Hardwood vs. the Pretenders: The wood flooring category focuses on its brand identity - Apr 2019
By Darius Helm
Hardwood, the most beloved flooring among American consumers, is in the midst of a legitimate existential crisis, as every other hard surface flooring type is focusing the bulk of its efforts on wood looks. To reassert its primacy, the hardwood industry is working to elevate its profile and push its way back into the spotlight.
The hardwood industry experienced its greatest period of growth during the FHA housing boom following World War II-back then, it was almost entirely solid strip flooring, dominated by red oak. Then it saw its fortunes reversed with the advent of wall-to-wall carpet. But in 1983, the hardwood industry began to grow again, with the pace accelerating as residential consumers steadily turned away from residential carpet.
Even as wood-look LVT started to transform the face of the flooring industry, hardwood continued to grow and gain marketshare, thanks in part to the overall gains in hard surface flooring over carpet as well as demand for new hardwood looks and formats. But the rise of SPC and WPC flooring-again, largely in wood looks-over the last four years has put even more pressure on the other flooring categories, and in 2017 resilient flooring surpassed hardwood as the largest hard surface flooring category.
The hardwood market in the U.S., accounting for about $3 billion in mill sell revenues, was down by low to mid single digits last year-we’ll present our full analysis of the hardwood industry in next month’s Annual Report-mostly driven by pressure at the lower end of the market, with the biggest impact felt by entry-level engineered hardwood, as well as a continued drop in demand for solid wood flooring as consumers turn to the wider widths in engineered products. Imports grew by about 9%, accounting for just over 50% of consumption, driven by product flowing mostly from China, Canada, Vietnam and Cambodia, while domestic production was down by double digits.
It looks like some of that import growth came from firms boosting inventory in anticipation of the 15% additional tariff increase that was originally scheduled to be enacted at the beginning of the year and has since been delayed a couple of times. It’s worth noting that half of the grade lumber produced in the eastern U.S. is exported, and half of those exports go to China.
THE FAUX WOOD TREND
Hardwood visuals have been produced in other types of flooring for decades. In the early days it was mostly sheet vinyl coming up with incredibly unconvincing wood looks, as did some of the early LVTs. But the picture changed substantially in the last decade of the 20th century, as an entire category-laminate flooring-rose to prominence based almost exclusively on its faux wood visuals. And in the first decade of the new century, faux wood visuals came to quickly dominate the ascendant LVT category. More recently, ceramic tile wood looks have gained traction-actually trending in Europe for a few years before being embraced in the U.S. market-though wood looks don’t dominate the category like they do in LVT and laminates because ceramic tile has so many well established design styles.
However, the biggest impact has come from the sudden arrival of rigid LVT, first in the form of WPC, then SPC, flooding the market with faux wood products and putting huge pressure on the lower price points. And exacerbating the problem is the quality of the visuals and the ubiquity of low-cost high-resolution digital printing technology. Even the lousiest commodity-focused SPC manufacturer can achieve a level of visual precision and photo-quality replication that was unattainable by the most cutting-edge producers ten or 15 years ago.
For the consumer, this is a compelling proposition. The majority of consumers desire hardwood floors-according to a recent National Wood Flooring Association (NWFA) survey, nearly 80% of homeowners believe that wood floors add the most value to a home, and an NAHB (National Association of Home Builders) survey of nearly 4,000 homebuyers listed hardwood flooring as one of the top ten desired features in a home. And many have resisted settling for poor imitations, despite tight budgets. Then along comes a product at a cheaper price point that this time around really looks like wood and, for what it’s worth, is waterproof (the product, not the installation). Like hardwood, these products have heft and rigidity, or at least more rigidity than any other resilient flooring.
When salespeople challenge customers to guess which sample is hardwood and which is, say, WPC, the product pitches itself. And customers often find themselves enamored of the technology, which is giving them the look they want at a price that’s hard to resist. For many, that draw is stronger than their draw for authentic hardwood.
And it turns out that selling SPC is also hard to resist. Industry insiders report a lot of frustration in the dealer community with retail sales associates going for the easier sale-despite the lower commission-enabling consumers who are legitimate hardwood prospects to trade down to SPC or similar products. SPC sales, particularly for a DIY customer, are more straightforward than hardwood sales, and the commissions are more timely.
Also putting hardwood producers at a disadvantage is the fact that species and styles in highest demand, like European-cut white oak, are priced well above entry-level hardwoods, so the aspirational consumers who realize that the specific look they’d love the most is well outside of their budget are even more likely to succumb to SPCs with those same visuals. Other trending looks, like long and wide planks in cleaner, higher grade woods, can be hard to achieve in real hardwood at a competitive price, but again, LVT and rigid LVT don’t face the same kind of limitation.
Most recently, there has been a blurring of the lines in terms of what is real wood and what is not, from laminates being marketed as wood flooring to rigid core products topped with real wood veneers, some as thin as 0.5mm, which is about the same thickness as the 20 mil wearlayers on commercial LVT.
At the recent Surfaces show in Las Vegas, the NWFA officially launched its campaign to promote real wood flooring. The “Real Wood. Real Life.” initiative includes a range of promotional materials for everyone from homeowners to retailers, information on hardwood selection and floor care, and an official definition of what qualifies as a real wood floor.
The materials produced by the NWFA include a consumer outreach toolkit, which features downloadable and customizable print and online ad content, show signage and even sample social media posts, like this Twitter post: “Is that wood floor the real thing or a wanna-be? Check out @NWFA_WoodFloors official definition and the benefits of real wood flooring: WoodFloors.Org #RealWoodRealLife.”
The toolkit also includes a comprehensive section of media outreach tips, along with customizable templates for media materials. Fact sheets and a substantial list of FAQs round out the package.
The NWFA also came out with a homeowner’s handbook, a primer to help consumers select the right floor for their lifestyle. It includes a whole section on hardwood details, like species, hardness, and the different constructions and finishes available, and there’s also another section on wood’s benefits and how to maintain the flooring, along with a short step-by-step guide on the process of selecting and buying a wood floor.
The NWFA has formally defined a real wood floor as “any flooring product that contains real wood as the top-most wearable surface of the floor.” And it breaks down wood flooring into three categories: solid wood, which is a single, solid piece of wood from top to bottom; engineered wood, which is also real wood throughout, but constructed with multiple veneers or slats of wood adhered together in opposing directions; and composite engineered wood flooring, which features a real wood top veneer and a base made up just about anything at all.
That final category includes everything from wood veneers on an HDF base, to the new generation of rigid core products topped with real wood, from the likes of Shaw’s Coretec, American OEM, Johnson and Samling Global-with many more to follow.
While the NWFA is expected to focus more on promoting wood flooring that can be refinished-like solid hardwood and sand-able engineered wood with a veneer thick enough to be sanded-since that’s part of hardwood’s core identity, the addition of composite engineered wood flooring is a welcome move by many flooring producers, freeing them up to experiment with higher performance, lower cost constructions without straying outside the bounds of what the NWFA calls a real wood floor.
The last few decades have seen huge and unprecedented developments in hardwood design and construction. First, lighter stains broadened hardwood’s visual palette and enhanced its role in interior décor. Then prefinished hardwoods started their takeover of the market in the late 1980s, simplifying installation and offering harder finishes than available on traditional site-finished floors. And this was followed by gains in engineered hardwood, which was originally invented by Sweden’s Kährs in 1941, and introduced to the U.S. market in 1955 by Anderson Hardwood. By 1999, engineered hardwood accounted for close to a third of U.S. hardwood flooring sales-it’s closer to two-thirds now.
Engineered hardwood was the vehicle for the explosion of exotics in the market, and for a few years the landscape was dominated by the oranges and reds of tropical woods. That didn’t last long. The Lacey Act 2008 prohibited the import of illegally logged timber, and for a brief time hardwood producers tried coloring their domestic woods to resemble exotics, but then they realized that the trend was already shifting away from the hot exotic colors to cooler hues, and that American consumers were becoming enamored of the more exotic domestic species, like hickories and walnuts.
Over the same period came another critical design development, hand scraping. It started very rough and chunky-some of those early planks looked like they had barely survived machete wars-and gradually shifted to more thoughtful and deliberate markings, like cracked knots, worm holes and saw mark chatter, then to softer timeworn looks. In the last few years, surfaces have become flatter and smoother, with distressed looks more often conveyed through wirebrushing and rustic painted visuals.
The other big trend, again entirely driven by engineered hardwood developments, was wide planks, which have grown steadily longer and wider over the years-while solid hardwood in wider widths will cup and bow, the cross-ply construction of engineered woods prevents any such deformations. Now that planks go up to 10” wide and 6’ long, it’s safe to say that they’ve about reached their maximum. If they go any wider, people are going to have to get bigger rooms. And it’s worth noting that since the Great Recession, house sizes have actually shrunk.
And the most recent major trend in hardwood flooring is the rise of white oak. Red oak has traditionally been the most common wood flooring, and many consumers don’t find it appealing, having been so thoroughly inundated with it. White oak looks like the uptown, more put-together cousin of red oak and is also the perfect vehicle for wirebrush effects. The two share oak’s distinctive grain patterns, but red oak has an open grain while white oak has a closed grain and is denser, which is why it’s used for whiskey barrels while red oak is not. These enhanced performance characteristics put white oak in higher demand for a range of uses, and it’s pricier than red oak.
Hardwood manufacturers regularly identify their white oak products as European or French white oak. Sometimes they are, and sometimes they aren’t. Europe is renowned for its old-growth white oak forests-the oak was used for ship masts-and it’s a slower growing wood in Europe, so it’s stronger and has a tighter grain. But a lot of what is marketed as European oak is really about the cut. In the U.S., white oak is plain sawn, quarter sawn or rift cut, but in Europe, the log is square cut first, then sliced, which yields extra wide planks that have flat sawn visuals (cathedral graining) in the middle, flanked by rift and quartersawn patterns, all in one board.
Demand for white oak is still on the rise, and it now accounts for 30% of U.S. hardwood flooring consumption, compared to 37% for red oak, which is still the most affordable species out there. Then comes maple, followed by other domestics like hickory.
At the beginning of this year Mohawk completed the transition of all of its engineered hardwood-under the TecWood brand-to HDF cores, which offer enhanced attributes, like better performance with click systems. Part of Mohawk’s marketing strategy is to present its RevWood laminate line alongside its wood flooring, to in a sense marry them together along a continuum of value propositions for consumers with varying budgets. And it’s worth noting that RevWood Plus (with perimeter sealing) is promoted as a waterproof floor akin to ceramic tile installations, where the entire floor is waterproof, and unlike LVT, SPC and WPC, where the individual planks are waterproof but the installation is not. The firm also has a solid wood program that goes through all channels. Like all solid wood business, it’s stronger in the colder climates and particularly in the Northeast-and generally wherever there are basements rather than slab constructions.
The firm sells wood flooring under the Mohawk, Quick-Step and Pergo Wood brands, and it also has a commercial program that has been showing some growth. Overall, business has been stronger at the higher price points, and the firm is working on building its share of that part of the market.
Shaw Industries has been a big player in solid and engineered flooring for years, along with its Epic brand of HDF cores topped with real wood veneers. And now the firm has further expanded its wood flooring constructions with the introduction at the beginning of this year of real wood veneers on rigid cores under the Floorté and Coretec brands. The Floorté product features an SPC core topped with a 1.2mm hardwood veneer, while Coretec Natural Wood uses a magnesium-based mineral core with a 2mm hardwood veneer. The firm anticipates that hardwood growth this year will be driven by these new intros.
Those two products also have another attribute that’s in high demand-they’re waterproof. It’s likely that this feature will play a big role in driving sales. The firm also offers Repel, an engineered hardwood with a robust water-resistance treatment for consumers in search of more traditional hardwood constructions.
At the end of last month, Shaw sold its remaining solid hardwood operations, in Franklin and Bryson City, North Carolina, to Beasley Flooring Products, a vertically integrated mill that has been supplying Shaw in some capacity for several years, and Shaw will continue to source its solid hardwood from Beasley.
Mullican’s sawn-face engineered program was developed to target those higher price points, and its introduction in 2017, with production in Johnson City, Tennessee, has helped drive growth. Most of Mullican’s revenues still come from solid hardwood, where the company has its roots.
Last year, predating the NWFA initiative, Mullican ran an advertising and social media campaign called “Real Dogs, Real Harwood Floors,” to educate consumers about the benefits of buying real hardwood floors. According to Neil Poland, president of Mullican Flooring, “Dogs represent special moments and memories, and we want that same connection with our products. We thought it was appropriate to use them in our promotional efforts.” And needless to say, any kind of promotional campaign that features dogs on real wood floors helps shift perceptions about what types of flooring can handle pets.
Somerset, which has been manufacturing hardwood since 1990, targets the mid- to high-end of the market with both solid and sawn-face engineered hardwood-its engineered products all use birch cores. Like Mullican, solid hardwood is still the bigger part of the business. Somerset started up its engineered facility in Crossville, Tennessee in 2012.
Somerset keeps its margins healthy by steering clear of the lower end of the market. While business was about flat last year, deliberate growth in average pricing improved profitability.
Mannington Mills only produces engineered hardwood, sold through specialty retailers and flooring contractors. Eschewing solid hardwood somewhat buffers the firm from the full impact of raw material price increases, since engineered veneers use so much less material. The firm is also investing in growing capacity at its facility in North Carolina, including milling capabilities for longer, wider boards and for herringbone formats.
The firm is also testing coatings to increase the water resistance of its hardwood flooring. And it will continue to focus on medium to higher price points.
Quebec-based Mercier is another firm that steers clear of the lower end of the market. The firm reports that revenues were up by double digits last year, and so far this year is on the same trajectory. The firm makes both solid and engineered hardwood. Its sawn-face veneers range from 2mm to 4mm, and it goes to market with 13 species, including a handful of high-demand exotics, like tigerwood, Santos mahogany and Brazilian cherry.
One of the most interesting hardwood firms is AHF Products, which is the hardwood business that Armstrong sold off at the very end of last year. As part of Armstrong, the firm took a big hit in sales last year, but this year brings a new team, led by Brian Carson, and an entirely new set of priorities and strategies. For one thing, the firm is leveraging its legacy brands, some of which had been gathering dust in recent years, like Hartco and Robbins. Other brands include Capella, Homerwood and the most prominent hardwood brand in the industry, Bruce.
The firm has seven hardwood facilities in the U.S., producing in-house most of its products, including both solid and engineered hardwood. The entity that owns AHF, that purchased it from Armstrong, is American Industrial Partners, a private equity firm that has a lot of experience with hardwood businesses. And Carson, who was with Mohawk for the last 12 years, including seven as president of Mohawk Flooring North America, was with Armstrong for 16 years before that.
WHAT COMES NEXT
There’s every reason to believe that the U.S. market will see a wave of rigid core products topped with hardwood veneers, and many of them will likely be marketed as waterproof. And this may well eat into share of traditional hardwoods, especially if RSAs are allowed to downsell the customer. Some hardwood producers will address the situation by coming out with their own composite engineered wood products, but many will likely work hard to stay above the fray and focus on differentiated products.
Also, it bears remembering that hardwood has been around a long time. As a solid product, it has been tested in all conditions for millennia and its performance characteristics are well known. Even engineered hardwood has been around nearly 80 years-and its ability to perform well in a range of environments has been well documented.
By contrast, rigid core products have been around for about five years. And while standards have been created, it’s still the Wild West out there, with too many manufacturers to count (almost entirely from China) and far too big a range in quality, with plenty of well documented product failures. There are concerns that the next few years could see further price point erosion in the rigid core categories, particularly SPC, which could damage prospects.
It will be interesting to see what sorts of issues arise after these products have been down for a few years, particularly in environments where waterproof attributes are put to the test. Not all consumers understand the difference between a waterproof product and a waterproof installation-to
put it mildly-so there could be a lot of mold issues down the road.
An article in Nature, the international science journal, details a process scientists have developed to make wood a potential substitute for steel and other construction materials. According to the abstract, the scientific team has developed “a simple and effective strategy to transform bulk natural wood directly into a high-performance structural material with a more than tenfold increase in strength, toughness and ballistic resistance and with greater dimensional stability.”
The two-step process boils the wood in a chemical solution to partially remove lignin and cell wall material, followed by hot-pressing that totally collapses the cell walls and densifies the wood with “highly aligned cellulose nanofibers.” According to the researchers, the resulting product is a “low-cost, high-performance lightweight alternative” to traditional construction materials.
University of Maryland’s Teng Li, a member of the team, says, “It is as strong as steel, but six times lighter. It takes ten times more energy to fracture than natural wood.”
The process has already been successfully tested on several wood species, and now the focus is on scaling up and speeding up the process, and the research team is confident that this should be fairly straightforward.
Such a product would make for a remarkable floorcovering-the product is literally bulletproof-and an even better construction material. Stay tuned.
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