Laminate Report: Retailers indicate that the category is holding its own - Aug/Sep 18
By Beth Miller
It wasn’t that long ago that laminate flooring was the latest fad in the flooring industry. Developed in Europe in the late 1970s, laminate was first introduced here in the U.S. as a product sold through distributors in the early 1990s. For the last 20 years, big box stores have helped drive the laminate category. Following the economic downturn in 2009 and the Lumber Liquidators formaldehyde blow in 2015, the category seemed as though it was destined to descend into obscurity. Manufacturers reacted with ramped up efforts to reinvigorate the category and saw a slight gain in 2016. The category continues to hold its ground in the residential sector and, while the surging LVT category is taking marketshare, laminate is establishing itself in the multifamily and builder segments with its realistic visuals, durability performance story and, most recently, its water resistance story.
Laminate sales from the top three home centers (The Home Depot, Lowe’s and Menards) accounted for 38% of all U.S. laminate flooring sales in 2009, according to Market Insights. For the same year, Lumber Liquidators accounted for 8% and Floor & Décor another 3%. By 2016, the top three had ticked up to 40% of the total, with Lumber Liquidators at 9% and Floor & Décor at 4%. And in 2017, the top three had 41% marketshare, Lumber Liquidators dropped back down to 8%, while Floor & Décor grew to 5%.
In 2009, laminate flooring accounted for 6.2% of the total U.S. flooring market, according to Market Insights. The category dropped significantly in 2010 but ticked upward in 2016 to 4.9%, falling only marginally in 2017 to 4.8%. Many flooring retailers scaled down their laminate offerings to make room for other, more popular flooring products and many dropped the category altogether. According to Alex Pearson, product and marketing manager for Inhaus Surfaces located in Vancouver, Canada, the laminate category remains a viable category for the European market and has been for nearly 30 years.
Floor Focus reached out to several independent retailers across the country who continue to support the category to find out exactly what is keeping laminate afloat-especially in light of the popularity of LVT-and what they foresee as the future of laminate.
STATE OF THE CATEGORY
Laminate’s scratch-, dent-, fade- and water-resistance story coupled with its competitive pricing and realistic wood visuals make it a tough product to beat. But where does laminate stand among the other hard surface flooring categories?
It is no secret that LVT is taking marketshare from the laminate category. LVT is quieter than laminate flooring, performs better in moisture and doesn’t have laminate’s potential formaldehyde issues or any of the associated bad press.
According to Dave Snedeker, division merchandising manager of flooring with Nebraska Furniture Mart in Omaha, Nebraska, “LVT is the leader in hard surface. Wood is a category that is taking a lot of lumps (down slightly), and laminate is certainly significant, but it is nowhere near the numbers of the other two categories.” He reports that Nebraska Furniture Mart is running about 20% up on the year so far in the laminate category and that it has actually expanded the category in one of its locations. “We reinvested in the product category,” Snedeker says. “We made displays bigger. We put more inventory in the barn to try to sell, and it’s very successful. It is not to the same degree as the LVT category, which is up almost 50% so far this year.” With locations in Nebraska, Iowa, Kansas and Texas, the home furnishings retailer caters to the residential market, and its bread and butter laminate sells at $1.99 per square foot or below. Additionally, Snedeker reports that the $2.99 price point is selling well.
“Laminate is holding its own in terms of value,” says Pearson. “It’s very tough to beat as it looks better than most LVT products. In terms of wear, laminate is still the product to beat; LVT has a softer urethane surface that wears out. [Manufacturers] have to keep making it thicker and thicker to remedy that, which is not always great for the visual.” He feels that the SPC and WPC products are still considered new, and laminate is a mature category with an established value proposition as its biggest selling point, so it is poised to compete. Also playing to the category’s advantage is that it is PVC-free.
Seth Hunt, general manager of sales and operations with Dalton Wholesale Floors in Dalton, Georgia, reports that wood business is flat, and laminate is in more of a growth mode-up by double digits for 2018-due to the realistic wood visuals. As for LVT, Hunt says, “Most of the consumers are not familiar with the difference between US Floors’ Coretec, Mohawk’s SolidTech and Mannington’s AduraMax. They just know they like the visual, and they’re all waterproof.” Hunt feels having the various vinyl products, particularly LVT, help educate consumers on the benefits of laminate, since vinyl products share some of the same benefits. The flooring retailer has four locations in Georgia and one in Alabama that focus on the residential and commercial markets. Hunt reports that laminate products that retail for $3 per square foot or less are the company’s sweet spot.
Ken Chadderdon, co-owner of Great Floors in Coeur d’Alene, Idaho, reports that laminate sales are up this year. The company, which owns over 20 stores in Washington, Montana and Idaho, primarily works with the commercial and builder segments, with residential remodel accounting for 35% of its business. With that said, Chadderdon admits, “We promote laminate a lot. It’s a great product. Without question, it’s a tremendously better product than it was ten years ago.” Chadderdon’s builder customer base uses laminate in the entry-level home-$180,000 to $300,000-rather than lower-end hardwood. According to Chadderdon, the new home builders are switching to a higher-end laminate product in lieu of entry level hardwood products in order to avoid the issues associated with the cheaper wood products. For Great Floors, laminate sales for 2018 are up 5% compared to 2017, and Chadderdon predicts a 6% to 7% gain for 2019. He sees hardwood sales moving to the middle- and upper-end, particularly in new home construction ranging from $800,000 and up that require real wood products. The demographic that is buying laminate in Chadderdon’s area is the younger to middle-aged consumer. Great Floors sells laminate in the $1.99 to $3.29 price range, competing with comparable SPC and WPC products.
Atlanta Flooring Design, located in Atlanta, Georgia, works primarily with the builder segment-followed by commercial and some residential-so the activity it is experiencing with the laminate category is very different. Michael Barrows, general manager, admits that those most interested in laminates in the retail market are the DIYers; however, Atlanta Flooring Design caters to an upper-class consumer who is not interested in buying laminate. According to Donny Phillips, founder and president, the upper-end consumer has not wavered. They are sticking to true hardwood products, while the lower- to middle-end builders use LVT and engineered hardwood. Currently, the retailer has only a few racks of laminate still in the store. LVT has been replacing the laminate products over the last few years. Barrows reports that Atlanta Flooring Design sells laminate in the $2.50 to $3.50 price range.
With such variation in vinyl, rigid core and laminate products, consumers are certainly struggling to discern between wood and plastic. This places greater responsibility on retail sales associates to understand the differences, including proper application of each product as well as remain on top of the shifting category types. However, consumers are learning the difference between a low-quality product and a mid- to high-end product. Box stores like Lumber Liquidators have the low-end cornered, while independent flooring retailers are offering mid- to high-end laminate products that are better looking and certainly better performing. Hunt points out that Dalton Wholesale Floors does not sell anything below a 12mm in the laminate category. And Great Floors’ Chadderdon says, “We don’t have a single 8mm in stock.”
WATER-RESISTANT VERSUS WATERPROOF
Laminate is known for its durability and wide variety of visuals; however, the addition of the water resistance story to the portfolio has helped buoy the category. Addressing moisture issues and trying to solve them is keeping manufacturers busy, though retailers still need to be convinced that “waterproof” is really possible.
Mohawk has been working hard to resolve this vulnerability in the laminate category with its RevWood Plus product by taking it to market as a “wood product” that is also “waterproof.” The product itself is not inherently waterproof, but through proper installation, including the use of a perimeter seal, it then becomes a waterproof installation. According to Hunt, customers are not taking all of these necessary steps to ensure their flooring is indeed waterproof, which limits the product to simply being water-resistant. Snedeker adds, “It’s one thing to tell us in the industry that this is what’s going on, but when you start talking to do-it-yourselfers that they are going to have to put clear caulk around the edges and a lot of other things, they’re not going to do that.”
When it comes to waterproofing claims associated with laminate products, Snedeker says, “I don’t think you can ever say that. ‘Water-resistant’ you can say, but I don’t think it’s going to get much past that. It depends on the construction, obviously. I don’t think anyone has perfected anything yet that is waterproof.”
InHaus’ Pearson asserts that water-resistant laminate is nothing new in the European market and is, in fact, what the company has always sold. However, the U.S. laminate market has only in the last few years begun to demand a water-resistant product. LVT, which is indeed waterproof, has had a major impact on consumers’ desire for those same qualities in laminate’s more affordable products. Pearson defines waterproof as “being able to throw the plank in the swimming pool,” whereas water-resistant means spilling a drink and cleaning it up promptly with no negative impact on the flooring. Inhaus’ laminate products are marketed as water resistant. However, its Sono product, which can be defined as an SPC product or laminate hybrid, is in fact waterproof. Sono is not made with an HDF core but rather a ceramic composite core, and instead of a print film and melamine layer on top, it prints directly on a primer layer bonded to the core.
CURRENT CATEGORY TRENDS
As advancements continue in the water resistance arena, so too does design. Wood looks have traditionally dominated laminate visuals, alongside a few popular stone and concrete looks. Atlanta Flooring Design’s Barrows reports that antique washed grey is trending as well as espresso type colors, while light oak is disappearing. Additionally, the variation in species and length continue to evolve to achieve a true wood look.
Dalton Wholesale Floors’ Hunt says, “Visuals are what consumers are drawn to. Some WPCs look nice but are not as dent resistant [as laminate], and SPCs can’t quite mimic laminate.” He believes that when it comes to the wood story, consumers are not concerned if the product is real wood or a vinyl plank. “Meeting their needs is what they’re most concerned with,” says Hunt. He shares a story of a customer interested in vinyl plank who asked for wood yet migrated toward the laminate products. Even after explaining the difference to the customer and making it clear that the laminate product was not a true wood product, the customer continued to refer to it as wood.
Great Floors’ Chadderdon says, “All of these faux products, they’re becoming so real that even someone who deals with them every day can walk onto a floor and have to take a couple, three or four looks to figure out if it’s laminate or real wood.” According to Chadderdon, the laminate category will continue to look more realistic than LVT or rigid core products, lending it merit. Snedeker agrees, adding, “The visuals with laminate are fantastic and getting better.”
Floor Focus magazine reported on the Lumber Liquidators formaldehyde scandal in the November 2013 issue, noting that the mega-retailer closed 2012 with sales of over $813 million. In March 2015, 60 Minutes broadcast the Lumber Liquidators story to the public, revealing the details to homeowners and sparking a chain reaction that continues to plague the company.
For the second quarter of 2018, Lumber Liquidators experienced a net loss of $1.259 million compared to a net gain of $4.6 million in the same quarter of 2017. Moving forward, the company has plans to downsize its headquarters in 2020. It will relocate from its 315,000-square-foot facility in Toano, Virginia to a new 52,900-square-foot facility in Richmond, Virginia. It is selling all of its equipment and exiting its finishing operation; however, it will still own the rights to the Bellawood trademark.
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