The Flooring Industry Can Improve in This Economy

Though the resilient category isn't in the clear just yet, conditions are improving_ as much as the flooring industry can improve in this economy. In this case, improving means 2010 may be the end to a consistent drop in category sales since 2006. Combined sales of all resilient flooring_vinyl, linoleum and rubber_decreased approximately just one-half of one percent over 2009's overall sales numbers, while total volume was down about 6.6% over the prior year. When rubber is taken out of the equation, sales of resilient flooring in 2010 dropped 1.7% over 2009, while units fell 5.6%. Rubber came out ahead, thanks mainly to the commercial market having a strong rebound toward the latter part of the year. In the end, sales of rubber were up 3.6% and units increased 2.8%. Despite the overall mixed results, one trend that started with the recession remained when it came to resilient flooring: The category continues to pick up market share in both dollars and units within the overall context of the industry. A look at the five- ear trend shows resilient sales, minus rubber, held a 10.6% share in 2010, up a full point from 2006. Rubber also gained a full percentage point during this time, going from a 2% share to 3%. In terms of volume, rubber has made the most headway, going from less than a percentage point in 2006 to a 1.3% share in 2010. Meanwhile, sales of all other resilient flooring was bumped up a tad, from 14.1% to 14.3%. End in sight While these numbers are nothing to set the world on fire, many resilient executives surveyed by FCNews are wont to credit this as a laudable improvement over the last few years which saw double-digit loses in both sales and units. "[2010] was a tale of thirds," said Ed Duncan, vice president of sales and marketing, Mannington Residential. "The first third of the year was really strong, but early summer through the end of year was really hard." Residential business was hit exceptionally hard in the latter half of 2010 due to the expiration of the government's homebuyer's tax credit, which bolstered the real estate market through the first two quarters of the year." Pricing per square foot for resilient flooring (not including rubber) increased $.03 over 2009 as well, despite the slight dip in sales. This could be due in part to the series of price increases manufacturers were forced to initiate to stem the rising cost of raw materials which continued to climb in 2010. Another factor could be that two-thirds of the resilient tile sold in the U.S. market was lower-end material imported from China and other parts of Asia. Manufacturing executives noted the proliferation of ink jet printing technology also played into this as it raised the bar on visuals from high-end to value goods. As a result, it has virtually eliminated the aesthetic differentiation between price points for consumers when deciding how much to spend on their flooring purchase. Product shift With total sales remaining relatively flat, the biggest change was a shift in product popularity. In 2009, the popularity of vinyl sheet vs. tile was relatively even: Tile came in at 48.4% of the market while sheet flooring accounted for the remaining 52.1%. However, during the course of the year, tile sales jumped dramatically to 62.1% of the total market while sheet dropped to 37.9%. Much of that change is credited to LVT, the newest product in the category. "[LVT] is a hot category with retailers right now," Duncan said. "It is fairly new and consumers are really embracing it. They feel like it is a real beefy, high performance good, and you can achieve great visuals like wood plank and tile." Due to this shift, across the industry fiberglass only grew slightly from 9.5% to 11.9%. While the segment's growth was not what it has been in previous years, manufacturers are committing heavily to producing this type of flooring in North America_from Armstrong's $24 million commitment in a new fiberglass production facility in Lancaster, Pa., (FCNews, Dec. 6/13) to IVC opening its first U.S. manufacturing facility in Dalton (FCNews, May 30/June 6). These are on top of Tarkett, which brought fiberglass production to its Canadian plant a few years ago. Another change in the types of products being used came at the hands of felt-backed sheet good as sales fell 4.1 percentage points from 26.3%. Sales of linoleum, meanwhile, held steady, as the segment went from a 3.5% market share in 2009 to 3.8% in 2010. Despite the shift, sheet goods still hold potential in the market nonetheless. "Resilient has a lot of good qualities to it versus other hard surface products," said John Geier, director of product development, resilient, Shaw. "There's good value, good feel to the product, it installs practically anywhere and everywhere and it's extremely durable." Though Shaw is a relatively new player in the resilient category, he sees "great opportunities" with the company's outreach in direct channels, and particularly commercial applications. The commercial segment continues to be a mainstay for resilient flooring, from rubber to VCT to sheet products. One of the reasons that the category enjoys the largest share of the hard surface commercial market comes from the fact its products are suited for the specific areas that have been the most active, even during this prolonged economic downturn. The biggest area is healthcare, which, thanks to an aging population has made steady progress in the last decade, whether it is hospitals and large medical centers to the local doctor's and dentist's offices. In each instance, resilient has a long history of success in these areas. Source: floorbiz.com