DIY-Trend or Transient: Gains in DIY business last year, driven by stay-at-home and social distancing, may usher in a more enduring trend - March 2021
By Darius Helm
In the residential remodel market, the field is divided between the specialty full-service flooring retailers and the big boxes that have been taking share from them for the last few decades. And the biggest differentiator for the flooring specialty retailers has been the service and expertise, including installation, that they bring to the table. On the face of it, a strong trend toward DIY is yet another threat that flooring specialists have to contend with.Last spring, home centers and national chains got a leg up on the flooring competition due to their “essential businesses” designation, driving up in those channels not just flooring sales in general but DIY flooring sales specifically. And once independent flooring retailers started opening their doors in late spring, they, too, saw increases in DIY flooring sales, driven in part by a reluctance by homeowners to let installers into their homes.
The question currently facing the market is what happens now that the health crisis seems to be waning. Did the pandemic accelerate an organic trend? And if so, what will happen once the pandemic is fully in the rearview mirror?
To be sure, there are enough variables to make a reliable forecast difficult. First and foremost, how will the population react to the all-clear? Will it be a once bitten, twice shy scenario, where the grim experience has a lasting effect on socialization? In other words, will people continue to spend a lot of time at home and spend their money on that environment? Or will there be a rebound effect? If history is any judge, people may well consider this a closed chapter and carry on as before. There are also economic issues, like whether, once there are no more stimulus checks, homeowners will continue to focus on home renovation-and how quickly the economy rebounds will play a big role in this.
According to Statista, a leading business data platform, total U.S. DIY retail sales growth started surging in mid-spring and peaked last June at nearly 25% higher than June 2019. And NPD Group, a global provider of industry data and analytics, reported that as of last fall over 40% of consumers indicated that they have “post-pandemic DIY home improvement plans.” NDP also reveals that check-out information from the home improvement market shows that about 10% of consumers “have taken on home projects they would have hired professional services for pre-pandemic, including cleaning, landscaping, maintenance, repairs, and even remodeling.”
RETAILER DIY IMPACTS
For the specialty retailer, increasing DIY means decreasing installation revenue. And this means that, with DIYers doing more of the simpler installations themselves, a higher proportion of retailers’ installations will be for more complex floorcoverings (e.g. hardwood and ceramic tile), so training and expertise will be more important than ever-and there’s already a dearth of trained, experienced installers. Beyond that, a strong trend toward DIY impacts a key differentiator between flooring specialty retailers and home centers and chains-service. The less retailers can tout their service as a reason to shop with them, the more marketshare is vulnerable to encroachment from big boxes.
And that leads to the biggest threat to retailers: most DIY product is currently sold through big boxes, so a DIY trend favors big boxes more than specialty retailers, at least for now. This could also drive a share shift away from the specialists.
It’s worth pointing out that the most significant difference between flooring in big boxes and in specialty retail is quality. Big box flooring is more affordable for a reason-it’s a less expensive product. Rigid LVTs are generally thinner at home centers, wearlayers are less robust, carpet is lighter weight.
Home Depot’s second quarter 2020 comparable sales in the U.S.-for its total business-were up 25%, and third quarter sales were up nearly as much (24.6%). For Lowe’s, U.S. comparable sales were up over 35% in the second quarter, and third quarter sales were up over 30%. So far, there are no hard numbers for growth in flooring sales, but flooring vendors to the big boxes report strong double-digit growth.
In Home Depot’s third-quarter 2020 conference call, Ted Decker, president and COO, referring to its DIY customers, noted that the firm continues “to see unprecedented levels of engagement from both new and existing customers across a variety of home improvement projects. And, importantly, as they these customers complete a project, they are gaining the confidence to tackle their next project and reengage with The Home Depot.”
Fortunately for the brick-and-mortar specialty retailer, there are significant barriers to selling most flooring types online. Rugs, which are the only floorcoverings that go atop finished floors, are an exception. And over the years, the bulk of area rug sales have migrated online.
Most online rug merchants accept returns, often with a surcharge. But rugs are fairly straightforward; they can be rolled up into a cylinder that’s usually less than 10’ high. Try returning ten palettes of hardwood or LVT. Or ceramic tile.
Flooring is a tactile product, and homeowners in general won’t have flooring shipped if they haven’t seen it in person first, but they’ll certainly use the Internet to do all their research before heading out to see the products they’re interested in.
And if the flooring requires professional installation, which it generally does, then it makes even less sense to order online when the installer can bring in the new product and dispose of the old.
But while it seems that the flooring industry is somewhat buffered from online sales, the Internet has a habit of shattering business models and upending conventional wisdom. Developments in technologies like augmented reality could end up as viable alternatives to the brick-and-mortar experience.
DIY IS NOT NEW
Some forms of DIY products have been on the market for decades, like peel-and-stick vinyl tiles. Traditionally, these products have populated the entry-level price points. All it required from homeowners was a utility knife and a ruler. For homeowners on a tight budget, peel-and-stick tiles have been a real problem solver, but they tend to have thinner wearlayers and they ugly out fairly quickly, and even the most precise installation will often not prevent grime from uglying the seams.
The advent of laminate flooring in the late 1990s brought new DIY possibilities, thanks to the click systems and floating floor installations. However, instead of a utility knife, homeowners would need a power saw to cut the dense boards at the perimeter. And they’d probably need to install an underlayment to mitigate the hollow clacking laminates emit when walked on. So even though they can technically be installed DIY, the vast majority of laminates have always been installed by professionals.
Over time, those click systems also started to pop up on engineered wood and flexible LVT. In the case of engineered wood, they never gained a lot of traction. Wood-look LVT in the form of planks did better, and was easier for homeowners to install, mostly because, like peel-and-stick, they only needed a utility knife. Newer click technologies included locking systems for the short ends, increasing the integrity of the installation and enhancing the performance and appearance of the floor.
However, locking, flexible LVT became obsolete practically overnight with the advent of rigid LVT. Consumption shifted from flex to rigid LVT in a matter of a couple of years, and so did the click systems.
In terms of soft surface, broadloom is not a DIY product, but carpet tile certainly can be. Early to the game were Milliken and Interface. Milliken had a product for home centers and another for the specialty retailer, but they never found enough traction and after a few years the programs were gone from the market. Interface had a different model with Flor, sold through the Internet and catalogs along with, ultimately, 20 retail stores. The stores are gone now, but Flor still does a lot of catalog and Internet business. The tiles attached to each other with adhesive tabs, making DIY extremely straightforward.
There’s another carpet tile that’s been in the market for at least eight years, and it’s produced by Foss Floors through its three Georgia facilities-two in Rome and one in Chatsworth. The unique peel-and-stick product, which is entirely made from recycled PET drink bottles, is a nonwoven construction with a needlepunched face. The firm also makes cut rugs and broadloom. Foss sells its products to home centers and mass merchants, and it also supplies its textiles to other producers in the manufacture of end-use products.
The firm’s first carpet tile offerings were 18” squares but now it also does 24” squares as well as plank formats. And it offers a wide range of styles with convincing tufted looks and high-low textures, as well as more utilitarian designs, retailing from $1.50 to $3.50 per square foot. Its carpet construction is essentially monolithic, with its PET back fused to the patterned face with Dura-Lock technology that holds every fiber in place even in high traffic installations, and its releasable adhesive allows for products to be re-installed a number of times over a clean subfloor. However, the product can also be installed over finished floors, including low-profile carpet, according to the firm.
Foss reports that about half of its carpet tiles are DIY, and the rest are professionally installed, usually for mainstreet or light commercial applications.
Over the last year, two of the largest mills, Shaw and Engineered Floors, have also introduced carpet tile to the residential market. Shaw’s product, Floorigami, is also a peel-and-stick carpet tile, and it comes in 9”x36” plank formats in about a dozen styles in both nylon and PET constructions. While the firm has plenty of displays out there among its retail partners, it has also developed a system, through floorigami.com, where consumers can either have the product shipped or they can pick it up from a local Shaw-aligned retailer.
Shaw believes that Floorigami’s success will come from managing pricing, so the carpet tile program is priced the same to the consumer regardless of channel; a direct sale and a sale through a specialty retailer cost the same. That’s a positive for specialty retailers, since it levels the playing field. Of course, that leaves selling direct as Shaw’s most profitable channel for Floorigami.
Engineered Floor’s residential carpet tile line, Smart Squares, is a line of 18”x18” peel-and-stick tiles in four styles, each available in a range of colorways. The line uses the firm’s PureColor polyester face fiber with soil and stain protection, with an attached polyurethane cushion on the back and a pressure-sensitive adhesive for installation. Both Shaw and Engineered report good growth in their residential carpet tile programs in 2020 and anticipate steadily increasing traction this year.
Mind you, the fastest-growing flooring category is rigid LVT, with SPC, which is a thinner, harder product, rapidly taking share from WPC. And rigid LVT is also well suited to DIY, with four-sided locking systems from one of the three providers-Välinge, Unilin and I4F. However, depending on the thickness and density of the product, rigid LVT may need some type of saw. Ends can generally be scored and snapped, but when it comes to cutting along its length or cutting out corners, power tools may be the easiest way to go. So it’s a product that probably benefits from a handy homeowner.
Most rigid LVT flooring is installed by professionals, but DIY is substantial and growing. There are no hard numbers on this yet, but industry experts estimate that DIY last year accounted for anywhere from 30% to 35% of the rigid LVT remodel market, with about 75% of big box rigid LVT being sold as DIY, compared to only 10% at specialty retail.
CHALLENGES AND OPPORTUNITIES
Another issue is what DIY means to the flooring industry. For instance, do manufacturers care if their products are installed professionally or DIY? After all, a sale is a sale. But manufacturers do care if their products are installed correctly; flooring failures are bad for business. And with even the best installation technologies and best instructions, amateurs can make mistakes.
As any flooring retailer will acknowledge, homeowners can be spectacularly incompetent when it comes to installing their own flooring. Often, their confidence far exceeds their competence. Homes all across the country are littered with flooring failures that professional installers have had to salvage. In fact, such failures can translate into an attractive source of revenue for flooring retailers.
Some industry veterans, like Russ Rogg, president of HMTX’s Metroflor Corp., expect that specialty retailers may have to promote that they offer both turnkey and DIY transactions in order to prevent further share loss to home centers and even online merchants. Rogg adds, “And if the retailer can win back the confidence of the consumer, when that flooring shows up, the consumer may turn back to the retailer after all to handle what looks like a problematic job.”
Additionally, there is the question of whether a DIY market may actually mean more flooring sales. If homeowners can get a floor for less by installing it themselves, they are more likely to make the purchase. Instead of hanging on until their flooring is entirely uglied out, they can save a ton of money and do it next month themselves. That’s an attractive proposition.
Flooring manufacturers in general spend little on consumer advertising, even less than they used to. But one would think that DIY growth presents an opportunity for manufacturers to fight for marketshare, and that they would want to get the word out.
However, according to the manufacturers with whom we spoke, TV commercials are not the way to go. Sure, the Baby Boomers still watch TV, but no one else does. According to a study by MediaHub, a global creative media agency, that ranked the top three video content providers for various age groups, TV stations (other than HBO, which doesn’t run ads), didn’t make the cut at all for viewers under 50. For those under 50, Netflix and YouTube were the top choices, generally followed by Hulu or Amazon Prime.
Many manufacturers of DIY products leave all the advertising to their downstream partners, like distributors and retailers. In large part, this is because their products are often branded downstream, as well. But for those manufacturers doing brand sales, social media is where they spend their money.
And within social media, one core group with escalating prominence are the influencers. One prominent LVT producer recently cited a promotion it ran with an influencer that increased sales on its product by 1,600%.
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