in the pursuit.
Behind a good part of the transformation is the application of digital printing technology to tile-a process that gained widespread use roughly a decade ago and has been applied pervasively ever since-enabling impressive detailing and the ability to replicate other products with striking accuracy. Concurrently, the tile industry has also moved beyond the traditional 12”x12” square in favor of larger sizes, additional shapes and the impressively versatile gauged porcelain panels.
As this aesthetic revolution has been taking place, the U.S. market has seen consumption of floor tile steadily increase, growing by just over 50% between 2012 and 2017, though it still remains far behind the rest of the developed world in terms of per capita consumption. The market has also seen a dramatic rise in the production of ceramic tile on U.S. soil. With the many investments in the market, it stands to reason that the industry has cause to actively promote itself, and we have seen effective efforts to that end.
However, ceramic tile continues to face real challenges with regard to installation, challenges that will only be intensified if the labor pool continues to tighten. Leaders in the ceramic category are facing this dilemma head on, but that doesn’t necessarily mean a solution is within close reach.
Ceramic tile offers a plethora of benefits for both residential and commercial applications. It is natural, utilizing no chemicals or plasticizers. It promotes a healthy indoor environment; it contains no VOCs and does not harbor bacteria or grow mold. It’s easy to clean and hard to chip, scratch and crack. It’s versatile. It’s long-wearing, and it’s durable.
But in a culture so driven by the here-and-now, ceramic tile can seem a little out of place. First and foremost, ceramic doesn’t take hours to install, but days. The curing of thinset and grout is a process that simply can’t be rushed if the result is to be a successful one, and installation of the product is a physically intense process that requires knowledge and skill, not to mention a costly one due to labor hours. Of course, installation of tile is also a significant inconvenience, a multi-day process during which the space is totally unusable-an inconvenience made even more glaring in light of the proliferation of click, stick and otherwise easy-to-install flooring products on the market that enable users to walk on them as soon as they are installed.
As we are seeing across the industry, LVT is sending its vinyl shockwaves through the ceramic category as well. Davide Saguatti, marketing director for Atlas Concorde USA, says, “The challenge right now is LVT. The material makes sense from the consumers’ perspective: it looks good; it’s easy to install.” It’s also cheaper and riding a tide of hype, produced by manufacturers that have sunk big bucks in production of the product and therefore have to promote it heavily. And while it’s debatable how moved consumers are by the waterproof features, LVT has capitalized on that benefit, thereby bumping ceramic from its former position as the only truly waterproof flooring. That being said, ceramic still has a few tricks up its sleeve. Saguatti notes, “Pointing out material emissions from LVT are a good defense for us, as is color fading in the product. LVT will improve the quality of its graphics over the coming years, but we will too. And, ultimately, no material can take the place of porcelain.”
The success ceramic has had in the face of LVT’s assault seemingly proves that these arguments are effective with consumers. “We were pleasantly surprised that the market was able to get more than 5% growth last year-it’s particularly impressive with LVT having such high growth,” says Michael Kephart, CEO of Wonder Porcelain. “This tells us that our product is well-accepted, sustainable and competing well in the market. We are very excited about opportunities as the housing market expands.”
The fact that a finished tile floor is a relatively permanent surface that can be removed only via significant effort is both a blessing and curse for the category. While its permanency means that it won’t actually need to be replaced for decades, when it does come time for replacement, the task is sure to be onerous. Consider, for instance, that in a retail environment with an LVT floor, contractors can potentially remove the old material and install the new in a single night, having the store open for business the next day with relatively little mess and disruption. While tile offers a great deal more in the way of durability and lifespan, it does not offer such ease. Removal and replacement of a ceramic floor is a multi-day process, requiring jackhammers and producing a great deal of dust and mess, and don’t forget that for most tile installations, the setting and grouting process typically takes two to three days.
Within this discussion, it’s also important to consider that today’s trendy looks may go out of fashion more quickly than the humdrum products of yesteryear. Remember those graffiti ceramic looks that we saw at Coverings a few years back? It seems possible that a few homeowners who followed a wild hair and installed those tiles may have grown to regret their graffiti-covered bathrooms, especially when it came time to place their home on the market. Of course, by and large, the designs offered today are versatile and, in a sense, timeless, but that doesn’t negate the fact that the installation of tile is a factor inhibiting the category’s success.
Says Juan Molina, general manager, sales and marketing, for Del Conca, “Unfortunately one of the most critical components impacting the selection of a tile floor is the cost of labor, which we, as manufacturers, don’t control. In some areas, installation represents 70% of the total cost of a tile floor. The shortage of labor has impacted the growth of tile.”
Similarly, Mark Shannon, executive vice president of sales for Crossville, emphasizes the importance of a quality installation with all tile products, “It’s cheap to fix LVT mistakes but expensive to fix tile mistakes. We have to find better systems and ways to install.”
The onset of digital printing on ceramic tile has enabled the tile category to create much more fashion-forward and realistic looks, which has undoubtedly increased its appeal. Wood looks, which were virtually impossible pre-digital, have skyrocketed in popularity, and many manufacturers believe that these looks are not passing fads but now permanent fixtures in the American tile lexicon.
Of course, digital printing hasn’t just been applied to the creation of wood looks. It’s been used to replicate a variety of materials-marble, stone, concrete and fabrics-providing significant durability, ease of maintenance and a sustainable profile along the way.
Through its new Milestone brand, Florim is bringing the production of high-style, niche product onshore. These types of fashion-forward products are typically brought in from Italy and Spain. The company is installing a new polishing line from Italy with the capability to produce glossy and semi-polished finishes. Fregni reports that the glossy products are “like a mirror.”
While there are many ways that the industry is working to promote its products, Shah believes that style shouldn’t be overlooked as a significant influencer as well. “Inspiration is the first and most important item,” he says. “It is the industry’s job to inspire the consumer, so they can understand all of the choices available to them. Everyone wants their home to be special, and it is our job to provide the products to make them feel special.”
EXPLORING INSTALLATION ALTERNATIVES
Over the years, there have been a number of manufacturers that have rolled out solutions to the dilemma of installation-one version features plastic trays that click together and in which ceramic tiles sit. Some of these must be grouted; some include a grout line. Del Conca’s Fast, which the company introduced almost seven years ago, utilizes a tongue and groove system akin to hardwood for a floating installation that needs no grout. But none of these products have become the dynamic solution that their creators had hoped for.
Explains Molina, “Interest for Fast was initially quite high, but the installation is not quite as easy as we had expected. We still promote the product, but it is a very tiny percentage of sales. We saw the product as an opportunity for DIYers to install over an existing floor or slab, but the tile requires a substrate that is very flat.”
According to JT Turner, president of Dal-Tile, finding a viable solution to this dilemma may be the golden ticket. “Ultimately, if we really want to increase the consumption of tile, we have to drive down installed cost, so that tile isn’t a premium over other products,” he says. “Everywhere else in the world, where labor costs are lower, tile is the most popular flooring by far … We also have to reduce the time it takes to install tile. With LVT, you come in, lay it, click it in or glue it down, and leave-400 to 500 square feet per day. In tile, to do that amount, it takes two days to set, then time to dry, then a day to grout, then time to dry. By then, you’re multiple labor days in versus one with LVT. Today, we’re selling really nice ceramic for less money than average LVT, but by the time you do the installations, the LVT is half.” Turner reports that Dal-Tile has “stuff cooking in R&D” regarding possibilities for streamlining the process of installing tile.
Turner reports that previous click systems-including those introduced by Dal-Tile-were problematic for several reasons, including that they severely limited selection to a few SKUs and still required cutting with a wet saw, which adds a level of complexity. Overall, the products were expensive and not differentiated enough from standard tile.
Another previously introduced system, which sold at Lowe’s, had tile laminated to MDF board. In this case, inevitable movement of the board ultimately caused the tile to crack.
Adds Eric Astrachan, executive director of the TCNA, “While not professing expertise with all click systems that have hit the market, the ones we have seen struggled to provide the robustness associated with tiles cemented in place. Similarly, while a hollow ‘floating’ sound has long been associated, and perhaps accepted, with many LVT and laminate floating floors (albeit with attempts to cushion that effect), that sound is not associated with the durability of ceramic.” Of course, in cases where water creeps under floating floors, there is also concern about mold growth, and that would be just as true for ceramic as it is for other flooring types.
Says Marco Fregni, CEO of Florim U.S., “Whoever comes out with a system to install tile more easily will become a millionaire in a week.”
Until a revolutionary system hits the market, increasing the number of qualified ceramic tile installers will help. This task is also, unfortunately, outside the direct control of manufacturers and part of a larger labor shortage in the country, the result of society’s decades-old message that physical labor is not simply different from but inferior to white-collar work. That being said, elevating the image of installation, and thereby attracting individuals to the field, may hinge not on making it easier for people to become installers, but making it more of a specialty field-not grunt work but skilled labor, as we see in other parts of the world. “In the U.S., a barber can become an installer tomorrow,” Fregni explains. “In Germany and Italy, they have to go through a two- to three-year class to get a license.”
Another factor is the fact that flooring installation has long been an unstructured industry and therefore has not offered the perks of standard jobs, such as insurance, steady paychecks and security. In today’s costly healthcare environment-and especially considering the physical nature of the work-these factors are clearly problematic for the profession.
Fregni points out that the lack of well-educated installers also impacts the acceptance of new innovation in the market. Retailers can’t sell what their installation community doesn’t have the knowledge or skill to install, lest they be pulled into problems when installations fail. This most certainly hampers the penetration of new materials, such as gauged porcelain, in the market.
Impressively, the ceramic tile industry has been able to successfully accomplish what other flooring categories are still struggling with: creating a viable consensus of players that acts and achieves results. Led by the Tile Council of North America (TCNA), in April 2017 the industry announced that it had created installation standards for gauged porcelain, stating in a press release, “More than four years of cross-disciplinary industry collaboration and 4,000-plus hours of research from the TCNA Laboratory Services team have culminated in today’s announcement of two new standards: ANSI A137.3, the American National Standard Specifications for Gauged Porcelain Tiles and Gauged Porcelain Tile Panels/Slabs, and its companion, ANSI A108.19, Interior Installation of Gauged Porcelain Tiles and Gauged Porcelain Tile Panels/Slabs by the Thin-Bed Method bonded with Modified Dry-Set Cement Mortar or Improved Modified Dry-Set Cement Mortar.” In a technologically evolving category, such action is necessary to ensure a breakthrough innovation doesn’t soon devolve into an industry black eye.
Of this achievement, Shannon remarks, “We have been an integral part of the establishment of ANSI standards for the gauged porcelain category. The more qualified contractors, the more confident specifiers, and the more established standards, the more opportunities for porcelain tile panels to be utilized in interesting applications in products across all market segments. We’re seeing this happening and increasingly so.”
At Coverings 2017, the TCNA launched the “Why Tile?” campaign, an industry-wide initiative to promote the use of ceramic tile throughout the channel and down to the consumer level. Says Astrachan, “The ‘Why Tile?’ campaign provides the tile industry with a common voice to express all the benefits of ceramic tile. Already ‘Why Tile?’ and WhyTile.com have received millions of mentions with the campaign not yet being fully developed.”
In creating the campaign, the TCNA sought input from a variety of industry organizations, including the Ceramic Tile Distributors Association, the National Tile Contractors Association, the Ceramic Tile Education Foundation, the Tile Contractors Association of America, and the Tile Heritage Foundation, in addition to manufacturers worldwide. At Coverings 2018, TCNA will launch the commercial guide section on WhyTile.com, which provides information for the A&D community.
“‘Why Tile?’ has been a great tool for delivering the truth,” says Luca Setti, chief sales and marketing officer for Florida Tile. “Not all flooring products are the same. ‘Why Tile?’ has helped-and continues to help-create awareness so that consumers can be better educated and make better decisions.”
Adds Molina, “We believe that the campaign is going to be instrumental in getting the word out on why tile is so great. Other product competitors have done a very good job up-taking their products.”
Kephart points out “Why Tile?” is the first tile campaign he can think of that is market- and product-driven rather than technically driven, and that is key to its success.
Fregni agrees, adding, “Consumer education from the tile industry used to be more fact-based. Today, we are pointing out benefits, including economic, from a health point of view and more.” This is significant because, in order for the ceramic category to increase its rate of consumption in the U.S., the conversation must be redirected from cost to other features and benefits. “Increasing consumption comes down to educating consumers with the goal of changing mindsets,” Fregni continues. “In the U.S., consumers say, ‘How much do I have to spend today? What is the minimum I can spend?’ They have no long-term outlook. In Italy, people say, ‘If I pay a premium now but the product lasts forever, how long before I recover the cost?’”
As for why the ceramic tile industry has been able to unite so productively, Astrachan says, “The tile industry has a long history of collegiality among competitors and collaboration on industry standards. In part, this is because the technology for tile products has been constantly evolving, which lends itself well to the need for standards. It’s also partly a result of strong involvement and coordination at the association level, with TCNA facilitating the development of standards since the 1950s. With its extensive laboratory, TCNA has been able to focus on research and product testing to help provide independent analysis when stakeholders meet to determine a consensus.”
Shannon adds, “By merit of members of the tile industry coming together in a way that’s brand agnostic yet thoroughly focused on our shared goals and product commonalities, we can strengthen each other. A rising tide lifts all ships.”
Another example of the industry’s success is its Green Squared program, a multi-attribute sustainability standard-backed by third-party certification-for ceramic and glass tiles, quarried stone, and tile installation materials. The program, which launched in 2012, proved its worth in February 2017, when it was added to the U.S. Environmental Protection Agency Recommendations of Specifications, Standards, and Ecolabels for Federal Purchasing.
Turner notes, “‘Why Tile?’ is an overarching, independent campaign that is backed by good science; this is very important because that makes it trustworthy. Sometimes the parts of our industry that sell products get caught up in the wave of what’s popular and easy to sell. Over time, when we educate people, other factors-such as lifestyle cost and human and environmental health aspects-come back into play.”
It’s important to note that the category also has an industry-wide event annually, called Total Solutions Plus, a cooperative event of the TCNA, Ceramic Tile Distributors Association, National Tile Contractor’s Association and the Tile Contractors’ Association of America.
Turner pegs the consumption division of tile between the residential and commercial sectors as 60% to 40%, respectively, and notes that, historically, that divide has been more like 65% to 35%, explaining that the residential market is currently more sluggish due to the impacts of LVT, which has stressed its use in residential remodel. Tile continues to be a strong player in the new residential market, where blank, flat concrete slabs exist and the installation process is not upending a homeowner’s life.
LVT is taking marketshare from tile in the commercial sector. “We see vinyl all over hotels now,” notes Turner. “It used to be tile in the bathrooms, but now we’re seeing LVT there too, as well as in restaurants. Vinyl is going in because the owner pays half as much to get it in. Also, we’re seeing an uptick in LVT use at retail because it is cheaper up front and easier to get out in the end.”
The U.S. market has also been impacted by the flurry of new capacity online. Though some report that it hasn’t completely changed the larger dynamics of the market because most of the players who built U.S. production were already selling the U.S., it has impacted some aspects. Reports Setti, “It has been a natural economic conclusion: offerings have increased dramatically, creating price pressure on the middle of the market. Domestic products now offer better pricing and also better service after the sale.”
Turner agrees, noting, “The market is more competitive, primarily in some of the larger channels like big box. The new players need customers, and they don’t have the breadth of SKUs and the ability to distribute like we do.”
For ceramic tile distributors, U.S. production has been a significant boon, says Doug Snell, vice president of sales and marketing for Stonepeak. He adds, “A lot of distributors like to buy American. They would rather not wait for the boat ride.”
Raj Shah, co-president of MSI, says, “We are seeing [our] customers take advantage of the ability to have real-time inventory rather than holding it themselves.”
As for 2018, Turner says, “I think the market will be under pressure through 2018, and it will be interesting to see if it’s up again. One disruptive factor in the market right now is Floor & Décor. The company is growing so aggressively that it needs a ton of inventory growth, product that it has to buy before opening. In its 10K, the company reported 35% inventory growth and 25% sales growth.” Presumably, this front-end buying prior to new store openings could skew growth numbers for a fiscal year.
With the gauged porcelain business better established, manufacturers are focused on expanding its applications. Here and there, we have seen the material making headway in locations besides floor and wall, but today manufacturers are really going after that business. Says Molina, “Our panels can be installed as a countertop slab, but require another type of tool for countertop fabricators. We feel there is a really big opportunity to introduce this product to that sector of the market. Installers who are educating themselves about these products and investing in themselves will find success.”
It’s important to note that panels come in multiple thicknesses: the thinner are used for flooring and facades, the thicker for applications like countertops and the like.
Saguatti adds that Atlas Concorde’s panels have also been used for backsplashes, sinks and tables. “Because the product is colorbody, you can work the edges to suit your needs, making them rounded or beveled. You can do a mitre on the sides.”
New products and applications always bring new challenges. Snell says, “If an installer breaks a panel, they’ve lost around $700 dollars. I always say: it takes a glass guy to move them, a fabricator to cut them, and a tile guy to install them.” While almost all gauged porcelain is imported from Italy currently, Stonepeak is beginning production of the material at its Crossville, Tennessee plant and will introduce those U.S.-made products at Coverings.
In addition, we see manufacturers of residential products pursuing A&D and vice versa. Pavers are another area of expansion. These thick outdoor products are increasing in popularity as an alternative to decking or pavement.
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