Laminate Report 2019: The laminate category continues to innovate - Aug/Sep 19
By Beth Miller
For the past few years, laminate has been in reactive mode, innovating to compete with LVT rather than looking at the bigger picture. Now, it must figure out where it fits among the flooring categories by taking a hard look at the features it offers as well as its inherent advantages, including its low cost, enhanced visuals, resistance to scratching and denting, and even its environmental profile.
One of laminate’s greatest selling points has been its lost cost/high design value position, which has only increased over time. Even at entry-level price points, good quality, high-resolution designs are fairly common. More recently, the category’s push toward water resistance has also gained traction. However, laminate still has some significant challenges to overcome, driving manufacturers to continue to innovate.
The addition of water-resistance attributes has helped stabilize the category, though the next big step, most feel, is a waterproof solution. So far, no one has been able to provide a complete waterproof product. Part of what makes it so challenging is that laminate’s core is made of fiberboard-a wood byproduct-which can be particularly susceptible to moisture penetration.
Laminate has had to overcome a number of obstacles that could have potentially been the demise of the category like commoditization, the Lumber Liquidators scandal and LVT’s impact. One of the biggest challenges remains, however, and that is consumer perception of the category. As the flooring market continues to shift due to evolving consumer demands, so too must the category.
Traditionally, as a value product in the residential market, laminate was viewed as a cheap flooring that was perfect for remodels and multifamily. Consumers balked at the clacking sound when walked on, the delamination issues, its vulnerability to water and its ability to “ugly out” over time. But consumers also saw a unique product that was very affordable.
When Pergo entered Home Depot in the late ’90s, laminate in North America began to move toward commoditization, following the path already undertaken in the European market. The shift started to impact growth at the higher end of the category.
However, laminate continued to dominate the big box channel, warehouse clubs and retail chain stores (such as Lumber Liquidators and Floor & Decor). In the mid ’90s, it found its way into new home construction, giving it the opportunity to showcase its features and benefits in another area besides residential remodel and multifamily.
Another challenge was the economic downturn in 2008. Laminate accounted for 6.2% of the total U.S. flooring market in 2009, according to Market Insights. In 2010, it started its drop and fell to just under 5% in 2016. Also, in 2010, Wilsonart International closed its flooring business in Temple, Texas, citing a “sluggish U.S. economy and continuing declines in sales of high-pressure laminate flooring.” Fallout from the commoditization of Faus Group, a high-end laminate company based in Spain. In early 2012, Faus filed for bankruptcy for its U.S. operations located in Calhoun, Georgia, and in 2014, QEP purchased the rights to Faus’ U.S. business.
In response to the shift in demand for laminate, Shaw shuttered its Ringgold, Georgia and Lexington, North Carolina laminate facilities in October 2017. However, it continues to source its laminate elsewhere.
The category took another hit in 2015, when 60 Minutes revealed that Lumber Liquidators was selling laminate flooring at its stores with elevated levels of formaldehyde supplied by a Chinese manufacturer. While the distrust in Chinese imports placed more emphasis on domestically made product, the laminate category, as a whole, took a big hit that continues to negatively impact consumers’ perception to this day.
The laminate category was directly impacted by LVT with its waterproof story and comfort underfoot, though not all laminate players agree on the severity of LVT’s impact. Travis Bass, executive vice president of marketing with Swiss Krono, says, “[LVT] has taken away growth opportunities, but it hasn’t had that severe of an impact on laminate.” He notes that carpet has been the hardest hit by the influx of LVT. “Today, we make a much higher percentage of thicker [laminate] products," says Bass. "The detail that we can provide-the texture and décor-we would not have imagined it seven or eight years ago. The product has organically gotten better as a natural defense mechanism against these other choices.”
Dan Natkin, vice president of laminate and hardwood with Mannington, says the impact felt by LVT on the laminate category has been significant and indicates that Mannington has responded by developing technologies like its SpillShield waterproof surface warranty that protects against pets, spills and standing moisture.
It’s worth noting that the concerted effort by laminate producers to enhance their products-mostly in terms of moisture issues-has attracted more attention to the category than it has received in years. People are talking about laminate again, providing manufacturers with a window to elevate the category and strengthen its position in the market.
TAKE ANOTHER LOOK
With enhanced durability and improvements to its already impressive visuals, laminates today are better than ever, but convincing consumers that the category can compete with wood, tile and marble is as challenging as ever. And getting it specified in the commercial market beyond light commercial applications in the retail and corporate settings is just as challenging, particularly with the A&D community.
Tyler Snyder, senior product manager with Kronospan USA, says, “The word laminate itself has a negative connotation, and that’s where we are working to change the consumer’s mind. I think part of our job, as manufacturers and retailers, is to educate consumers on what the real benefits of laminate are-today’s generation of laminate.”
Manufacturers like Mohawk made the decision to tackle laminate’s negative perception and susceptibility to moisture in one fell swoop with products like RevWood and NatureTek Plus and Select, which are marketed as waterproof flooring systems. And more producers are manufacturing water-resistant laminates, including in 10mm and 12mm boards.
Some manufacturers feel that it is time for specifiers to take another look at laminate’s portfolio for use in a wider range of commercial applications. Swiss Krono’s Bass recently stayed at The Hotel at Avalon in Alpharetta, Georgia for a business trip and took note of the interior furnishings. The Hotel, a boutique hotel that is part of the Marriott Autograph Collection, a group of independent, luxury upscale hotels, held its grand opening in January 2018. Attendees walked across lavish marble floors mixed with wood flooring-all topped with luxurious area rugs. However, Bass noted that the guest rooms made use of laminates in wood looks.
According to Bass, the architects and designers Swiss Krono works with are impressed with the new laminate products, but this happens on a one-on-one basis, and as a result, spreading the word to the A&D community is slow going.
So, what’s the hurdle in expanding the use of laminate further in the contract market? While Inhaus does sell to the commercial market, Derek Welbourn, CEO with Inhaus, points out that, for now, the product is not suitable for heavy commercial wear and is not waterproof, preventing it from fully penetrating the commercial market.
Mohawk sells its RevWood products through its Mohawk Group commercial team, and Adam Ward, senior product director, wood and laminate, says, “Retail, offices and meeting areas are the segments that laminate resonates with the most. Commercial is a very diversified market and meeting the different needs for each area offers unique challenges.”
Mannington’s Natkin agrees that laminate is ideal for specific segments of the commercial market at this time but adds, “The biggest challenge tends to be maintenance, particularly with standing water and flood mopping.” Kronospan USA does not sell directly to the commercial market but sells its products via the builder market. At this time Swiss Krono sells commercially in the multi-family and hospitality sectors only, but it has just hired a commercial sales director in an effort to dive deeper into the commercial segment.
The negative, direct impact of tariffs on the laminate category for U.S. producers, they report, has been little to none. However, the impact on the category as a whole has been substantial since China accounts for 49% of global laminate production, according to Market Insights. In the U.S., imports make up 58% of all domestic consumption, and the bulk of the imports are Chinese, which are subject to tariffs, accounting for about 34% of total domestic consumption.
Total imports are down 25% year-to-date. China comes in first for laminate imports followed by Germany in second and Canada in third. Total exports are up 3.5% year-to-date with U.S. producers exporting to Canada and Mexico primarily, with Canada accounting for 69% of laminate exports and Mexico 20%.
Swiss Krono’s Bass adds, “We saw a slump in demand because so many smaller retailers stocked up on vinyl to get ahead of the tariffs, so money went into vinyl purchases in late 2018, and in early 2019 is when the slump hit; however, it is beginning to equalize.”
Welbourn points out that the tariffs are raising costs on competing categories, which is having a positive effect on laminate. Ward says all of its RevWood and Quick-Step products are made in the U.S. with a small amount coming from its facility in Europe. And Natkin reports that all of Mannington’s products are made in the U.S., and the company reports seeing a return to the category due to the price pressure placed on LVT by the tariffs.
THE NEXT WAVE OF INNOVATION
Bass sees a migration toward both ends of the thickness spectrum with the middle thicknesses of 8mm and 10mm fading in favor of the two extremes-7mm and 12mm. This is based on consumer feedback.
Ten to 15 years ago, 60% of the laminate that Swiss Krono made was 7mm. In the current market, that number has fallen to 10%, the sharp drop in demand a result of the increase in features and benefits in the thicker products, along with other categories, like LVT, taking marketshare. However, Bass points out that today’s consumers are requesting better 7mm laminate, and he anticipates a bounce back towards preference for the flooring. So do others.
At the other end of the spectrum, 12mm accounted for 5% of Swiss Krono’s product offering a decade ago. Today, it is 30%.
“There are considerable innovation opportunities left in laminate,” says Welbourn. He says the category has room to improve its 7mm product and explains that the move to 12mm “is pure marketing at its best.” The attempt at adding value has only served to increase raw material usage and transportation costs, Welbourn contends, adding, “There is really no advantage [to a 12mm product]; even experts in the industry can’t tell the difference once the floor is down. Why is a 12mm laminate required, but a 4mm LVT is just fine? The answer is that it is not. We (in the laminate industry) need to work on that. On a 7mm basis, laminate is again a cost leader and creates great value.”
Bass notes that 7mm laminate is made the same way as the 12mm. When it comes to 12mm laminates, he continues, “You’re paying for a thicker product; it sounds better; you got the moisture holdout and so forth, but the quality of the product-the wearability and so forth-it’s all made the same way. We make a 7mm for Lowe’s that’s embossed-in-register; it has four-sided edge bevels. It’s a really nice-looking product. It’s called Wood Thin Oak, and I think they sell it regularly for $0.99 per square foot, and they occasionally have it on sale for $0.59 to $0.69 per square foot.”
According to Brad Dukes, vice president of laminate sales with Kronospan USA, standard laminate prices were closer to $2.00 per square foot roughly ten years ago, “maybe even slightly above, and then there was a race to the bottom as vinyl came on and took marketshare with its innovation and features. We’re now pivoting back with the addition of water resistance and other advancements in textures and décors.” He says that the higher-end looks and designs are penetrating the market and yet are $1.50 to $2.00 per square foot cheaper than a vinyl option.
Snyder adds, “I think that this time around, laminate is doing a better job of holding its value. With the recession, laminate prices dropped. It took time to recover and for consumers to trust the products. But the new features have helped laminate to become and remain relevant-and keep prices up a bit.” The biggest pressure, according to Snyder, came from LVT. As a result of this pressure, laminate has improved, placing more emphasis on its water-resistant/waterproof innovation. “In a way, LVT has made laminate a better industry,” he says.
THE FUTURE OF LAMINATE
Water resistance helped the laminate category stay afloat, but consumers are pushing for waterproof-even if they don’t need it. Some within the industry view waterproof as a marketing ploy-something pushed on consumers-when, in fact, what they need is water resistance. Despite what anyone thinks or believes, the fact remains that consumers are demanding waterproof.
Bass says, “I think the fascination on the part of the consumer that ‘Hey, I need a waterproof product’ will force laminate to come up with [a solution.]”
Mohawk markets its RevWood Plus and Select products as a waterproof flooring system. Our Flooring Forensics columnist, Lew Migliore, addressed this in last month’s issue of Floor Focus Magazine, noting that while the definition is straightforward for waterproof, the industry’s standard for it is not. “Currently, there is no established industry standard for flooring to classify it as waterproof,” he writes. As for the waterproof flooring system, it is enhanced through the addition of a hydrophobic coating combined with the use of a proprietary joint system and bevel edge. All of these components are necessary to create the “waterproof” system.
Bass says, “[Waterproof] is a need brought on by a smart marketing approach that is not really a need. Consumers have been convinced that they need waterproof. Today, there are a few laminate products that tout themselves as waterproof, but if you read the fine print, it’s waterproof on the top. The key is keeping water out of the seams to keep water from going underneath. Am I comfortable saying our product is waterproof? No. It’s not and neither are the ones that say they are, but on the other hand, who really needs waterproof flooring?”
And, yet, Snyder reminds us that laminate is still a wood-based product. It will never have the waterproof properties found in a plastic core product. “Then again, some of these newer products don’t have the sustainability that laminate does either,” he points out. “At the end of the day, what manufacturers are trying to do is make laminate waterproof in the sense of what a homeowner needs or what they’re going to encounter in everyday life. Waterproof in the sense that you spill something on your floor and it doesn’t suffer catastrophic damage? I think we’re getting there, but waterproof in terms of being able to submerge it? You’ll never have that with a laminate flooring.”
In terms of Mohawk’s waterproof flooring promise, it “will resist moisture damage for up to 30 minutes under normal use,” while RevWood’s waterproof flooring system warranty states, “The RevWood Plus flooring system will resist moisture damage under normal use.” This still falls under the water-resistant definition, as does Mannington’s SpillShield technology. In order to go full waterproof, Bass points to resin as one factor to consider. The other is the board density, but altering the board thickness creates more issues. “You can make a product that is heavy as lead and water will never penetrate it, but then you can’t afford to ship it,” he says. Despite the hurdles laminate still has to overcome to claim waterproof status, producers anticipate that a true waterproof product in the next five years is achievable.
Innovations in design and texture have “a lot to do with what drives a customer and directs them,” says Kayla Defruscio, director of marketing and design with Kronospan USA. She says laminate is no longer just a value product but a trendy option. The mixed species look continues to be popular, along with distressed looks.
Wood looks still dominate. As Natkin says, “Replicating the out-of-reach looks or species for the consumer has always been a key trend.” European white oak and wider planks remain at the top of the list for consumers. According to Natkin, Mannington’s Restoration collection in hickory is proving to be a popular look.
Ward says, “Tile looks and other printed designs have resonated more in LVT and ceramic categories. The fact that this is a wood-based product, and consumers see it as such, makes non-wood visuals less attractive.”
Welbourn adds, “In the past few years, laminate has taken visuals with varying gloss levels, embossed-in-register and high definition printing to new levels. Today’s laminate looks better, performs better and is easier to install.”
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