Laminate Update: Optimistic producers invest in the category - Aug/Sep 16
By Calista Sprague
Industry experts have been predicting the demise of the laminate category for many years now. Although overall U.S. laminate consumption did drop 5% in 2015, sales for most U.S. producers actually rose, in some cases by double digits. And manufacturers continue to invest in the billion-dollar category, especially in an effort to achieve enhanced aesthetics.
STATE OF THE CATEGORY
Laminate maintains a strong niche as the go-to value product for consumers looking for durability. So even manufacturers with successful hard surface programs, including hardwood and LVT, maintain excitement and optimism around their laminate lines.
“Our laminate business continues to be extremely strong,” reports Mannington’s senior director of residential products, Dan Natkin. “A lot of people seem to keep thinking that the category is dying, but if anything, we see the opposite.”
On March 1, 2015, a 60 Minutes story aired about alleged counterfeit CARB2 compliance labeling and high formaldehyde levels in laminate supplied by a Chinese manufacturer and sold at Lumber Liquidators. The story raised concerns in the category, and Chinese suppliers took a huge hit, with an estimated drop in U.S. sales as high as 25%. Although most Chinese companies abide by industry manufacturing standards, concerned consumers flocked to American made laminate, pushing sales into positive territory for many U.S. producers.
More than a year later, the effects still ripple through the category. Many suppliers, distributors and mass retailers have stopped sourcing product made in China altogether, and consumers continue to be wary of no-name Chinese imports, opting for trusted brand names and American products.
The most promising news for the laminate industry comes from U.S. producers, which report laminate growth in 2016 running similar to last year’s numbers thus far. They continue to enjoy the sales boost from the 60 Minutes report and see no immediate signs of slowing.
New growth is also opening up for the mature category in the builder market for many manufacturers. Builders are attracted to the hardwood look at a lower price point with easier installation. And the new designer trend of installing wood on walls is providing growth potential for laminate producers as well.
Almost all manufacturers investing in laminate have focused on enhancing aesthetics. For a couple of years, growth in the category has been fastest at higher price points, so manufacturers are shifting toward a higher end mix, and consumers are responding positively. In order to capture high-end sales, laminate suppliers have channeled their energy into creating premium looks to suit consumer tastes.
While natural neutral tones remain the best sellers, suppliers report that lighter colors are the fastest growing trend in laminate. Whitewashed looks, light greys and even light blue and silvery hues are quickly gaining popularity, and manufacturers are offering more of the pale shades in their collections.
For the past two or three years, grey has been the hottest color in design, not only for flooring, but for pretty much every surface and textile in the home. Even many builders, who paint homes to appeal to the masses, have abandoned their ubiquitous beige-and-white color scheme for grey and white.
Following this strong trend, laminate designs have incorporated more grey as well. Suppliers point out that in recent months, however, consumers have expressed more interest in warmer greys, often with brown undertones, rather than cool greys.
Lighter looks are trending across the nation, although they are most popular in coastal areas and in the South and Southwest. Pockets of the country, such as the Midwest and especially Texas, still prefer darker colors for laminate, however, so manufacturers have not abandoned darker colors completely. Color also tends to follow style lines. More traditional interiors tend to incorporate warmer medium to dark tones, while contemporary and urban spaces are more likely to sport lighter colors.
Wood looks are by far the most popular among consumers, so the goal for most laminate makers is to mimic authentic hardwood as realistically as possible. In some cases the results are so convincing, it’s nearly impossible to tell the difference.
At the heart of a realistic wood look is the visual. Laminate can take on the look of virtually any material—wood, stone, metal, concrete, textiles, you name it—because it is basically created by layering a photograph of the desired material over an HDF core.
As digital photography and printing technology has improved in recent years, so have laminate visuals. Today’s high definition cameras and printers create striking images with ever-increasing detail and clarity, a far cry from the flat, blurry images of 20 years ago. Combined with artful texturing, laminate can reproduce stunning realism.
Laminate first entered the industry with wood looks, and consumers overwhelmingly choose wood looks year after year, despite an array of alternatives. Rustic wood looks with distress marks, cracks and knots have been trending for several years, but a large portion of the market, some suppliers estimate half or more, still goes to traditional hardwood looks.
Most recently, reclaimed wood visuals have been on the rise. Popularized by influencers such as restoration hardware and the industrial design movement, authentic reclaimed wood has become big business, selling at premium hardwood prices and higher in some parts of the country. Laminate can reproduce realistic reclaimed looks at a fraction of the cost for consumers who cannot afford the real thing.
Not all laminate visuals are wood, however. Swiss Krono has been working on 1’x2’ laminate tiles in travertine and slate looks for its new line, while Armstrong, Mannington and Mohawk, among others, are developing hybrid looks that combine wood elements with other materials, such as stone or concrete. Hybrids like these have been trending in ceramic tile and are now being picked up by laminate and LVT producers.
Howard Montgomery, director of residential design at Armstrong, says that company research shows Generation X, the Millennials and even progressive Boomers are less interested in traditional looks, especially those who live in urban settings. They are more likely to respond to materials other than wood, and with Millennials poised to become the most influential buying group in the next few years, it makes sense to develop visuals that resonate with them.
NALFA president Bill Dearing offers one possibility for the lack of mass acceptance for visuals other than wood. He says that although laminate can authentically mimic the visual of any material, consumers may balk at the difference in feel and sound underfoot. He says that when a consumer walks on a floor that looks like concrete, they expect the floor to feel and sound like concrete as well. Since laminate is predominantly made of wood, consumers get the feel and sound that coordinates with the wood visual. It’s a natural fit.
Texture has been an area of innovation for laminate in recent years, greatly enhancing the overall aesthetics. For the majority of top selling, premium laminate collections, surface texture tends to consist of embossed-in-register effects that follow the grain, knots and character marks for increased realism, especially in more traditional looks. Some manufacturers, however, have invested in the latest embossing technology, experimenting with deeper, heavier surface textures.
These more exaggerated textures have been added to laminate offerings, used to enhance deep cracks, saw marks and other elements common in the trending rustic visuals. The deep texturing also allows for more authentic sandblasted looks. Manufacturers point out that there is a limit to the feasible depth of structure in flooring. At some point, ease of maintenance will be negatively affected by crevices that attract and hold onto dirt and debris.
Handscraped looks, once all the rage, seem to be on the decline, being replaced by a rise in textures that emulate soft wirebrushed looks. Also, some manufacturers are beginning to experiment with even subtler looks that emulate oil or wax finishes.
No matter how deep or subtle the texture, sheen is still out. Mirroring the hardwood trends—and also avoiding references to the slick, shiny laminate of old—the most popular laminate finishes continue to include little to no sheen.
Longer, wider planks have been a long-term trend that continues to expand in laminate as well as most other hard surface flooring categories. Standard laminate formats have grown to around 5”x48”, but many manufacturers are investing in machinery to stretch dimensions to 10”x72” and beyond. For example, Mohawk currently sells boards up to 54” in the U.S. but makes product in Europe up to 90” long. In the next 18 months, it will start making and selling the longer boards here in the U.S. as well.
Shaw’s laminate category manager, Jeff Francis, postulates that at some point longer boards are not necessarily better, explaining that eventually it becomes a handling and installation issue. “If you can’t get it into your vehicle, it’s going to be a hassle,” he says. On the other hand, longer, wider planks speed up installation time, since installers cover more ground with each plank.
Consumers are also gravitating toward thicker boards. Entry level product starts at 7mm, but consumers prefer premium boards of 10mm to 12mm. Manufacturers think the heft of thicker boards increases perceived value in the mind of the consumers. Also, the thicker boards more closely resemble hardwood flooring.
Armstrong has been looking to the future, developing products based on what it believes to be emerging trends, including hybrid looks that incorporate metal, or concrete visuals, for example. The company is gaining “significant traction” with these new looks, especially among younger and urban consumers.
With its To the Sea collection, Armstrong has introduced blue and teal into the Architectural Remnants line, picking up on the popularity of blues in other flooring types, such as ceramic tile and area rugs. It has also incorporated hints of blue in its Woodland Reclaim collection.
The company reports that Woodland Reclaim, an aged barnwood look in browns or greys, has been its best seller, and it is currently marketing its laminate for walls as well as floors, a new revenue stream for Armstrong.
Beauflor, which belongs to the Beaulieu International Group, manufactures laminate in Belgium and Norway, and also sources some from China. The company is currently in the process of rebranding all of its BerryAlloc products to carry the Beauflor name.
Beauflor is one of the few companies to still produce high-pressure laminate, a product that stands up to heavy commercial use. Beauflor has a worldwide contract with Volkswagen, for example, which uses the laminate in its showrooms, where it stands up to car traffic in addition to foot traffic. High-pressure laminate is also more water resistant than the standard direct pressure laminate, although it is still not waterproof.
The company has recently made considerable investments to upgrade its laminate production in Belgium, increasing both volume and efficiencies for a more cost effective operation.
Beauflor has also invested in design, including technologies to achieve clear matte finishes that enhance the realism of the visuals. Sales in recent months have been strongest for its sawn face white oak look with minimal character.
Clarion’s laminate business surged 36% in 2015, making it the second largest producer in the U.S., selling mainly to mass retailers. The company had increased capacity at its Pennsylvania facility the year before by 50%, so when the 60 Minutes story aired, Clarion was in the perfect position to supply frantic home centers and discount flooring retailers with American made product.
In December Clarion was purchased by Kronospan, which, like Swiss Krono, is an independent branch of the Kaindl family business based in Austria.
Home Legend and Eagle Creek are both U.S. brands of Power Dekor, a manufacturing group based in China. The group launched Home Legend first, providing laminate, as well as hardwood, LVT and bamboo, to mass retailers. More recently Power Dekor developed the Eagle Creek brand, offering its products to independent retailers.
The company reports increased interest in laminate among retailers in recent months, and laminate sales were up 1% in 2015 over 2014, likely boosted by the fact that all of its products are Green Guard certified, putting concerned consumers at ease.
The company operates an R&D facility in Fontana, California, where its laminate products for the American market are designed. The reclaimed wood looks have been selling best, and the manufacturer is currently investing in higher end designs with enhanced textures and visuals in longer and wider boards.
Mannington produces laminate almost exclusively for independent distribution, and therefore concentrates on higher end product. The company has been investing in its program, enhancing the scratch and moisture resistant properties of its products as well as adding technology for improved textures.
Mannington specializes in laminate with embossed-in-register textures, aiming for subtle natural looks that mimic hardwood. For the past year or two, a smooth, low gloss look with fine ticking that resembles a waxed finish has been popular with customers, so Mannington has extended it into several additional products.
Although the company sells mainly wood looks, it has been experimenting with hybrid patterns that mix wood visuals with stone and other materials. Last year, for example, Mannington launched a successful collection called Nantucket that looks like a weathered pine but incorporates elements of marble. Currently some of the more popular LVT visuals are being adapted for use in laminate as well.
A new introduction called Hillside Hickory was designed in conjunction with a hardwood collection, and according to Mannington, sales of the 8” wide subtle rustic are “absolutely on fire.” In fact, one of the colors has already soared to the top 15 colors of its laminate category.
Mohawk Industries sells laminate through several brands. Quick-Step and Mohawk offer comprehensive lines from upper entry level up to premium products, sold through independent distribution and the Mohawk sales force respectively. Quick-Step is considered the fashion leader of the group, incorporating a touch of European design trends, while the Mohawk brand is dedicated to mainstream American tastes.
In 2013, Mohawk purchased Pergo, the first laminate brand sold in the U.S., which goes to market through the home centers. And Columbia is mainly a hardwood brand with a small offering of upper entry level laminate in traditional wood looks sold through independent distribution.
Mohawk Industries invests most of its resources toward the premium end of its product assortment, since that part of the market has shown the most growth. The goal with its products is to create laminate that can’t be distinguished from authentic hardwood, offering consumers and builders premium hardwood looks at a much lower cost.
While wood looks sell best, Mohawk has experimented with some ceramic inspired hybrid designs in laminate. The company says the looks are new, so it is too soon to tell how they will be received.
Mohawk’s biggest laminate innovation recently has been in water resistance. At Surfaces 2015, it premiered the Quick-Step Envique collection, featuring a 24-hour spill protection guarantee. The product utilizes a combination of two patented technologies, allowing it to stand up to household spills for up to 24 hours before cleanup without damage. The Uniclic system creates a tighter joint between planks, and the HydroSeal coating repels water, preventing spills from seeping into the core.
Mohawk has also capitalized on the latest texture technology, developing deep textures for collections like Envique, which features some of the deepest textures available on the market today. The company is also developing larger format capabilities at its U.S. facilities, stretching planks within the next 18 months to 90”.
Mohawk has invested several millions of dollars in its Thomasville and Garner, North Carolina laminate facilities during the past two years, and the latest improvements, due to come on line sometime next year, will increase capacity as well as the capability to make additional products with deep textures and water resistance technology.
Shaw Industries reports tremendous success with LVT, and it is buying heavily into that category. But it is still investing in laminate production as well, with sales at a pace nearly double the average rate of U.S. producers.
Shaw invests heavily in design. It leverages the R&D efforts from all its hard surface categories to develop laminate collections, drawing images from popular solid and engineered hardwood and LVT lines in addition to designs created exclusively for laminate. The company reports that more than 90% of its sales come from wood looks, although it also offers tile, concrete and other visuals.
Shaw’s latest introductions follow the industry trend for longer, wider boards, offering up to 8”x78” planks. The company also has identified consumer preferences for thicker boards, leading it to shift its mix to include more 10mm and 12mm products.
In addition to the lighter colors that have been trending for laminate, next year Shaw plans to go to the opposite extreme, incorporating dark colors that it also sees gaining ground.
Shaw’s products are Greenguard certified, and the core for Shaw’s laminate products contains 85% to 90% recycled content.
On July 13, Swiss Krono Group officially broke ground for its HDF factory, set to open in 2018. The factory will feed the group’s U.S. laminate production for vertical integration. It will also supply boards to other manufacturers.
Swiss Krono is investing in a new production line for its laminate facility as well, increasing design capabilities along with 75 million square feet in additional capacity to come on line next year. Current production stands at 150 million square feet annually.
The new line represents the next step in Swiss Krono’s shift to a higher end mix, with investments in new texture and format capabilities. The company will improve scratch resistance for some of its products, aiming for Abrasion Class ratings of AC4 and AC5 to allow for more commercial viability. And it is developing a moisture-resistant product to compete with LVT.
To expand the use of laminate, Swiss Krono is promoting the use of the product on walls, citing numerous examples of rustic wood looks on walls at NeoCon as well as in its own showroom and boardroom.
Laminate was first developed in Sweden as a DIY product. Spurned by the flooring industry, it was sold through paint stores and eventually through mass retailers. In the U.S., laminate came to the market in 1993, sold as a DIY product in home centers, but also marketed to independent distributors and retailers as a durable product that installs quickly and easily.
Dearing sees the strengthening builder market as one of the best prospects for future sales growth. “If it were up to me, the first step would be to make sure that builders understand everything about laminate that they can,” he says.
And Dearing’s second step would be to drive specification of laminate in commercial settings, especially boutique retail, adding, “Boutique, dry goods, anything of that nature, technically any place that doesn’t have a wet area.”
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