Laminate Report: Laminate sales are down, but the category holds unique benefits that are attracting retailers and new suppliers – August/September 2024

By Jennifer Bardoner

Following laminate’s race to the bottom, the category largely shifted to a value-focused offering sold at big boxes. With a host of suppliers and independent retailers now returning to laminate, it may be poised for somewhat of a renaissance. It is not expected that the category will grow by leaps and bounds, especially with the housing market and retail foot traffic still suffering, but the influx of new players and products will bring an enhanced focus, and increased competition typically breeds differentiation.

THE RETURN TO THE CATEGORY
In the decade since laminate began ceding some of its marketshare to rigid core LVT-which was driven by SPC’s inherent waterproofness-the category’s mix has evolved as laminate producers seek to remain relevant by giving the consumer more value. Today, thanks to a myriad of core, edge and surface treatments, enhanced water resistance is a common feature among laminate products.

“Now that you can offer that protection and back it with a warranty, it allows you to compete head-to-head with SPC and WPC products,” notes Brian Parker, vice president of product management for AHF Products, whose TimberTru laminate, introduced in 2021, carries a top-down waterproof warranty.

Such advances have opened the door for laminate’s re-emergence, and providers are beginning to enter the market with competitive offerings. This year alone, Tarkett Home, Stanton, Happy Feet and Provenza added the category, Cali Floors debuted two new lines following its introductory offering last fall, and Beauflor and Southwind retooled their laminate programs.

Noting that Tarkett’s new domestically sourced ShoreFlor offering can be steam mopped thanks to its watertight locking system and hydrophobic edge coating, senior marketing manager Nicole Roth adds, “In late 2019, we made the strategic decision to stop selling laminate through our distribution channels. This decision was influenced by the development of LVT floors and the growing consumer demand for waterproof floors. We knew when we offered laminate again, it needed to address the needs of today’s busy families.”

The timing of the wave of new laminate offerings has as much to do with the resilient category’s own challenges, however. Since the pandemic, the LVT category’s supply chain has been wrought with uncertainty and price pressures-on top of the longstanding tariffs on Chinese imports-as political turmoil around the globe continues to plague trade routes, illustrating the inherent benefits of laminate’s largely domestic position. Inhaus CEO Derek Welbourn estimates that domestic producers supply roughly 50% of the U.S. market. And David Moore, senior product director of wood and laminate for Mohawk, which accounts for roughly 42% of domestic sales, notes that “well above 95% of everything we have and use is domestically sourced from a raw material perspective, even some of the raw materials that our vendors use.”

“With ocean freight rates recently having more or less tripled, that is added cost that gets passed on to the buyer, distributor, retailer and consumer,” Parker points out regarding LVT. Noting that AHF’s laminate offering is sourced from a manufacturing partner in Pennsylvania, he explains, “As prices on imported products escalate, a domestically manufactured product like laminate becomes more attractive because there is better price stability, more predictability, shorter lead times and less inventory to carry, so the distributor or independent retailer doesn’t have that cash tied up.” And the fact that, “without the freight escalation, you’ve got price parity between laminate products and middle and upper-end rigid LVT products” makes laminate a more palatable option for consumers challenged by ongoing inflation, he adds.

Especially price-sensitive are homebuilders, and laminate’s tried-and-true dent and scratch resistance enhances its value position in environments where tradesmen continue to traipse in and out after the floor is down. SPC is naturally more prone to gouges and dents, and low-cost products are having profile failures and stability issues, as well.

“There have been some problems with SPC cupping, so it has opened some opportunities for other products,” Welbourn reports. “Some of those issues go away when people put more money into SPC, but then they’re losing the price advantage they have there.” And with raw material pricing squeezing margins and high interest rates dampening demand, builders are looking for every opportunity to reduce costs.

“We are definitely seeing laminate working its way more into the homebuilder side of the market than it has in the past, and I think that will continue,” says Mannington’s senior director of residential hard surfaces, John Hammel.

Welbourn notes that, though the housing market is challenged, “if you’ve got good products and are focused on creating some value, there is still some business to be had, for sure.” He adds that “multifamily has never been a strong market for laminate, so there is a little bit of transition there, and we are still seeing some reasonable multifamily business.”

Retailers are not immune to the performance issues plaguing SPC and have also begun shifting their product mix to give more shelf space to laminate flooring.

“Rigid core has been the fastest-growing category for the last decade; nothing was coming close to it,” says Parker. “But over the last three years, laminate has rivaled it and, at independent retail, has outpaced it. We’ve seen that in our products and our brands, as well.”

Jamann Stepp, who stepped into the newly created role of senior vice president of hard surface for Stanton in late 2023 after tenure at The Dixie Group and Shaw’s Coretec, reports that “some high-ranking National Floorcovering Alliance accounts around the country have thrown SPC out of their showrooms,” which factored into Stanton’s decision to add laminate to its offerings. “If you only offer SPC, you’re probably out of the game,” he explains. “Even before I left Dixie, I was told by a few key accounts around the country that they were phasing out their SPC products.”

With SPC losing momentum, the rigid core category is experiencing somewhat of an identity crisis as suppliers begin to backfill with WPC, which many retailers initially dropped in favor of SPC’s competitive price structure. As rigid core LVT “figures out where it wants to be,” an evolution that Moore expects to play out over the next 12 to 24 months, “it bodes well for laminate,” he says.

RE-EDUCATING RSAS
Laminate has suffered in the past from negative connotations, both in light of the Lumber Liquidators formaldehyde scandal and performance issues related to the product’s previous lack of water-repelling treatments as well as its hollow sound. Many of those issues have since been remedied and, in the meantime, a new generation of buyers has matured.

“We used to talk about how laminate was a dirty word,” says Moore. “People associated it with low-quality products that didn’t perform well. From a consumer perspective, I don’t think that’s the case anymore.”

However, he notes that “a lot of people in the trade have been doing it a long time,” and their memories aren’t as short.

“It’s not so much that you need to convince the consumer as it is that you need to convince or retrain the realtor and RSA,” Parker says. “RSAs have been trained and conditioned for the easy sale for the last decade, and that easy sale has been WPC and SPC. There hasn’t been much focus on laminate or wood, and with the turnover in RSAs, some of the newer ones may only know how to sell WPC and SPC products.

“When I meet with customers, the way I frame it is that laminate was the original rigid core. And it always had better visuals than vinyl, better scratch and dent resistance than WPC and SPC; it just didn’t have that waterproof story. Now it does. It’s a value and performance story on a domestically made product.”

A DIFFERENTIATED OFFERING
Rigid core LVT’s rise has saturated the market to the point that laminate is now seen as a differentiator. “And the way retailers win is through differentiation so those using laminate as a point of differentiation are seeing growth,” Parker says, reporting that AHF has seen “significant double-digit growth” with its independent-dealer-focused laminate program since entering the category three years ago and is on track for that again this year.

“Consumers are looking for alternatives to wood and vinyl,” says Larry Purcell, director of sales for the Midwest and Northeast for luxury hardwood provider Provenza Floors, which will reintroduce laminate to its portfolio this fall with its Modessa collection. “As a leader in style and color, our dealers have been asking us for laminates,” he says.

During Mohawk’s recent Q2 2024 earnings call, chairman and CEO Jeffrey Lorberbaum cited laminate, along with quartz countertops and porcelain slabs, as having the most opportunities for higher growth, and he referenced related company investments. Moore notes that the company is not simply increasing its laminate capacity, but also targeting differentiated offerings.

As retailers stake their claims in the category, they’re seeking to differentiate themselves from big boxes, which typically cater to the more price-conscious DIY crowd. With water resistance a necessary quality across the board, the focus at independent retailers has shifted to additional attributes, including product thickness. Whereas Welbourn reports that Inhaus, which does a sizable home center business, in addition to some specialty retail, is seeing activity with 7mm, 8mm and 10mm value-priced products in the $1.49 per square foot to $2.99 per square foot range, Stepp says “12mm has become a staple at specialty retail,” whether that means a 12mm product without pad or a 10mm product with an attached 2mm pad.

“The demand today is much different than that of 2020, as a large percentage of laminate sales are coming from our 12mm products with attributes like embossed-in-register (EIR), painted bevel, water resistance and attached cushion,” reports Kevin Howell, senior director of sales and product management for Beauflor USA. “Prior to the pandemic, 80% of the volume was being driven by 8mm laminate without those attributes and was purchased purely on price, but as of today, consumers are really understanding the value and are willing to invest in the product for the long term.”

Moore believes “the middle is where laminate is positioned to do really well,” noting the lack of competing products that can offer the same level of features, benefits and realism in the $3.50 per square foot to $5 per square foot retail price range.

As suppliers look to balance cost with performance and value, new rollouts are largely favoring the 10+2 format, including Tarkett’s ShoreFlor, AHF’s TimberTru, Cali’s Shorebreak and Stanton’s NuvoMax and NuvoLux lines.

“A 10+2 gives you that sturdiness, heft and solid feel underfoot that a 12mm product would give you, but it is a thinner structure, so it moves you closer to that value 8mm price point,” Parker says, noting that the attached pad facilitates DIY install.

“Before rigid core LVT products made their way onto the scene, the market really was segmented with pad-attached product at home centers for DIYers and non-pad-attached product at independent retail, where you would get a better product and a quality install,” Parker adds. “Rigid core has broken that barrier down, and it benefits pro installers because now it’s a faster and easier install for them, as well, so they can get the job done quicker, get paid quicker and do more jobs.”

Like performance, the product’s visual is integral to consumers’ purchasing decisions, and laminate’s core construction and visuals offers greater realism than traditional vinyl products, thanks largely to its matte finish. As more players enter the category, these main purchase drivers-performance and aesthetics-are likely to become the battleground for business, with suppliers working to stand out from the crowd.

Hammel notes Mannington’s digital print technology, which provides crisp designs and allows for up to 20 unique planks, further enhancing the realism. Stepp points to plank size, noting that the company is looking at adding 72” and 86” boards. “I do think we will start to see wider, longer planks being more prominent in laminate,” he says. Moore cites premium species, like walnut, as well as surface technology that augments the look and feel of the visual, like Mohawk’s Signature technology, which will see further developments unveiled this winter. Cali CEO Doug Jackson references unique visuals, like the stone-inspired aesthetic of the company’s Shorebreak laminate collection.

“The biggest opportunities in the laminate flooring category lie in its continued evolution toward greater realism, durability and sustainability,” Jackson says. “Looking ahead, we plan to expand our laminate offerings by introducing new designs and colors, and even larger Shorebreak tiles.”

Stepp agrees that innovation, color, design and texture-as well as “the chassis,” or the construction-is “an opportunity for laminate to improve on itself and enhance its water story,” though he cites acoustics as an issue that largely remains. Inhaus is set to debut a new product called Ecolam that Welbourn believes will improve sound abatement. Topped with a resilient surface material, which he expects will dampen sound due to its cushioning compared to traditional laminate, it represents a wider offshoot of the category that promises to further push the envelope. Ecolam’s wood-based core will be protected from moisture by a waterproof joint with additional edge treatments.

WHAT’S SELLING
Reporting the emergence of “a little bit of oak fatigue,” Moore says that while white oak visuals still represent a big part of the market, buyers are beginning to look for “something different, more stylized.” He lists warm tones and chocolate browns, and Welbourn notes a hint of rusticity along with the move toward richer natural colors.

“I think it is an opportunity for some of these other species-maples, pecans, walnuts,” Moore says, citing a recent request for maple and the fact that the third-best-selling RevWood style is now a pecan visual. “I don’t see any crazy Brazilian cherry or jatoba, but other domestic species besides white oak are going to grow for the next little bit.”

THE NEXT FRONTIER
Inhaus’ Ecolam is the latest in an emerging category that some refer to as hybrid resilient, which combines the best attributes of laminate and resilient flooring. Many are eyeing the new subcategory with interest as laminate producers begin testing the waters. AHF launched a version called Ingenious Plank in June, which Parker says will be built out to create a “good, better, best” hierarchy, and Mohawk will unveil new releases next year for its PureTech offering, which officially debuted ahead of this year’s Surfaces.

“I think that whole hybrid category is going to explode,” Welbourn says. “It is another category for laminate producers to build upon their strengths, and it adds another step up the value chain.”

There is some mystery around the various constructions at play as suppliers experiment in search of the potential next big thing, but one thing they all have in common is their sustainable positioning, which is becoming more important in the marketplace. Moore notes that while consumers are increasingly conscious of their environmental impact and it is a growing topic of concern, “we’re probably still at a place where sustainability on the residential side doesn’t drive higher prices.”

Until now, the main purchase driver has flip-flopped between performance and style/design, but Hammel believes that could change as this generation of shoppers matures and gains real buying power. “Those consumers that are more eco-conscious tend to be a little bit younger and maybe aren’t quite there yet in terms of the majority of folks that are buying and renovating homes, but I think that will be the case before we know it,” he says. “I don’t expect hybrid products within one year to be the next LVT or whatever, but I do think on that five- to ten-year horizon they’ll become more important.”

In the meantime, laminate suppliers are beginning to capitalize on the material’s inherent sustainable aspects, owing to its scrap-wood construction and domestic supply base.

“We’re really focusing on the wood composition of the product and its carbon-negative footprint,” says Moore. “With wood-based products, you get to go after the carbon piece of [sustainability].”

He cites RevWood’s “American Original” campaign as “one of the big [marketing] pieces that’s gone very well,” adding that, as part of its related marketing efforts, the flooring producer has partnered with One Tree Planted to help offset the Earth’s loss of carbon-capturing tree canopy through RevWood sales.

“Sustainability is definitely important to [consumers], and we’re trying to appeal to that because laminate is a very sustainable product since it’s made with renewable wood sources,” Welbourn says, adding that Inhaus is also attacking the environmental aspect from the perspective of a healthy home: “Do you want plastic or do you want wood?” he muses.

The re-emergence of the category at specialty retail could help bolster the material’s budding sustainability message-which until now has been lost in light of its aesthetic and performance improvements.

“Gen Z consumers and maybe even some younger Gen Xers, they definitely have more of a desire for sustainability, and that’s where, quite honestly, I think the laminate category has some catching up to do,” Hammel says. “Some of the marketing elements we’re seeing with the hybrids are also inherent with laminate flooring.” (For more on this topic, see State of Sustainability 2024, starting on page 25.)

OUTLOOK
While suppliers believe laminate is positioned well, its fate is entwined with interest rates. Home sales are the category’s primary driver, since it predominantly lives in the residential remodel market, which remains challenged.

In early August, mortgage rates fell to their lowest point since May 2023, but that nearly 6.5% interest rate was still double what it was two years prior, and those with existing mortgages are in no rush to give up low rates secured prior to the pandemic. This “locked-in” effect has driven up existing-home prices at a time when inflation is eating into Americans’ savings and purchasing power.

“I think macroeconomics are having a bigger impact on laminate-and all categories-than any single attribute of the category,” Hammel says. “Interest rates and overall inflation are still having a tremendous impact on the overall country. And typically, going into an election, sales ease up. I think it’s going to be a tough market for the next six to 12 months unless interest rates do something significant.”

The Federal Reserve is expected to lower the federal interest rate in September, but that won’t create an immediate market rebound. During Mohawk’s Q2 earnings call, Lorberbaum reported, “In the third quarter, we anticipate pricing pressures will continue, given low industry volumes, constrained consumer spending on larger purchases and consumers trading down.”

Conversely, laminate’s value and price point position it well even amid the economic factors that are holding the industry back. But while “this is a climate where value can be a play,” Welbourn says, he notes that “everybody is under pressure to try to figure out how to generate business.”

“The flooring market as a whole has been down year over year across all categories, so laminate was no exception there,” Parker reports. “It’s holding its ground, but it’s down like everything else. But if you look back over the last three years, it’s been one of the fastest-growing segments, not overall but in that independent retailer segment, and I believe there is even more upside there.”

Hammel agrees that the category will continue to gain momentum at specialty retail, though he estimates it may only pick up a point or two. And with home centers historically accounting for roughly 75% of laminate sales, swings at specialty retail will likely not drastically impact the category’s marketshare. In 2015, it accounted for 4.9% of the market; last year it was 4.4%.

“Laminate has a pretty good crawl to get back to the peak of where it was a decade-plus ago, but I’m bullish; I think laminate will continue to see a little bit of a growth spurt,” says Stepp. “Even if laminate can get back to its peak of $2 billion-plus at wholesale, it still pales in comparison to the $7 billion of WPC and SPC, so you’ve got to put it all in context. But Stanton would love to go out and get even 0.5% of that.”

HYBRID MARKETING
Hammel notes, “There are two camps in the hybrid world. One camp is saying, ‘Let’s take laminate and change the core’s cover and call it a hybrid, with minimal changes to performance or anything that would significantly differentiate it from a laminate product.’ I would consider that more of a marketing approach to a laminate, versus the other camp that is saying, ‘How do we take the benefits of laminate and make them even better with things like higher-density cores and lower swell rates?’ That’s going to be challenging for consumers and retailers: separating what is truly a hybrid product versus what is marketed as a hybrid product.”

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