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STATISTICAL REPORT '11 - Floor Covering Institute
STATISTICAL REPORT '11 - Floor Covering Institute
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Vol. 61 No. 14 A Hearst Business Publication July 23/30, 2012 $75<br />
FLOOR COVERING WEEKLY<br />
FCW’s<br />
Statistical Report<br />
20th Anniversary<br />
STATISTICAL REPORT ’11<br />
Chart 1<br />
Flooring’s slow climb: Continued<br />
sluggishness, volatility<br />
The flooring industry showed mixed but<br />
positive results in 2011. Last year mimicked<br />
the year before in many ways, with business<br />
picking up in the first half,<br />
slowing mid-year and<br />
continuing to struggle as<br />
the year came to a close.<br />
Raw materials prices also<br />
continued to be an issue.<br />
Total sales in 2011<br />
reached $17.89 billion, a 2.5<br />
percent increase over 2010’s<br />
$17.45 billion. Square<br />
foot sales — on the other<br />
hand — dipped a slight 1.5<br />
percent from 17.89 billion<br />
square feet in 2010 to 17.62<br />
billion. Square foot wholesale<br />
prices grew from 98<br />
cents per square foot to $1.02 per square foot.<br />
Last year was another in which the traditional<br />
selling seasons seem to have disappeared.<br />
Consumers continued to look for sales, deals<br />
and specials on the residential side. The builder<br />
market remained almost nonexistent. Fortunately<br />
the commercial market held strong.<br />
According to Catalina Research, Floor<br />
Covering Weekly’s partner in the annual<br />
Statistical Report, hard surface sales showed<br />
an upward trend, as did area rugs and carpet<br />
tiles. Wall-to-wall carpet square foot sales<br />
continued to weaken, according to the report.<br />
On the hard surface side, demand strengthened<br />
for ceramic tile, wood and vinyl sheet and<br />
floor tile. According to Catalina, ceramic tile<br />
dollar sales increased by 6 percent and square<br />
foot sales by 4.5 percent. This was the highest<br />
On the inside<br />
News ................................... 3<br />
2011 Industry Statistics ...... 4<br />
marketWise ......................... 5<br />
Imports/Exports .................. 7<br />
Carpet & Area Rugs ............. 8<br />
Wood ................................. 12<br />
Tile & Stone ...................... 16<br />
Laminate ........................... 19<br />
Resilient ............................ 20<br />
The Last Word .................... 26<br />
rate for any flooring material. Vinyl sheet and<br />
floor tile dollar sales rose by 5.8 percent, while<br />
square foot sales increased by 3.2 percent. For<br />
wood flooring, the gains<br />
were 4.3 percent and 4.1<br />
percent, respectively.<br />
On the soft surface<br />
side, carpet tile continued<br />
to show increases in the<br />
commercial sector, but on<br />
the residential side, wall-towall<br />
carpet sales continue<br />
to suffer. One reason could<br />
be the more dramatic<br />
increases in price per<br />
foot of this material type,<br />
which is based on synthetic<br />
chemicals. Two things<br />
helped the area rug market:<br />
the increase in hard surface sales as well as the<br />
sluggish economy. Consumers find area rugs<br />
an inexpensive way to spruce up their homes.<br />
In 2011, the value of carpet and area rug<br />
sales was $9.51 billion — 53.1 percent of total<br />
floor covering dollar sales, down from 53.8<br />
percent in 2010 and 71.9 percent in 1987.<br />
On a square foot basis, soft surface sales were<br />
10.22 billion square feet in 2011 or 58 percent<br />
of total sales, down from 59.7 percent in 2010<br />
and 71.2 percent in 1987.<br />
The industry’s mix continues to change.<br />
Catalina Research estimates that residential<br />
sales accounted for 64.1 percent of total flooring<br />
dollar sales in 2011, down from 67.9 percent<br />
in 2007. Meanwhile, commercial sales<br />
have become approximately 31.5 percent of<br />
Continued on page 4<br />
2011 U.S. Floor Covering<br />
Sales: $17.89 billion<br />
(in wholesale dollars)<br />
5.0%<br />
10.2%<br />
12.4%<br />
5.9%<br />
11.8%<br />
1.6%<br />
53.1%<br />
Laminates<br />
Hardwood<br />
Ceramic Floor<br />
& Wall Tile<br />
Stone<br />
Vinyl Sheet &<br />
Floor Tile<br />
Other Resilient<br />
(Cork, rubber, other plastics and linoleum)<br />
Carpet &<br />
Area Rug<br />
$894.2 million<br />
0.13% from 2010<br />
$1.82 billion<br />
4.3% from 2010<br />
$2.21 billion<br />
6.0% from 2010<br />
$1.06 billion<br />
0.2% from 2010<br />
$2.11 billion<br />
5.8% from 2010<br />
$281.5 million<br />
4.2% from 2010<br />
$9.51 billion<br />
1.2% from 2010<br />
<strong>Periodical</strong><br />
For breaking news updated each business day, visit us online at www.fcw1.com<br />
For breaking news updated each business day, visit us online at www.fcw1.com<br />
Source: Catalina Research<br />
UP 2.5%<br />
from 2010
July 23/30, 2012<br />
News<br />
3<br />
Sturrus steps down, Babula takes lead<br />
Clarion Industries names new president, CEO<br />
By Raymond Pina<br />
[Shippenville, Pa.] Tony Sturrus announced<br />
he was stepping down as president and CEO<br />
of Clarion Industries, a vertically integrated<br />
manufacturer of particleboard and laminate<br />
flooring, based here, on July 25. The board of<br />
directors at Clarion Industries appointed Mike<br />
Babula, a fellow investor in Clarion Industries<br />
and former vice president of sales and market-<br />
Flooring America: Focus on referral business<br />
By Raymond Pina<br />
[Orlando, Fla.] Nearly 350 Flooring America/Flooring<br />
Canada members gathered here<br />
July 9th for its annual summer convention. The<br />
group focused on its Fast Phase II program that<br />
combines locally aimed TV and radio spots,<br />
web-based technology and training to increase<br />
its referral business through online testimonials<br />
and old-fashioned word of mouth.<br />
“It’s becoming more difficult to win the<br />
hearts and minds of customers with traditional<br />
advertising,” said Keith Spano, president,<br />
Flooring America. “Word of mouth is track<br />
able and inexpensive. Our Buzz Advertizing<br />
campaign is a new way to stay top of mind<br />
with our customers and getting people to talk<br />
about our products and unique services.”<br />
Supporting the strategy is data from Reuters,<br />
highlighting that 70 percent of customers con-<br />
ing, to succeed Sturrus.<br />
“The company is moving into<br />
another stage of development and<br />
it requires a leadership change,”<br />
said Sturrus. “I approached our<br />
board a year ago with a plan to<br />
create a deeper, more technical<br />
managemen t team internally and<br />
Mike was the best prospect based<br />
on experience and knowledge of<br />
Tony Sturrus<br />
Clarion and its customers. That<br />
plan put us in a place where Mike is<br />
now president and CEO. Our business<br />
has a solid foundation and I’m<br />
confident in Mike. I’m leaving my<br />
invested capital in the company.”<br />
Sturrus said the transition will<br />
allow him to focus on other business<br />
interests and his family.<br />
Sturrus and Babula were<br />
sult online reviews or ratings before making a<br />
purchase while 92 percent of consumers value<br />
word-of-mouth testimonials over advertising.<br />
What’s more, the study revealed 75 percent of<br />
consumers mistrust advertising.<br />
Guest speaker Andy Sernovitz, author of<br />
Word of Mouth Marketing, suggested members<br />
send free emails for friends and family<br />
sales instead of spending thousands of dollars<br />
printing out fliers. He also keyed in on<br />
unique services and products, such as flood<br />
proof vinyl floors, that are easy to remember<br />
and discuss. And, Sernovitz stressed the<br />
importance of searching the Internet for any<br />
comments about their stores — thanking<br />
those who commented favorably and apologizing<br />
and seeking solutions for those with<br />
negative comments.<br />
Dealers who sign up for the $87 per month<br />
Fast Phase II program receive a free iPad featuring<br />
an application to help consumers fill out<br />
testimonials as well as a system that automatically<br />
filters testimonials to members homepage,<br />
Facebook, Twitter and other social sites.<br />
The Build the Buzz campaign is also being<br />
supported by TV and radio ads featuring<br />
family and friends referrals to locally-owned<br />
Flooring America or Flooring<br />
Canada locations.<br />
“Our customers know they<br />
want a new floor but not much<br />
more beyond that,” said Marcia<br />
Hewey, direct of marketing,<br />
Flooring America. “Now we<br />
can leverage the words of her<br />
friends and family who have<br />
already been through the process.<br />
We’ve also added more<br />
diversity to our ads with different<br />
ages and ethnicities.”<br />
among a group of investors that purchased<br />
Clarion Industries from Tarkett for $26 million<br />
in 2009. With Tarkett as its original sole<br />
customer, Clarion Industries now supplies<br />
OEM laminate flooring to a number of the<br />
industry’s leading suppliers, distributors and<br />
retailers. Prior to joining Clarion Industries<br />
Babula served as president and CEO of<br />
Franke, a leading international supplier of<br />
kitchen systems.<br />
“I’m going to keep to our strategy of providing<br />
a domestic platform that executes extremely<br />
well and build upon it going forward,” said<br />
Babula. “It’s important that we have this transition<br />
and we expect it to be seamless for our<br />
customers, employees and shareholders.” FCW<br />
Members who are already deeply involved<br />
in their local communities are uniquely<br />
positioned to leverage this modern referral<br />
system, said Sue Barlett, owner of Charlevoix,<br />
Mich.-based Barlett’s Home Interiors. Barlett,<br />
a longtime Flooring America member, sponsors<br />
her local sport teams and donates to the<br />
library and battered women’s organization.<br />
“We already do a lot of referral business but<br />
this program will step it up,” she said. FCW<br />
Flooring America’s summer convention<br />
Carpet One: New wool carpet, click LVT<br />
[Orlando, Fla.] More than 500 Carpet<br />
One Floor & Home members attended the<br />
group’s Team of Champions summer convention,<br />
held here July 11-13, which focused<br />
primarily on new product.<br />
Eric Demaree, Carpet One president, told<br />
dealers that they need to get noticed, get into<br />
the consumer’s consciousness. “The best way<br />
to do that is to drive our combined product<br />
knowledge, selection and service locally,” he<br />
said. “Ultimately, it’s in each individual store<br />
where the battle is won.”<br />
The focus of this year’s convention was on<br />
new product, including Just Shorn, a high-end<br />
collection of New Zealand wool carpeting, and<br />
mechanically locking luxury vinyl tile (LVT).<br />
“Those who seek this type of luxury product<br />
will only increase as consumer confidence<br />
improves,” said Paul Johnson, a Carpet One<br />
owner in Tulsa, Okla. “The Just Shorn collection<br />
has a great green story and it’s beautiful.”<br />
Mike Mostad, general manager of Missoula,<br />
Mont.-based Loren’s Carpet One, said<br />
he was going to pick up the Just Shorn line<br />
at convention. “We have a new upper-end<br />
furniture store in our new building and their<br />
clientele will go towards this new line,” he said.<br />
Mostad said the biggest potential lies with<br />
the group’s recent advent of click LVT. “We’re<br />
pushing big into LVT,” he said. “Nationwide,<br />
that category is coming on like laminate did 20<br />
years ago. And to be competitive, you need a<br />
click LVT at glue down price points.”<br />
Also introduced were coordinated commercial<br />
carpet and carpet tiles to complement the<br />
existing hard surface Core Elements program.<br />
“These products are specifically designed<br />
to target Main Street commercial,” said<br />
Demaree. “We have come to this convention<br />
with products and programs that continue to<br />
help our members differentiate themselves.”<br />
Carpet One also reported that efforts to<br />
attract customers by pairing the strength of its<br />
buying power and product knowledge with<br />
digital and social media has driven 65,000<br />
leads from its website to local stores. FCW<br />
Kitchen of the Year features Shaw’s Epic<br />
[New York] Shaw’s Epic hardwood was<br />
the featured flooring in House Beautiful’s 5th<br />
annual Kitchen of the Year in Rockefeller Plaza.<br />
Poised to be the “new American living<br />
room,” this year’s kitchen was repositioned to<br />
generate more space and reconfigured to look<br />
and feel like a real home, according to Newell<br />
Turner, editor and chief of House Beautiful.<br />
Designed by Mick De Giulio, the con-<br />
struction of the kitchen began in early 2012.<br />
De Giulio said the inspiration behind the<br />
development was his own kitchen.<br />
“It’s all about kitchen centric living, all<br />
living can be done in this space,” said De<br />
Giulio. “I wanted to create a space that I would<br />
want to eat in. This is it, this is my style.”<br />
Shaw’s Epic in gold rush walnut was used in<br />
the kitchen and in the butler’s pantry. Made of<br />
recycled bi-product, Epic utilizes 50 percent less<br />
of the tree, and its handscraped and distressed<br />
look offers a time worn visual. It is also Cradle<br />
to Cradle certified. De Giulio stated that he will<br />
be using Shaw’s floors again and worked with<br />
the company to create his own chevron detailed<br />
pattern in the butler’s pantry.<br />
“People don’t want to compromise on<br />
style but they also want sustainability. I chose<br />
Shaw’s Epic because I wanted something stylish<br />
but organic,” said De Giulio.<br />
Continued on page 23<br />
Shaw’s Epic is the featured flooring<br />
for this year’s Kitchen of the Year.
4<br />
Table 1<br />
U.S. floor covering market sales value<br />
(in millions of dollars)<br />
Product sector 2007 2008 2009 2010 2011 % change<br />
Carpet & area rugs $13,210(R) $11,870(R) $9,287(R) $9,393(R) $9,505 1.2%<br />
Hardwood flooring $2,184(R) $2,102(R) $1,506(R) $1,749(R) $1,824 4.3%<br />
Ceramic floor & wall tile $2,826(R) $2,513(R) $1,909(R) $2,084(R) $2,210 6.0%<br />
Laminate flooring $1,276 $1,047 $901.0(R) $893.0(R) $894.2 0.13%<br />
Vinyl sheet & floor tile $1,926(R) $2,105(R) $1,818(R) $2,000(R) $2,115 5.8%<br />
Other resilient flooring* $282.5(R) $279.8(R) $263.5(R) $270.1(R) $281.5 4.2%<br />
Stone flooring $1,689 $1,408 $1,079 $1,062 $1,064 0.2%<br />
Table 2<br />
U.S. floor covering market sales volume<br />
R=Revised Source: Catalina Research<br />
*Other resilient includes cork, rubber, other plastics and linoleum.<br />
(in millions of square feet)<br />
Product sector 2007 2008 2009 2010 2011 % change<br />
Carpet & area rugs 14,867 12,814 10,601 10,686(R) 10,221 -4.4%<br />
Hardwood flooring 989.0 944.5 803.4 882.8(R) 919.0 4.1%<br />
Ceramic floor & wall tile 2,664 2,258 1,848 1,992 2,078 4.3%<br />
Laminate flooring 1,160 1,039 912.0 957.7 949.8 -0.8%<br />
Vinyl sheet & floor tile 3,272 3,254 2,784 2,860 2,951 3.2%<br />
Other resilient flooring* 352.9(R) 330.8(R) 280.1(R) 250.2(R) 244.0 -2.5%<br />
Stone flooring 436.4 351.6 270.8 260.0 261.5 0.6%<br />
R=Revised Source: Catalina Research<br />
*Other resilient includes cork, rubber, other plastics and linoleum.<br />
Chart 2<br />
2011 U.S. floor covering<br />
sales by volume<br />
Total: 17.63 billion square feet<br />
1.5% 1.4%<br />
16.7%<br />
5.2%<br />
5.4%<br />
11.8%<br />
Carpet &<br />
area rugs<br />
10.22 billion<br />
Ceramic floor &<br />
wall tile<br />
2.08 billion<br />
Vinyl sheet &<br />
floor tile<br />
2.95 billion<br />
July 23/30, 2012<br />
58%<br />
Laminate flooring<br />
949.8 million<br />
Hardwood flooring<br />
919.0 million<br />
Stone flooring<br />
261.5 million<br />
Other resilient*<br />
244.0 million<br />
R= Revised Source: Catalina Research<br />
*Other resilient flooring includes cork,<br />
rubber, other plastics and linoleum.<br />
Slow climb<br />
Continued from page 1<br />
the industry’s total, up from 27.6 percent in<br />
2007. The transportation market remains at<br />
about 4.4 percent of total industry sales.<br />
Just like 2010, commercial sales led dollar<br />
growth in 2011. Corporate, retail and healthcare<br />
are the strongest commercial markets.<br />
Education and government struggled with the<br />
down economy and lower tax bases. Hospitality<br />
is still pulling out of the recession, though<br />
activity there is picking up. Commercial sales<br />
were estimated to be $5.6 billion, rising 4.7 percent;<br />
while sales to transportation equipment<br />
manufacturers were $785 million, a 3.1 percent<br />
increase over the previous year.<br />
Throughout the recession, the residential<br />
market has been the most affected. In 2011,<br />
things improved slightly, but the industry has<br />
a long way to go. In 2011, total residential sales<br />
are estimated to be $11.5 billion (in manufacturers’<br />
dollars), a 1.5 percent increase over the<br />
previous year, according to Catalina Research.<br />
The residential construction market remains<br />
a challenge for the flooring industry, though it<br />
appears to be picking up in 2012. Existing home<br />
sales have been increasing since late summer<br />
2011 and builder starts have been increasing<br />
at double-digit rates during 2012. However, in<br />
2011, home sales remained sluggish and new<br />
home starts were severely depressed.<br />
On the remodel side of the market, which<br />
makes up roughly half of the industry’s sales,<br />
flooring sales continued to struggle. Consumers<br />
in 2011 replaced or repaired essential items.<br />
Flooring is an easy item in the home to postpone<br />
and one of the most expensive. With the<br />
continued decline in home values, consumers<br />
were reluctant to make big expenditures.<br />
Square foot sales increased year over year,<br />
with the average value per square foot going<br />
up 4.1 percent over the previous year. That’s<br />
the sharpest gain since 2006, according to<br />
Catalina. As the overall economy enjoyed<br />
some recovery in 2011, manufacturers<br />
passed along rising raw material, energy and<br />
transportation costs. Carpet and rug prices<br />
increased an average of 5.7 percent, one of<br />
the highest. Hard surface flooring average<br />
selling prices rose by only 0.9 percent in 2011.<br />
According to Catalina, price competitiveness<br />
Methodology<br />
Floor Covering Weekly collaborated with Catalina<br />
Research for this 20th annual statistical<br />
analysis of the U.S. floor covering market. Area<br />
rug numbers come from FCW research.<br />
All figures that have been revised from<br />
previously published numbers are indicated<br />
with (R). All 2011 numbers are estimates at<br />
this time and are subject to revision. The total<br />
Graph 1<br />
Looking back: 20 years of floor covering sales value<br />
(in billions)<br />
$26.0<br />
$24.0<br />
$22.0<br />
$20.0<br />
$18.0<br />
$16.0<br />
$14.0<br />
$12.0<br />
U.S. floor covering sales number posted for<br />
2010 in last year’s issue has been rev ised<br />
from $17.13 billion to $17.45 billion.<br />
Note that in this year’s edition, resilient is<br />
broken down into vinyl sheet and floor tile<br />
and other resilient which includes cork, other<br />
plastics, rubber and linoleum.<br />
U.S. market sales are in manufacturers’<br />
dollars and exclude installation costs. All retail<br />
information is courtesy of Jonathan Trivers’<br />
exclusive marketWise.<br />
improved for ceramic tile and wood flooring.<br />
2012 is shaping up to be an improvement.<br />
Existing home sales increased 7.2 percent in<br />
the first quarter. Industry experts estimate<br />
that will stimulate industry sales since a quarter<br />
of movers will replace a floor in the first<br />
year. Housing starts also increased 19.4 percent<br />
in the same time period. Commercial<br />
sales should also continue to be strong as the<br />
economy slowly improves. FCW<br />
R=Revised Source: Catalina Research<br />
Note: Stone flooring was added as its own category and is reflected in sales<br />
figures starting in 1997. Rubber flooring was removed as its own category<br />
and is reflected in “other resilient flooring” sales figures starting in 2011.<br />
’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11<br />
$12.42(R) $13.30 $14.20 $14.60 $15.20 $15.95(R) $17.40 $18.80 $19.90 $20.20 $20.65(R) $22.12(R) $24.33(R) $25.62(R) $25.89(R) $23.39(R) $21.39(R) $16.76(R) $17.45(R) $17.89
July 23/30, 2012 marketWise 5<br />
Sales velocity: So little and so slow<br />
By Jonathan Trivers<br />
If you were a runner and had to run on a road<br />
that increased in elevation so you could get<br />
real aerobic exercise, the upward slant of the<br />
road needs to get you panting and wishing for<br />
the end of the hill. If our industry’s 2011 sales<br />
(including labor) increase (3.0 percent) were<br />
the upward slant, you would not be winded<br />
and you sure would not have done much to<br />
burn calories. Forget aerobic exercise.<br />
So it is with our industry. Yes, it wasn’t<br />
down but no it wasn’t up much.<br />
As always, what happens to housing happens<br />
to the floor covering industry.<br />
New home sales for single families continue<br />
to amaze — in a bad way. New home sales<br />
have declined for six years in a row. In 2005,<br />
new home sales were 1,283,000. For 2011, new<br />
home sales were 302,000, almost one million<br />
fewer new home sales than in 2005!<br />
In 2011, new home sales dropped 10<br />
percent from pitiful sales in 2010. An average<br />
of 6,000 new homes was sold per state.<br />
That might be fine for South Dakota, but that<br />
barely shows up as an economic impact for<br />
California, Florida, New York, etc. (If the<br />
builder business increases by 13 percent a<br />
year for nine years, it will be close to the good<br />
years. It might well take that long.)<br />
Existing home sales are off 25 percent<br />
from the best year ever but they are nonetheless<br />
still pretty robust. The problem for<br />
Table 3<br />
2011 floor covering industry sales<br />
(in billions) $48.1B<br />
Product Labor Total<br />
$ Sell GP % $ Sell GP % $ Sales GP %<br />
Carpet $12.5 30.4% $3.1 17.5% $15.6 28.2%<br />
Vinyl $3.9 33.0% $1.8 26.0% $5.7 31.5%<br />
Ceramic tile $4.6 32.0% $6.3 26.0% $10.9 28.6%<br />
Stone/marble $1.1 36.0% $1.6 25.0% $2.7 29.6%<br />
Wood $3.5 28.6% $2.1 22.0% $5.6 26.9%<br />
Laminate $1.7 26.0% $1.0 20.0% $2.7 22.2%<br />
Carpet cushion $.0 9 26.0% N/A N/A $.09 26.0%<br />
Installation<br />
materials<br />
$1.0 26.0% N/A N/A $1.0 26.0%<br />
Total installed<br />
products<br />
$29.2 30.6% $15.9 23.9% $45.1 28.2%<br />
Area rugs $3.0 33.0% N/A N/A $3.0 33.0%<br />
Total floor covering $32.2 30.9% $15.9 23.9% $48.1 28.5%<br />
homeowners is that the average price of those<br />
houses sold is 30 percent less than what it<br />
was six years ago. If you are underwater you<br />
certainly won’t make investments in flooring;<br />
if you are wanting to upgrade your floors<br />
but know that the house has lost 30 percent<br />
Source: marketWise<br />
in value, you will become a much harder sell<br />
— it becomes, “should we really do this” as<br />
opposed to “which one is best for us.”<br />
Even with those headwinds, pent up<br />
demand for new flooring in existing homes<br />
continues to drive business for the residential<br />
replacement sector. Pent up demand is far<br />
greater than the negatives and will continue<br />
to push this sector with sales increases for<br />
years to come.<br />
Commercial, blessed commercial, has<br />
done better than the other sectors. That is<br />
true for large class buildings, refurbishment<br />
of existing commercial properties and Main<br />
Street commercial.<br />
The real news for 2011 is the accelerated rate<br />
of the “market splintering” at retail. Small niche<br />
markets are growing faster than traditional full<br />
service flooring stores and one niche segment<br />
has underperformed. Narrowcasting is in full<br />
bloom — specialty hard surface stores are<br />
popping up all over. The highest profile chains<br />
are Lumber Liquidators and Floor Décor and<br />
More, but there are independent hard surface<br />
stores in many towns by another name. Shop<br />
at home continues to grow as a part of full<br />
service flooring store’s marketing effort and<br />
Empire showed new vigor after consolidating<br />
and cutting back on underperforming markets.<br />
(Empire bought Luna, a direct competitor in<br />
Chicago at the beginning of 2012.)<br />
Key chapters of 2011 marketWise are:<br />
The four legged stool collapses<br />
New home’s size stabilize<br />
Narrowcasting<br />
Selling to the trade — a faltering business<br />
model?<br />
When ceramic looks like wood<br />
The vinyl revolution<br />
Baby boomers buy better and more expensive<br />
goods again FCW<br />
What we sell<br />
Our very own Ray Pina, senior editor, FCW,<br />
has been writing about the vinyl revolution;<br />
most were disbelieving. Myself included.<br />
Believe it. The vinyl industry bemoaned the<br />
fact that their product was called vinyl. Consumers<br />
thought of the vinyl in grandma’s house<br />
and didn’t even want to look at the product.<br />
The product got so much better in quality and<br />
looks but the name hurt the category.<br />
Along comes glass-backed vinyl, luxury<br />
vinyl tile and VCT all gussied up and we have<br />
a revolution. Used to be that luxury vinyl<br />
tile was sold by two companies — Amtico<br />
and NAFCO. It was a specialty product for<br />
commercial sector and they sold 10 yards<br />
into residential replacement. That might<br />
be high. VCT was purely commercial and<br />
glass-backed was some idea first advanced in<br />
Europe. So what?<br />
These three types of vinyl products are red,<br />
red hot residential replacement products. If<br />
retailers do not have large displays for these<br />
products, they are missing the revolution. I<br />
don’t mean a nice little display next to the<br />
gigantic sheet vinyl rack; I mean a large display<br />
of these products next to a small rack of<br />
sheet vinyl. Many joined the revolution but<br />
it’s not too late in 2012.<br />
The new vinyl is helping this category to<br />
regain lost market share. For 2011, vinyl had<br />
the second highest increase of any product<br />
category plus 5.7 percent (product plus labor).<br />
(See Table 4.)<br />
When ceramic tile looks like wood<br />
Carmen Chilelli, the very creative product<br />
Continued on page 7<br />
Table 4<br />
2011 product sales growth<br />
(sales in billions; product + labor)<br />
2006 2007 2008 2009 2010 2011<br />
% increase<br />
over last year<br />
Carpet $21.8 $20.1 $18.3 $15.0 $15.3 $15.6 +2.0%<br />
Vinyl $5.5 $5.5 $5.5 $5.0 $5.4 $5.7 +5.7%<br />
Ceramic tile $15.9 $13.5 $11.4 $9.5 $10.3 $10.9 +6.0%<br />
Stone/marble $3.5 $4.2 $3.4 $2.7 $2.7 $2.7 Even<br />
Wood $7.7 $6.7 $5.8 $5.0 $5.4 $5.6 +4.3%<br />
Laminate $4.5 $4.0 $3.4 $2.8 $2.7 $2.7 Even<br />
Table 5<br />
2011 market share installed products<br />
2006 2007 2008 2009 2010 2011<br />
Carpet 37.6% 37.9% 38.8% 38.2% 37.1% 36.6%<br />
Vinyl 9.0% 9.9% 11.2% 12.1% 12.6% 12.9%<br />
Ceramic tile 27.4% 25.5% 24.3% 24.0% 24.9% 25.5%<br />
Stone/marble 5.8% 7.5% 7.0% 6.7% 6.4% 6.2%<br />
Installation<br />
supplies<br />
$3.1 $2.8 $2.4 $2.0 $1.9 $1.9 Even<br />
Wood 12.6% 12.0% 11.7% 12.1% 12.6% 12.6%<br />
Rugs $5.0 $4.6 $4.0 $3.0 $3.0 $3.0 Even<br />
Total $67.0 $61.4 $54.2 $45.0 $46.7 $48.1 +3.0%<br />
Source: marketWise<br />
Laminate 7.6% 7.2% 7.0% 6.9% 6.4% 6.2%<br />
Note: These market share numbers were computed from the sales of product, labor and the installation materials used for that product category.<br />
Source: marketWise
6<br />
marketWise<br />
July 23/30, 2012<br />
Who sells it<br />
There is some very good news hidden under<br />
the massive amount of bad news about single<br />
family new home construction. The number<br />
of new homes sold has declined to an abysmal<br />
low 302,000. At the same time, the average<br />
size of the new home was dropping from<br />
a high in 2006 of 2,561 square feet to right<br />
around 2,300 square feet in 2010. Talk about<br />
adding insult to injury — new home units<br />
drop 72 percent from the best year (2005)<br />
and then the average amount of square feet<br />
drops another 10 percent! That’s what flooring<br />
contractors were looking at in dismay.<br />
However, in 2011, the average size of new<br />
single family homes went up almost 100<br />
square feet to 2,480. We see the size settling at<br />
the range of the best year (2006); gone will be<br />
the over-sized and useless foyer; there will be a<br />
home office space that is not a bedroom, spacious<br />
kitchens and some creative builders will<br />
give up on the never-used living room and add<br />
a play room along with a family room.<br />
So when 2012 new home construction is<br />
reported, the actual increase in number of<br />
homes built over 2011 will not have to have<br />
an asterisk noting that the home is smaller<br />
therefore there is no gain in flooring needs.<br />
The interest rates for mortgages were<br />
at an all-time low and that will help the<br />
sales of new homes and it allows the buyer<br />
to make a modest monthly payment for a<br />
good sized homes.<br />
The four legged stool collapses<br />
For a very long time our industry has been<br />
easily broken down into four equal parts:<br />
Builder 25 percent<br />
Commercial 25 percent<br />
Residential replacement (new owner older<br />
home) 25 percent<br />
Residential replacement (existing owner<br />
improving home) 25 percent<br />
Table 6<br />
Who sells to the three end-user markets<br />
(in billions)<br />
These numbers always fluctuated as one<br />
segment got stronger but a rolling average<br />
pretty much had these segments equal. But<br />
with the collapse of the builder business,<br />
there are really only three legs to the stool and<br />
(this is a very big and) because Americans<br />
are moving far less than in the last 40 years,<br />
the flooring sales generated by a household<br />
moving into an existing home has declined<br />
dramatically. (About 17 percent of households<br />
moved every year; now that number is<br />
right around 11 percent.)<br />
This is how we think the sales by end user<br />
market looks for 2011:<br />
Commercial: 31 percent<br />
Builder: 11 percent<br />
Residential replacement (new owner older<br />
home): 18 percent<br />
Residential replacement (existing owner<br />
improving home): 40 percent<br />
The most important areas for flooring<br />
retailers are commercial and residential<br />
replacement of existing homes (owner<br />
improvement). Sales for these two sectors<br />
will come largely from word of mouth and a<br />
compelling website.<br />
The builder business should improve<br />
about plus 13 percent each year for the next<br />
nine years or so (that’s how long it will take<br />
to get back to “normal” new home construction.)<br />
These numbers (end-user balance of<br />
sale) will slowly go back to how they were<br />
and we will have four equal components;<br />
however, for some years, the key components<br />
for sales will come from commercial<br />
and sales to customers in your town who are<br />
now willing to improve their flooring.<br />
Selling to the trade — a faltering business<br />
model?<br />
Many industries that serve the home<br />
improvement sector have distributors who<br />
sell to the trade. Their distribution facilities<br />
have a showroom and contractors can<br />
bring in their customers and decide on<br />
Residential<br />
Replacement<br />
Builder Commercial Total<br />
Floor covering stores $13.4 $1.7 $7.7 $22.8<br />
Home improvement $7.5 $0.4 $0.4 $8.3<br />
Hard surface stores; $4.3 $0.4 $0.4 $5.1<br />
Internet, non-store $0.9 N/A N/A $0.9<br />
Furniture, department,<br />
discounters,home<br />
furnishing stores<br />
$1.9 N/A N/A $1.9<br />
Contractors N/A $2.6 $6.5 $9.1<br />
Total $28.0 $5.1 $15.0 $48.1<br />
% to total 58.1% 10.7% 31.2% N/A<br />
Source: marketWise<br />
Table 7<br />
Who sells it: Who the customer pays<br />
(in billions)<br />
2006<br />
(%)<br />
2007*<br />
(%)<br />
2008<br />
(%)<br />
2009<br />
(%)<br />
2010<br />
(%)<br />
2011<br />
(%)<br />
2011<br />
($)<br />
Floor covering stores 57.8 53.8 54.2 53.6 49.7 46.4 $22.8<br />
Home improvement 16.1 14.3 14.4 16.0 16.7 17.3 $8.3*<br />
- Home Depot 8.7 7.1 7.5 8.8 9.9 8.7 $4.2<br />
- Lowe’s<br />
4.8 5.2 5.5 7.2 7.5 7.0 $3.4<br />
Hard surface stores 2.6 6.2 6.5 6.9** 10.1 10.6 $5.1<br />
Internet, non-store N/A N/A N/A N/A 2.1 1.9 $0.9<br />
Furniture, department,<br />
discount, home 0.5 5.5 5.0 4.4 4.3 3.9 $1.9<br />
furnishing stores<br />
Contractor 23.0 20.2 19.9 19.0 17.1 19.9 $9.1<br />
*This number reflects better valuation of Menards and other regional home improvement retailers’ selling flooring.<br />
**Up to 2009, this number was hard surface stores and Internet and non-store. For 2010 and 2011, we have broken out Internet and non-store as a<br />
separate category.<br />
Source: marketWise<br />
what she wants. The contractor buys the<br />
merchandise from the distributor. It’s not<br />
surprising ceramic tile distributors had and<br />
have beautiful showrooms for the “trade.”<br />
Lumber yards have always marketed to the<br />
trade and Home Depot and Lowe’s are very<br />
aggressive marketing to the trade. If the<br />
percentage of pro sales (their phrase for the<br />
trade) that Home Depot and Lowe’s generate<br />
for the entire store is applied to their<br />
flooring sales, they well could be selling $1<br />
billion in flooring to the “trade.” In that<br />
way, they are competing with distributors<br />
not retailers.<br />
Contract Furnishings Mart (CFM) sells<br />
only to the trade. They have been in Portland,<br />
Ore. for 30 years. But they are not a distributor.<br />
They are a flooring/counter top hybrid<br />
selling to the trade. They have nine “stores”<br />
in the Portland/Seattle corridor.<br />
They promise excellent service and excellent<br />
pricing; CFM is a one price house for customers<br />
whether you are an architect or builder. Service<br />
and product knowledge are an important part<br />
of their brand. They have a design staff; sales<br />
people are paid salary — guarantee no pressure.<br />
If you buy more and CFM gets a price break,<br />
that is passed on to the customer.<br />
Contract Furnishings Mart has thrived in<br />
these very tough times. (The Pacific Northwest<br />
has not been hit as hard as other parts<br />
of the country but new home construction is<br />
down in this area also.)<br />
Pro-Source, a division of CCA Global,<br />
is the largest type (in number of outlets)<br />
of this form of marketing. Unlike Contract<br />
Furnishing Mart, Pro Source was<br />
established as a do-it-yourself marketing<br />
company — the designer was given a key<br />
and could come in any time of day, find a<br />
product and place the order; 2 a.m. if they<br />
wanted. Nice displays, wide assortment of<br />
all flooring products but no sales help. Pro<br />
Source is a franchise and as such pays 3<br />
percent of their gross sales to the franchisor<br />
— CCA Global.<br />
They took a tremendous hit during the<br />
downturn. The Pro Source business model<br />
was bludgeoned.<br />
According to the most recent Franchise<br />
Disclosure Document from 2007 to beginning<br />
of 2011, Pro Source had a 37 percent<br />
sales decrease; they had a 27 percent<br />
decline in number of franchise outlets; and<br />
to protect the brand they owned (at the<br />
end of 2010) 19 outlets, of which they were<br />
looking to sell 15 of them to new franchise<br />
owners; the average sale of the existing outlets<br />
went from $3.4 million to $2.7 million<br />
per outlet. (Three Pro Source outlets were<br />
closed in Oregon/Washington.)<br />
The Pro Source model is built on high<br />
volume, lower gross margins than conventional<br />
retail stores and commensurate<br />
lower cost of operations — they don’t give<br />
the same kind of personal customer service<br />
as retail stores and their outlets are in business<br />
districts or those areas with much lower<br />
occupancy cost. As long as the sales were<br />
roaring, this was a great business but with the<br />
downturn, its flaws were too apparent.<br />
Over time, it became apparent that there<br />
was a need for sales people. The fact is their<br />
“customers” knew precious little about flooring<br />
and so the self-serve system became a<br />
selling system with sales force ever present.<br />
Did the gross margin increase to pay for these<br />
additional costs?<br />
Pro Source has decided to test kitchen<br />
cabinets to expand their product mix and<br />
attract new “professional” customers. (We<br />
are not sure the allure of kitchen cabinets to<br />
a flooring outlet, but Floor and Décor just<br />
added kitchen cabinets to its assortment.)<br />
Ultimately, a business model built on<br />
high volume and fairly low margin works<br />
only in the best of times. Our industry is<br />
littered with retailers and contract houses
July 23/30, 2012<br />
2011 Import/Export<br />
Table 8<br />
U.S. floor covering imports value<br />
(in millions)<br />
Industry Sector 2007 2008 2009 2010 2011<br />
Carpet & area rugs 1 $2,257.7(R) $2,039.8(R) $1,580.8(R) $1,859.3(R) $2,032.8<br />
Hardwood flooring $313.6(R) $572.8(R) $489.9(R) $632.0(R) $702.3<br />
Ceramic floor & $2,083.6(R) $1,720.7(R) $1,203.4(R) $1,275.8(R) $1,325.2<br />
wall tile<br />
Resilient<br />
Vinyl sheet & floor tile $605.8(R) $687.6(R) $613.8(R) $728.8(R) $764.4<br />
Other resilient 2 $106.1(R) $107.6(R) $95.4(R) $109.6(R) $117.2<br />
Laminates 3 $589.7(R) $453.2(R) $461.9(R) $476.2(R) $419.20<br />
Total imports $5,956.5(R) $5,581.7(R) $4,445.3 (R) $5,081.7(R) $5,361.1<br />
Year-to-year change -4.9%(R) -6.3%(R) -20.4%(R) 14.3% 5.5%<br />
Table 10<br />
U.S. floor covering exports value<br />
(in millions)<br />
Industry Sector 2007 2008 2009 2010 2011<br />
Carpet & area rugs 1 $1,029.9 $1,102.9 $850.5 $999.2 1,066.6<br />
Hardwood flooring $137.8 $142.7 $102.7 $130.7(R) $136.9<br />
Ceramic floor &<br />
wall tile<br />
$52.3 $56.2 $50.3 $50.3 $52.5<br />
Resilient<br />
Vinyl sheet & floor tile $138.0 $160.9 $141.6 $163.8 $176.8<br />
Other resilient 2 $27.6 $43.3 $34.3 $40.9 $40.4<br />
Total exports $1,385.6 $1,506.0 $1,179.4 $1,384.9(R) $1,473.2<br />
Year-to-year change 4.8% 8.7% -21.7% 17.4% 6.4%<br />
Table 9 Table 11<br />
U.S. floor covering imports volume<br />
(in millions of square feet)<br />
Industry Sector 2007 2008 2009 2010 2011<br />
Carpet & area rugs 1 2,060.6 1,824.6 1,654.7 1,960.7 1,956.5<br />
Hardwood flooring 152.2 258.3 282.4 330.9(R) 371.4<br />
Ceramic floor & 2,175.9 1,684.4 1,331.8 1,393.2 1,408.7<br />
wall tile<br />
Resilient<br />
Vinyl sheet & floor tile 1503.7 1,481.8 1,247.4 1,335.2 1,251.8<br />
Other resilient 2 196.7(R) 230.3 227.7 213.5 161.9<br />
Laminates 3 550.0 461.9 486.0(R) 522.7(R) 454.8<br />
Total imports 6,639.1 5,941.3 5,230.0(R) 5,756.2(R) 5,605.1<br />
Year-to-year change -8.3% -10.5% -12.0%(R) 10.1%(R) -2.6%<br />
Import Key<br />
1 Includes imports of roll goods, bath mats, area rugs, auto and aircraft carpeting and artificial grass.<br />
2 Includes imports of flooring made of other plastics, cork, linoleum, rubber and other materials.<br />
3 Estimated by Catalina Research, Inc.<br />
R=Revised<br />
U.S. floor covering exports volume<br />
(in millions of square feet)<br />
Industry Sector 2007 2008 2009 2010 2011<br />
Carpet & area rugs 1 1,050.6 1,091.4 785.3 947.3(R) 1,009.4<br />
Hardwood flooring 62.9 64.5 48.3 56.8(R) 59.1<br />
Ceramic floor & 56.6 61.3 55.6 50.8(R) 53.7<br />
wall tile<br />
Resilient<br />
Vinyl sheet & floor tile 301.2 331.7 310.5 377.6 363.3<br />
Other resilient 2 51.4 91.2 70.9 76.7(R) 74.7<br />
Total exports 1,522.7 1,640.1 1,270.6 1,509.2(R) 1,560.2<br />
Year-to-year change 1.2% 7.7%% -22.5% 18.8%(R) 3.4%<br />
Export Key<br />
1 Includes exports of roll goods, bath mats, area rugs, auto and aircraft carpeting and artificial grass.<br />
2 Includes exports of flooring made of other plastics, linoleum, rubber and other materials.<br />
R=Revised<br />
going gangbusters only to be tripped up by<br />
low margins and sales decreases.<br />
Narrowcasting<br />
Think of the traditional broadcasting networks<br />
in TV — NBC, CBS and ABC. Then<br />
along came cable and satellite and now we<br />
have more cooking channels than broadcast<br />
networks. That’s narrowcasting — a narrow<br />
but more compelling focus. Happened in<br />
magazines, radio and in retail.<br />
Flooring has a small, fairly narrow array<br />
of goods. But narrowcasting has come to our<br />
industry and it is thriving. Lumber Liquidators<br />
(wood and laminate) with 270 stores<br />
and Floor & Décor (ceramic tile, stone, porcelain,<br />
etc.) with 30 stores are the two best<br />
known national multi-store narrowcasters.<br />
The downturn slowed them down but they<br />
are gaining market share in all markets they<br />
serve. In 2011, these two flooring retailers<br />
with very narrow product offerings generated<br />
more than $900 million in sales. (They<br />
both have a very narrow product focus but<br />
otherwise they market differently. Lumber<br />
Liquidators has 1,000 square foot showrooms<br />
with stock in the back; Floor & Décor has<br />
60,000 square foot stores and all inventory is<br />
on the floor.)<br />
The customer’s logic goes like this: The<br />
fewer product types a store carries the better<br />
they know these products as opposed to<br />
the general retailer (Home Depot) or even<br />
the specialty retailer (full-service flooring<br />
store). She gives up one stop shopping (she<br />
wants carpet and wood) for the belief that<br />
she will get the most knowledgeable person<br />
and the best value.<br />
Both of these narrowcasters started out<br />
as product-only retailers. Customers have<br />
pushed them into offering installation.<br />
Both now offer installation done by a third<br />
party (Home Service Store). The pressure<br />
for them to expand their assortment to<br />
carpet will be great. Remember Color Tile?<br />
We suspect that won’t happen very soon<br />
but for some reason Floor and Décor is<br />
now offering kitchen cabinets to its flooring<br />
assortment.<br />
— Jonathan Trivers<br />
What we sell<br />
Continued from page 5<br />
development manager at Canada’s Shnier<br />
(second largest flooring distributor in North<br />
America) was talking about the crosstransfer<br />
(my words, not his) of design from<br />
one substrate to the next. Laminate looks so<br />
much like wood that wood manufacturers<br />
buy laminate samples so their wood can be<br />
more wood like; ceramic tile now has really<br />
cool looking wood plank looks; luxury vinyl<br />
tile looks like ceramic, even with faux grout;<br />
ceramic tile looks like stone; and vinyl looks<br />
like all the above. And with new and different<br />
printing technologies, the crossovers will<br />
continue and expand.<br />
Chilelli is convinced that this is great<br />
news for the flooring retailer. Superior<br />
knowledge of what product is perfect for<br />
what place in the home will become very,<br />
very important. And, with setting materials<br />
products that now have a moisture barrier,<br />
products never before installed in basements<br />
can now be installed without fear of<br />
basements and or slabs.<br />
Never before has training and product<br />
knowledge been so valuable. Now she has<br />
three different product types all with the same<br />
visuals and she doesn’t want to make the<br />
wrong decision. The best trained sales person<br />
wins. Every time. Now more than ever.<br />
Baby boomers buy better and more expensive<br />
goods again.<br />
They are back. And now that they are retiring<br />
they want to buy something really cool<br />
and creative. Just ask Pinterest.com.<br />
She has been frugal long enough. For her,<br />
it’s now or never.<br />
Flooring retailers had best reduce all those<br />
value products and start adding better and<br />
better and better goods to all product categories.<br />
All.<br />
This is true for all retail categories —<br />
clothes to washing machines to roofing<br />
materials to flooring.<br />
Enough said.<br />
— Jonathan Trivers
8<br />
Carpet & Area Rugs<br />
July 23/30, 2012<br />
Uneven recovery haunts carpet industry<br />
By Janet Herlihy<br />
The carpet industry continued to take one<br />
step forward, half a step back in 2011, but<br />
managed to eke out a slight increase in manufacturers’<br />
sales in the U.S. — sales for 2011<br />
(shipments minus exports plus imports) are<br />
posted at $9.51 billion, compared to $9.39 bil-<br />
Chart 3<br />
Carpet & area rugs market* value and volume<br />
(in billions)<br />
20<br />
15<br />
10<br />
5<br />
0<br />
$13.21(R)<br />
14.87<br />
$11.87(R)<br />
12.81<br />
$9.29(R)<br />
2007 2008 2009 2010 2011<br />
Market sales<br />
lion in 2010, according to Catalina research.<br />
Beset by necessary price increases and a shift<br />
in consumer preference, carpet lost market<br />
share, going from 59.7 percent of all flooring<br />
volume sales in 2010 to 58 percent in 2011.<br />
Residential market<br />
The residential carpet market continues to<br />
10.60<br />
$9.39(R)<br />
Square feet<br />
10.69(R)<br />
$9.51<br />
10.22<br />
*Includes roll goods, carpet tile, bathmats, area rugs, auto and aircraft carpeting and artificial grass.<br />
Source: Catalina Research<br />
R=Revised<br />
struggle. “For the residential carpet business,<br />
the first half was weaker and the second half<br />
was a bit stronger than anticipated,” said Tom<br />
Lape, president of Mohawk’s residential and<br />
commercial businesses. “Overall, the residential<br />
carpet industry had a puny positive increase in<br />
dollars and was down slightly (one and a half to<br />
three percent) in units,” Lape stated.<br />
“The higher end of residential carpet performed<br />
better because the luxury consumer<br />
was ready to remodel and the low end of carpet<br />
was driven by multi-family construction. The<br />
middle was still very tough,” he continued.<br />
According to Ralph Boe, CEO of Beaulieu of<br />
America, “Total demand in residential carpet<br />
stayed fairly weak because of a slow housing<br />
market that is weakened by foreclosures and<br />
short sales, was further depressed as people put<br />
off buying because the price might go lower and<br />
financing is hard to find,” Boe explained.<br />
For carpet manufacturers, slow demand<br />
is further aggravated by continued volatility<br />
of raw materials costs. Boe added, “Lately, we<br />
have seen reduction in cost of the oil, which<br />
has helped for awhile, but it is too hard to<br />
predict the future.”<br />
Randy Merritt, president of Shaw Industries,<br />
agreed, saying, “The residential side of business<br />
in 2011 was still quite a challenge. Consumers<br />
were still sitting on the sidelines. The consumer<br />
pattern was to complete necessary renovation<br />
projects but projects that were considered<br />
improvements to the home were delayed,”<br />
Merritt said, adding, “Unemployment and<br />
consumer confidence continue to be issues.”<br />
The Dixie Group’s high-end Fabrica and<br />
Masland brands performed ahead of the<br />
industry in 2011, contributing to a Dixie<br />
sales increase of 15 percent, according to<br />
the company. “Residentially, the upper end,<br />
design business was much healthier than the<br />
overall retail carpet business,” Kennedy Frierson,<br />
COO of The Dixie Group, said. “Our<br />
wool business continued to grow. In 2010<br />
and 2011, people realized that there was not<br />
going to be a total collapse, so, the upper end<br />
market started coming back.”<br />
Polyester filament increases share<br />
Polyester continued its surge in the residential<br />
carpet industry. “The fiber dynamic<br />
continued to change with filament polyester<br />
growing at the expense of staple yarns of<br />
nylon, polypropylene and polyester,” Boe said.<br />
Merritt added, “Just as we saw in nylon, polyester<br />
staple is giving way to filament replacements.<br />
Without question, the predominant<br />
face fibers in carpet today are nylon filament<br />
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July 23/30, 2012 Carpet & Area Rugs 9<br />
Chart 4<br />
Carpet & area rugs imports* value and volume<br />
(in billions)<br />
3.0<br />
2.4<br />
1.8<br />
1.2<br />
0.6<br />
0<br />
$2.26(R)<br />
2.06<br />
$2.04(R)<br />
1.82<br />
$1.58(R)<br />
2007 2008 2009 2010 2011<br />
Market sales Square feet<br />
1.65<br />
$1.86(R)<br />
1.96<br />
$2.03<br />
1.96<br />
*Includes imports of roll goods, bathmats, area rugs, auto and aircraft carpeting and artificial grass.<br />
Source: Catalina Research<br />
R=Revised<br />
and polyester filament. At some point in the<br />
future, these two fibers could near equilibrium.<br />
The result may be 60 percent nylon, 40 percent<br />
polyester or vice versa, but both fibers will play<br />
important roles in the future of carpeting.”<br />
While PET has moved into the residential<br />
market, it doesn’t seem likely to be accepted<br />
in the specified commercial business. “We’ve<br />
built Interface on durable materials for<br />
performance purposes,” stated John Wells,<br />
president and CEO of Interface Americas.<br />
“In our testing, polyester doesn’t fit commercial<br />
applications because it’s more suited to<br />
residential and light traffic applications.”<br />
But according to Frierson, PET dominates<br />
the under $10 per square yard segment and<br />
continues to grow in 2012. “As long as the cost<br />
difference between nylon and PET stays as great<br />
as it is, PET will continue to grow,” he said.<br />
Lape added that Mohawk research shows<br />
that “three out of four RSA’s (retail sales associates)<br />
who sell PET filament carpet would not<br />
put it in their own homes. We need to know<br />
how the consumer sees it (PET filament carpet)<br />
and be sure they know what they are getting, or<br />
it could backlash on the industry.”<br />
Commercial market<br />
Although, Catalina reports that soft surface<br />
flooring declined from 42.8 percent in 2010 to<br />
41.6 percent of total commercial market dollar<br />
sales in 2011, commercial was the saving grace<br />
for many carpet manufacturers.<br />
Merritt of Shaw, said, “Led by strength<br />
in the carpet tile business, the commercial<br />
carpet market remained robust in 2011.<br />
On the commercial side, we saw continued<br />
strength in corporate and healthcare segments,<br />
and retail store and hospitality began<br />
to show signs of recovery that have definitely<br />
carried over into 2012.”<br />
Interface Americas posted record sales in<br />
2011, according to John Wells, president and<br />
CEO of the leading modular manufacturer.<br />
“The corporate and education markets were<br />
especially strong for Interface in 2011,” Wells<br />
noted, adding, “The greatest challenges, for<br />
the past few years, have been anticipating<br />
customer needs in an unpredictable macroeconomic<br />
downturn.”<br />
Lape reported, “Specified was stronger<br />
in the front half and weaker in the second<br />
half. For the year, commercial outperformed<br />
residential, mainly because projects on the<br />
drawing board since 2008, 2009 and 2010<br />
were finally funded. The global market was<br />
reasonably robust, mainly with the export of<br />
2011 key points<br />
The carpet and rug industry gained slightly<br />
in dollars but lost slightly in volume in<br />
2011, compared to 2010. Sales were up<br />
to $9.51 billion compared to $9.39 billion<br />
in 2010, but square feet slid from 2010’s<br />
10.69 billion to 10.22 billion in 2011.<br />
Filament fi ber — primarily nylon and<br />
polyester — continue to replace staple<br />
fi ber yarns used in the carpet and rug<br />
industry. PET fi lament continues to grow<br />
its share of the residential market, but<br />
nylon continues to hold its own in the<br />
commercial industry. The new and improved<br />
PET fi lament has allowed carpet<br />
manufacturers to hit a more popular<br />
price point in residential but some in<br />
the industry fear a backlash if some PET<br />
products are not made well enough to<br />
meet consumer satisfaction.<br />
carpet tile, and that continues in 2012. Carpet<br />
tile is fast approaching 50 percent of the commercial<br />
carpet market.”<br />
Frierson added, “On the commercial side<br />
of Dixie’s business, we saw the corporate<br />
segment break loose a bit. We attributed<br />
that to the federal 100 percent tax deduction<br />
for capital expenditures in 2011 that<br />
accelerated spending.”<br />
Continued on page 10<br />
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10<br />
Carpet & Area Rugs<br />
July 23/30, 2012<br />
Rugs continue slow recovery<br />
By Janet Herlihy<br />
While far from a banner year, 2011 saw<br />
some recovery in the area rug market. Total<br />
market sales, calculated from a compilation<br />
of estimates, indicates an increase in area<br />
rug manufacturers’ sales for 2011 of about 6<br />
percent to $2.01 billion overall compared to<br />
2010’s $1.90 billion.<br />
Because rugs are manufactured in every<br />
material from silk, wool, cotton, natural<br />
grasses and leather to every synthetic fiber<br />
known and are available in hand made and<br />
machine made constructions, it is a difficult<br />
category to quantify. In addition, most rugs<br />
are imported and tracked in a myriad of<br />
ways. Statistics from the U.S. Department<br />
of Commerce combine carpets and rugs,<br />
Chart 5<br />
Area rugs market value<br />
(sales in billions)<br />
$3.0<br />
$2.5<br />
$2.0<br />
$1.5<br />
$1.0<br />
$0.5<br />
$0.0<br />
$2.25<br />
$2.05<br />
$1.80<br />
$1.90(E)<br />
$2.01(E)<br />
2007 2008 2009 2010 2011<br />
Source: U.S. Customs Bureau and FCW research<br />
E-Estimated<br />
including roll goods, bath mats, area rugs,<br />
auto and aircraft carpeting and artificial grass<br />
all in one statistic. Distribution for rugs is as<br />
diverse as its product lines.<br />
Catalina Research reported that while battling<br />
the same volatile raw materials costs and<br />
weak demand as broadloom, area rugs got a<br />
boost from the trend to hard surface flooring as<br />
consumers often added a rug to their new hard<br />
surface floor. Rugs also benefited by being a low<br />
cost way to refresh the look of a room.<br />
Most of the increase was estimated to<br />
come from sales of imported products, which,<br />
including carpet, were up from $1.86 billion<br />
in 2010 to $2.03 billion in 2011, according to<br />
Catalina. Rugs are estimated to account for<br />
60 to 70 percent of that total.<br />
In many ways, the area rug business is the<br />
opposite of the wall-to-wall carpet business.<br />
Most broadloom sold in the U.S., is made in<br />
the U.S., while most area rugs sold here are<br />
imported. While wool accounts for a low<br />
single digit percent of all U.S. broadloom,<br />
industry sources estimated that more than 90<br />
percent of imported hand knotted and hand<br />
tufted rugs are made of wool.<br />
Challenges<br />
The greatest challenge in 2011 continued<br />
to be price pressure brought about by a combination<br />
of forces, according to Bill Kilbride,<br />
president of Mohawk Home. “First, the U.S.<br />
economy is not fully recovered, so getting the<br />
consumer to spend disposable income on rugs<br />
is an issue,” Kilbride explained. “Those consumers,<br />
who are shopping, are on a quest for<br />
value,” he said. The second issue is the price of<br />
raw materials, whether up or down. “If those<br />
prices increase, it is virtually impossible to reprice<br />
your product, but, if they go down, customers<br />
expect our prices to go down,” he noted.<br />
For importers, conditions in countries<br />
where rugs are made and the cost of shipping<br />
added to the challenge. “Last year was a perfect<br />
storm, where the housing market, as well<br />
as the overall economy, did not show any<br />
signs of relief, while our industry in general<br />
was hit with price increases due to higher cost<br />
of raw materials and labor,” said Alex Peykar,<br />
principal of Nourison.<br />
Aaron Gray, director of marketing for<br />
Oriental Weavers/Sphinx, agreed that the<br />
ever-increasing cost of raw materials is the<br />
greatest challenge as it “obviously eats at our<br />
overall margins.”<br />
Ron Couri, president and CEO of Couristan,<br />
noted, “The greatest challenge was to drive<br />
sales. We introduced 67 new rugs in January,<br />
but the tough part is getting stores to commit.<br />
Our residential area rugs and broadloom businesses<br />
are seeing up ticks, but not as great as our<br />
hospitality business. In our rug business, hand<br />
knotted rugs are the slowest, while outdoor<br />
rugs are growing fastest,” Couri stated.<br />
In terms of channels of distribution, Couri<br />
added, “Department stores, internet retail and<br />
catalogs are performing the best for us. Macy<br />
has reset 180 stores with fresh rugs this year.”<br />
Couristan is looking to broaden distribution<br />
even more, according to Couri. “In rugs,<br />
we are looking at new distribution in home<br />
centers and are considering big boxes too.”<br />
Signs of a better 2012?<br />
Continuing the pattern of the past few years,<br />
the start of 2012 is looking better. Virtually all<br />
2011 key points<br />
Area rugs continued to contend with price<br />
pressure at all levels of the market, but<br />
managed to increase sales by about 6<br />
percent, generated by consumers choosing<br />
a value-priced rug to freshen a room<br />
or accent a new hard surface fl oor.<br />
Competition from imports may be lessening<br />
as labor costs in China and India rise<br />
as well as shipping costs. Currency rates<br />
are also favoring domestic production.<br />
Fashion and innovation are critical as rug<br />
manufacturers win sales with new kinds<br />
of products such as outdoor rugs and explore<br />
new channels of distribution.<br />
the rug suppliers FCW spoke with reported<br />
sales in the first quarter running ahead of the<br />
same period a year ago. Nourison’s first quarter<br />
sales are up 5 percent, according to Peykar<br />
and the company is striving for a double-digit<br />
increase for the year.<br />
In the first quarter, OW was slightly<br />
ahead compared to 2011, as Gray sees more<br />
optimism in the marketplace and expects<br />
that momentum to carry on the rest of the<br />
year. “We are being aggressive in introducing<br />
new products and bringing them to<br />
market,” he added.<br />
Despite escalating raw materials costs<br />
and soft demand, Jeff Brown, division vice<br />
president for Shaw Living, noted a few<br />
bright spots, saying, “New collections and<br />
constructions were well received by customer<br />
base,” and “Comps were better in<br />
the first quarter of 2012 than the previous<br />
year.” Still, Brown cautioned the industry<br />
to “Expect to see slowdown and more<br />
worry about consumer demand,” in the<br />
second half. FCW<br />
Uneven<br />
Continued from page 9<br />
Balancing cost increases, lower demand<br />
During the recession and into an anemic,<br />
uneven recovery, the carpet industry has done<br />
everything possible to serve its customers and<br />
survive. Mills shuttered excess capacity and<br />
cut back labor forces, but all the cost cutting<br />
could not make up for increases in the cost of<br />
raw materials.<br />
“There is no question that over the last five<br />
years, even in this recessionary environment,<br />
manufacturers have experienced a rise in raw<br />
material costs,” Merritt explained. “Certainly<br />
these prices rise and fall over time but the<br />
overall trend has been up. As costs rise, we have<br />
to also consider the first rule of marketing —<br />
supply and demand.”<br />
Even with a highly specialized product,<br />
Interface experienced the same situation.<br />
“We’ve had to pass along cost increases,<br />
where appropriate, to our customers. To<br />
balance raw materials costs, we’re also<br />
constantly driving product innovation and<br />
Chart 6<br />
Carpet & area rugs exports* value and volume<br />
(in billions)<br />
1.5<br />
1.2<br />
0.9<br />
0.6<br />
0.3<br />
0<br />
$1.03<br />
1.05<br />
design.” said Wells.<br />
$1.10<br />
1.09(R)<br />
2007 2008 2009 2010 2011<br />
Market sales<br />
$0.85<br />
2012 and beyond<br />
The carpet industry sees reasons for<br />
optimism in 2012. “Retail sales continue<br />
0.79<br />
$1.00<br />
Square feet<br />
0.95<br />
$1.07<br />
1.01<br />
*Includes exports of roll goods, bathmats, area rugs, auto and aircraft carpeting and artificial grass.<br />
Source: Catalina Research<br />
R=Revised<br />
to be a challenge through every channel,”<br />
Merritt noted. Still, “The new single family<br />
home business has shown some signs of life<br />
and they now believe we will see roughly<br />
369,000 new homes sold in 2012. This<br />
would be nominally a 20 percent increase<br />
over last year, still far from healthy but<br />
better. As we look to the fall, we of course<br />
have the election issues to deal with. Historically,<br />
this has a dampening effect on<br />
the fall business, but once we are past that<br />
event, I look for better things in 2013.”<br />
Lape at Mohawk added, “So far, 2012 has<br />
not been as robust for the residential carpet<br />
market as expected,” he said. “Still there are<br />
positive signs — gas prices were going down,<br />
there is credit available and the builder<br />
market is growing, although nowhere near<br />
the numbers before the recession.”<br />
Boe said that so far in 2012, business<br />
has been start and stop. “We had a surge<br />
in April, May and slowed down again in<br />
June,” he noted.<br />
Dixie is looking to a stronger second half<br />
in 2012. Frierson said, “So far in 2012, residential<br />
started out great in January, then each<br />
month since has been disappointing. We still<br />
have had some growth, but it’s at the upper<br />
end of the business and not as good as it was<br />
in 2011. We think the second half will be<br />
better, but not until after the election.” FCW
July 23/30, 2012 Carpet & Area Rugs 11<br />
Chart 7<br />
Carpet & area rug purchases by end-use market<br />
(Total: $9.51 billion)<br />
21.0%<br />
7.4%<br />
2.2%<br />
3.7%<br />
0.3%<br />
65.4%<br />
Residential replacement<br />
$6.22 billion<br />
Commerical replacement<br />
$2.00 billion<br />
Transportation<br />
$0.70 billion<br />
Commerical new construction<br />
$0.35 billion<br />
Residential contract<br />
$0.21 billion<br />
Manufactured housing<br />
$0.02 billion<br />
Source: Catalina Research<br />
Wells: In trying to balance increased costs<br />
and raising prices, we also place emphasis on<br />
our ReEntry Recycling Process where we’re<br />
taking back more used carpet and recycling<br />
— turning backing into new backing plus<br />
face fi ber into new face fi ber. Using more<br />
recycled materials helps us minimize the<br />
dependency on virgin, petrochemical based,<br />
raw materials for the short and long term.<br />
Frierson: Balancing increased costs with<br />
declining sales is a juggling act. It’s a very hard<br />
issue to solve — much lower volume with<br />
higher raw materials and other costs — and<br />
get back to a normal return.<br />
Merritt: I think there are some segments<br />
where this trend may be continuing, such as<br />
in new construction in apartments, where<br />
more living space is being converted to<br />
laminate or LVT while the bedrooms remain<br />
carpeted. This trend may be occurring in<br />
certain segments of the fl ooring market but<br />
it’s certainly not an overall market trend.<br />
In commercial, carpet continues to hold its<br />
own or grow share. And while we’re seeing<br />
a trend toward smaller homes, people still<br />
want three or four bedrooms and these are<br />
still carpet in the majority of spaces. I just am<br />
not sure carpet is continuing to lose square<br />
foot share.<br />
Perspective<br />
Carpet industry leaders Tom Lape, president<br />
of Mohawk’s residential and commercial<br />
businesses; Randy Merritt, president of Shaw<br />
Industries; Ralph Boe, CEO of Beaulieu of<br />
America; John Wells, president and CEO of<br />
Interface Americas; and Kennedy Frierson,<br />
COO of The Dixie Group, share views on<br />
challenges and strategies.<br />
What can manufacturers do to answer<br />
today’s greatest challenges?<br />
Lape: Carpet manufacturers are faced with the<br />
challenge of how to reverse the trend away<br />
from carpet. Carpet price increases in 2011<br />
are thought to have pushed some consumers<br />
to choose hard surface because, while still less<br />
expensive than most hard surface fl ooring,<br />
the cost difference was less than in the past.<br />
We have got to excite the consumer with<br />
innovation and exceed their expectations.<br />
Boe: The decreased market share of carpet<br />
versus hard surface fl ooring for the past fi ve<br />
years comes down to fashion. Consumers will<br />
have to become passionate about soft surface<br />
fl ooring again. Carpet is clearly preferred for<br />
bedrooms, where consumers want softness<br />
under foot. Carpet is also the value leader.<br />
Chart 8<br />
Carpet & area rugs market<br />
average value per square foot<br />
$1.0<br />
$0.8<br />
$0.6<br />
$0.4<br />
$0.2<br />
$0.0<br />
$.89<br />
$.93(R)<br />
$.88(R)<br />
$.88<br />
$.93<br />
2007 2008 2009 2010 2011<br />
Source: Catalina Research<br />
R-Revised<br />
When<br />
Less<br />
is<br />
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12<br />
Wood<br />
July 23/30, 2012<br />
Hardwood grows despite economy, housing market<br />
By Mallory Cruise<br />
The hardwood industry experienced a slight<br />
sales growth in 2011, with hardwood dollar<br />
sales rising 4.3 percent to $1.82 billion<br />
from $1.74 billion in 2010, according to<br />
Catalina Research. Industry executives said<br />
that there are a number of reasons for the<br />
increase in sales, and while they are hopeful<br />
that the market will continue to experience<br />
growth, many said that they have realistic<br />
expectations for the second half of this year,<br />
noting that there needs to be improvement<br />
in certain areas of the economy in order for<br />
hardwood sales to see significant growth.<br />
“The hardwood business is in early<br />
recovery and its growth is highly dependent<br />
on the economy and the building market,”<br />
explained Dan Natkin, director of wood and<br />
laminate business, Mannington.<br />
Industry executives said that other factors<br />
fueling growth are an increase in consumer<br />
confidence and lower housing prices.<br />
“Pent up demand is a contributing factor.<br />
People lived with the flooring they had while<br />
the economy was in turmoil,” explained<br />
Michael Martin, CEO, National Wood<br />
Flooring Association (NWFA). “Now that<br />
consumers are more optimistic, they are<br />
making the purchases they had been putting<br />
off. In addition, small gains in the housing<br />
market will have an impact on wood flooring<br />
as well.”<br />
Don Finkell, CEO of Anderson Hardwood,<br />
agreed. “The general economy has been the biggest<br />
factor influencing the hardwood market,<br />
there aren’t enough buyers going into stores.<br />
We are going to continue to try to add value to<br />
our hardwood products and offer lower prices<br />
because we see more price competition in the<br />
market place,” he said.<br />
According to Harry Bogner, senior vice<br />
president of hardwood at Unilin (a Mohawk<br />
Industries Company), “During 2011, the<br />
industry as a whole faced the challenges of<br />
slow to flat recovery in new home and replacement/remodel<br />
sales as well as increased raw<br />
material and energy prices. This resulted in the<br />
flat-to-slow industry growth rates that experts<br />
had predicted.”<br />
In order to meet pressures brought on by<br />
the economy, Unilin launched new products<br />
in 2011. “Mohawk and Columbia fared better<br />
than the overall hardwood industry during<br />
2011. We entered 2011 with the right mix of<br />
competitively priced products for each of the<br />
different audiences that our brands target,”<br />
Bogner added.<br />
Mannington’s Natkin said that ultimately<br />
it comes down to price versus raw material.<br />
“We’re starting to see an increase in price<br />
on the raw material side. Builders, in order<br />
to qualify people into homes, are going to<br />
2011 key points<br />
Hardwood sales increased 4.3 percent in<br />
2011 to $1,824.3 million from $1,749.1<br />
in 2010 and hardwood square-foot sales<br />
increased 4.1 percent to 919 million,<br />
from 882.8 million in 2010.<br />
While hardwood imports grew by 29<br />
percent from 2009 to 2010, industry<br />
executives said that growth is beginning<br />
to slow down. Imports for 2011 were up<br />
11.1 percent in dollar sales to $702.3<br />
million and up 12.2 percent in square<br />
foot sales to 371.4 million.<br />
Hardwood flooring exports were up 4.7<br />
percent in dollar sales in 2011 to $136.9<br />
million and up 4 percent in square foot<br />
sales to 59.1 million.<br />
Hardwood average price per square foot<br />
rose 0.5 percent last year to $1.99 from<br />
$1.98 in 2010. The category experienced<br />
a bigger jump in 2010 when it went up<br />
from $1.87 in 2009. Catalina reported<br />
that the average hardwood pricing per<br />
square foot continues to rise despite low<br />
lumber prices.<br />
Hard surface products, in general, have<br />
been experiencing overall market share<br />
growth taken from wall-to-wall carpet.<br />
Ceramic tile, vinyl sheet and floor tile<br />
and wood flooring have all seen market<br />
share gain. Wood flooring’s 2011 market<br />
share rose 0.2 percent in dollar sales<br />
to 10.2 percent of the flooring market.<br />
Note: Wood flooring sales include hardwood, softwood and bamboo flooring<br />
as well as solid and engineered and unfinished and finished products.
July 23/30, 2012 Wood 13<br />
Chart 9<br />
Hardwood flooring market value and volume<br />
(in millions)<br />
2,700<br />
2,325<br />
1,950<br />
1,575<br />
1,200<br />
825<br />
450<br />
2007 2008 2009 2010 2011<br />
$2,184.2(R)<br />
989.0<br />
$2,101.6(R)<br />
944.5<br />
$1,505.9(R)<br />
803.4<br />
$1,749.1(R)<br />
882.8<br />
$1,824.3<br />
919.0<br />
Market sales Square feet R=Revised Source: Catalina Research<br />
of visuals is good for the industry however<br />
we need a significant increase in demand,”<br />
said Poland.<br />
Import growth slows<br />
Hardwood flooring also witnessed an<br />
increase in imports over the past year, though<br />
not at the rapid pace of previous years.<br />
Import sales were up 11.1 percent to $702.3<br />
million and up 12.2 percent in square foot<br />
sales to 371.4 million.<br />
Goodwin at Armstrong explained that<br />
an increase in costs and decrease in available<br />
materials has had a negative impact on<br />
import sales.<br />
While imports remain a viable part of the<br />
wood market, industry executives have noted a<br />
renewed interest in Made in America products.<br />
“There is a growing passion amongst<br />
consumers, encouraged by today’s media,<br />
of made in the U.S.A. We’ve been talking<br />
with distributors and retailers about the<br />
amount of working capital that they have<br />
to tie up in imported goods, causing long<br />
lead times. We encouraged them to look at<br />
products, like those offered by Shaw, that<br />
can be serviced immediately and don’t<br />
have to tie up so much working capital and<br />
inventory,” said Kevin Thompson, hardwood<br />
category manager at Shaw. FCW<br />
less expensive product. The days of putting<br />
2,000 square feet of hardwood in the home<br />
are gone because it’s the difference between<br />
qualifying for a mortgage and not qualifying<br />
for a mortgage. On the remodel side, it is still<br />
a little weak but there are spurts of growth.<br />
Remodel is critical because wood floors are<br />
what people aspire to but sit back on until<br />
equity in the home grows,” he explained.<br />
Milton Goodwin, vice president product<br />
management, wood, at Armstrong, agreed<br />
saying that any growth in sales is dependent<br />
on new home construction and as that<br />
improves so will hardwood sales.<br />
But, Finkell also pointed to overcapacity<br />
as another issue facing the industry “The<br />
laws of supply and demand cause prices to<br />
go down,” he said.<br />
Even given the challenges facing the<br />
hardwood sector, Jim Gould, president of<br />
the Floor Covering Institute, pointed out<br />
that this category is one of the few product<br />
segments that is seeing growth. “There<br />
is a combination of factors attributing<br />
to hardwood market growth. There is an<br />
improvement with the wood floor itself,<br />
the consumer wants a natural product,”<br />
Gould said. “Hardwood is holding its own<br />
or gaining market share against other categories,<br />
which is what is most important.”<br />
Philip Key, vice president of sales and marketing<br />
at CFS, said he believes that hardwood<br />
options are more expansive today than they<br />
were before the recession, benefiting the consumer<br />
and encouraging growth.<br />
“Smart companies really looked at their<br />
product offering and enhanced it, so today’s<br />
homeowners who are ready to purchase a<br />
hardwood floor have great options to choose<br />
from that they didn’t necessarily have before<br />
the recession,” he said.<br />
In fact, Mullican Flooring has upped<br />
its product offering considerably, according<br />
to Mullican president Neil Poland.<br />
He said that while expansions in product<br />
offerings are an advantage , there needs to<br />
be a growth in consumer confidence when<br />
it comes to spending.<br />
“We are manufacturing 100 percent<br />
more styles and colors (SKUS) versus 2007<br />
therefore it is very challenging to control<br />
production costs, sampling costs and marketing<br />
expenses. Overall the diversification<br />
To make the best<br />
flooring, we employ<br />
the best technology.<br />
Our eyes.<br />
With decades of experience, our wood flooring experts<br />
have the most highly trained eyes in the industry. Because<br />
of them, only the finest quality boards make it into a Mirage<br />
box. And your showroom. Our commitment to perfection is<br />
what keeps you voting us #1 in quality year after year.<br />
MIRAGE PREFINISHED HARDWOOD FLOORS
Chart 10<br />
Hardwood purchases by end-use market<br />
(Total: $1,824.3 million)<br />
0.20%<br />
Hardwood flooring market exports value and volume<br />
(in millions)<br />
180<br />
150<br />
120<br />
90<br />
60<br />
30<br />
0<br />
10.5%<br />
Chart 11<br />
$137.8<br />
8.8%<br />
62.9<br />
4.1%<br />
58.9%<br />
17.5%<br />
$142.7<br />
64.5<br />
Market sales<br />
$102.7<br />
Residential builder<br />
$319.3 million<br />
Residential replacement<br />
$1,075.0 million<br />
Manufactured housing<br />
$3.1 million<br />
Commercial new construction<br />
$191.6 million<br />
Commercial replacement<br />
$160.5 million<br />
Transportation<br />
$74.8 million<br />
2007 2008 2009 2010 2011<br />
48.3<br />
Square feet<br />
$130.7(R)<br />
56.8(R)<br />
Source: Catalina Research<br />
$136.9<br />
59.1<br />
R=Revised<br />
Source: Catalina Research<br />
Chart 12<br />
Hardwood flooring market average value<br />
per square foot<br />
$3.00<br />
$2.50<br />
$2.00<br />
$1.50<br />
$0.0<br />
Chart 13<br />
Hardwood flooring market imports value and volume<br />
(in millions)<br />
800<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
$313.6(R)<br />
$2.21 $2.23(R)<br />
2007 2008 2009 2010 2011<br />
R=Revised Source: Catalina Research<br />
152.2<br />
$572.8(R)<br />
258.3<br />
$1.87(R) $1.98(R) $1.99<br />
$489.9(R)<br />
282.4<br />
2007 2008 2009 2010 2011<br />
Market sales Square feet<br />
R=Revised<br />
Source: Catalina Research<br />
$632.0(R)<br />
330.9(R)<br />
July 23/30, 2012<br />
$702.3<br />
371.4
July 23/30, 2012 Wood 15<br />
Perspective<br />
Top industry executives Dan Natkin, director<br />
of wood and laminate business, Mannington<br />
Mills; Jim Gould, president of the Floor Covering<br />
Institute; Michael Martin, CEO of the National<br />
Wood Flooring Association (NWFA); Don<br />
Finkell, CEO, Anderson Hardwood Floors; Harry<br />
Bogner, senior vice president of hardwood, Unilin<br />
Flooring; Milton Goodwin, vice president product<br />
management, wood Armstrong; Kevin Thompson,<br />
hardwood category manager at Shaw; and Neil<br />
Poland, president, Mullican Flooring, talk about<br />
the state of the hardwood industry and where<br />
the areas of opportunity can be found.<br />
Poland: The greatest challenge for us as a<br />
manufacturer is the increasing demand for variety<br />
from consumers, builders and interior designers.<br />
What are the bright spots in the<br />
hardwood industry?<br />
Natkin: There are early signs that new home<br />
construction is slightly on the rise; big builders<br />
are slightly bullish but still fragile.<br />
Gould: I think the brightest spots in hardwood<br />
fl ooring have been the improvements in<br />
product quality and installation methods.<br />
Eliminating formaldehyde and reducing VOCs is<br />
also being addressed.<br />
Martin: A bright spot in the industry is that<br />
we’re seeing the fi rst real gains that we’ve seen<br />
in the past fi ve years.<br />
Finkell: We’re starting to see some markets<br />
(mid-Atlantic, south-west, mid-west) experience<br />
improvement. Another bright spot is we have<br />
historically low mortgage rates (down to less<br />
than 5 percent.)<br />
Bogner: Consumers are continuing to demand<br />
products with a strong price/value relationship.<br />
Our company’s leading-edge manufacturing<br />
technologies will continue to enable our Mohawk<br />
and Columbia brands to offer stunning products<br />
at a competitive price.<br />
Thompson: I think we’re in a very conservative<br />
growth mode. I have seen a couple of industry<br />
projections that show a very gradual, modest<br />
increase, maybe 5 percent or less over the next<br />
three to fi ve years.<br />
Poland: One bright spot is the increased demand<br />
for maple, hickory, and, in general, species other<br />
than oak. A second bright spot is handsculpted<br />
and other surface textures are experiencing<br />
signifi cant growth within the wood segment.<br />
What was the biggest challenge for<br />
hardwood sales growth over the past year?<br />
Natkin: Price is at an all-time low for hardwood,<br />
raw material is an infl ationary profi t. There isn’t<br />
the ability to leverage a price increase because<br />
of excess capacity and increased competition.<br />
Gould: The biggest challenge to sales growth is<br />
the economy. Wood flooring is considered a longterm<br />
investment and when the economy is not<br />
stable or people are not secure in their jobs, they<br />
don’t want to make that long term investment.<br />
Commoditization is an industry challenge, not<br />
necessarily a challenge limited to hardwood.<br />
Martin: Raw material shortages. Since lumber<br />
prices were so low, many forest owners chose<br />
not to harvest, so that led to raw material<br />
shortages. In addition, Lacey affected imports,<br />
which have dropped in recent years.<br />
TOMORROW ’ S SUCCESS<br />
begins today.<br />
Finkell: The rest of this year will continue to be<br />
diffi cult but we expect to see improvement<br />
next year. I think, to me, it’s still all about<br />
foreclosures. One positive we’re seeing is<br />
foreclosures getting processed, so I think until<br />
they work through the foreclosures and get<br />
those incredibly cheap houses out of market,<br />
I don’t see how housing can recover.<br />
Bogner: In response to the economic turbulence<br />
of the past few years, those consumers who<br />
were worried by the unfamiliar economic dip,<br />
many times, continued during 2011, to simply<br />
purchase the cheapest fl ooring they could fi nd,<br />
just to get something on the fl oor.<br />
Goodwin: The biggest challenge continues<br />
to be a decline in total volume due to the<br />
decline in the housing industry. There are a<br />
lot of players vying for a smaller pie. That puts<br />
pressure on pricing.<br />
Thompson: Continued slow growth in new<br />
home construction — that has been the biggest<br />
challenge. Also, economic uncertainty. Gasoline<br />
prices have come down, but I think all the<br />
key indicators from an economic standpoint<br />
continue to affect all of fl oor covering and with<br />
hardwood being the largest ticket item of all<br />
fl oor covering options, it makes it the one that<br />
may have suffered the most.<br />
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CARPET | HARDWOOD | LAMINATE | TILE | AREA RUGS
16<br />
Tile & Stone<br />
Tile & stone inch ahead<br />
By Tanja Kern<br />
2011 tile and stone numbers showed that<br />
the U.S. really is seeing the “beginning of the<br />
end” of the recession.<br />
Ceramic tile dollar sales increased by 6<br />
percent to $2.21 billion, while square foot<br />
sales rose by 4.5 percent to 2.08 billion — the<br />
highest rate for any flooring material. Stone<br />
sales were up 0.2 percent to $1.06 billion —<br />
and square foot sales nudged up 0.57 percent<br />
to 261.5 million square feet.<br />
“It was not a great year, but we have already<br />
hit bottom, and we are a little bit ahead of<br />
before,” said Donato Grosser, consultant to<br />
the tile industry and owner of D. Grosser &<br />
Associates, Ltd.<br />
As the overall economy recovered in 2011,<br />
manufacturers felt confident enough to pass<br />
along rising material, energy and transportation<br />
costs to consumers, but price competitiveness<br />
actually improved for ceramic tile<br />
because the sector experienced only moderate<br />
raw material cost increases.<br />
The average square foot price stayed steady<br />
in 2011 — up just a penny. According to<br />
Catalina Research, average square foot selling<br />
prices stood at $1.06 per square foot in 2011<br />
with the category gaining market share — 12.4<br />
percent of total U.S. floor covering dollar sales.<br />
As the struggling housing market shows<br />
signs of improvement, there has been a reversal<br />
in the six-year trend in smaller home sizes,<br />
according to the American Institute of Architects.<br />
This is the case for custom and luxury<br />
homes, as well as for additions to existing<br />
homes. A preference for outdoor living, especially<br />
blended indoor/outdoor living, continues<br />
to increase. These consumer preferences<br />
are opening more doors for natural stone and<br />
high quality porcelain tiles.<br />
Segment breakdown<br />
The current administration’s recent housing<br />
scorecard shows signs of burgeoning<br />
stability in the housing market, with home<br />
equity numbers rising 7.4 percent between<br />
the fourth quarter of 2011 and the first quarter<br />
of 2012. The scorecard, which is compiled<br />
by the U.S. Department of Housing and<br />
Urban Development, the Obama administration<br />
and Treasury, noted that home equity<br />
rose $457.1 billion in the first quarter of 2012.<br />
Catalina Research market segment analysis<br />
showed that homeowners are investing in<br />
their homes with 41 percent of ceramic tile<br />
sales going to residential replacement in 2011.<br />
“Last year was better commercially and we<br />
are seeing some movement in hospitality,<br />
multi-family housing and retail,” said Lori<br />
Kirk-Rolley, senior marketing director for<br />
Dal-Tile. “I think that there is a lot of pent up<br />
demand and we are seeing a lot of that on our<br />
national accounts, on the retail side and with<br />
large retailers.”<br />
Non-residential construction accounted<br />
for 25 percent of the tile market. The commercial<br />
contract market held 19 percent of<br />
the tile market.<br />
“The commercial market is where we<br />
are seeing the growth for Florida Tile,” said<br />
Florida Tile marketing director Sean Cilona.<br />
“The hospitality and healthcare segments are<br />
doing pretty well and those smaller commercial<br />
jobs — those types where people are<br />
installing tile as a replacement floor coverings<br />
are also doing well.”<br />
Gianni Mattioli, president of Marazzi USA,<br />
added, “We are already established in the<br />
residential remodeling market and business<br />
is picking up, but the commercial markets are<br />
where we have made a lot of key investments<br />
in people, marketing and technology.”<br />
Import/Export<br />
Although imports still comprise the majority<br />
of U.S. consumption, due to the U.S. dollar<br />
losing value to the Euro, import market penetration<br />
has fallen in each of the last five years.<br />
In 2011, imports accounted for 69.2 percent of<br />
U.S. ceramic tile consumption — the lowest it<br />
has been since 1998, according to Eric Astrachan,<br />
executive director of the Tile Council of<br />
North America (TCNA). “As you can see, we<br />
are moving in the right direction,” he said.<br />
There are six Italian-owned tile plants in the<br />
United States — Marazzi USA with three locations,<br />
Florim USA, Iris-Stonepeak and Florida<br />
Tile. According to Ceramics of Italy, the Italian<br />
tile association, those plants make up 50 percent<br />
of U.S. ceramic tile production. “These companies<br />
invested in the United State due mainly to<br />
weaknesses in the dollar,” Grosser said.<br />
2011 key points<br />
Sales remained on the rise as consumers<br />
continue to turn to hard surface flooring.<br />
Ceramic tile value increased by 6.3 percent<br />
to $2.21 billion, while volume rose<br />
by 4.5 percent to $2.08 billion.<br />
While imports still comprise the majority<br />
of U.S. consumption and sales of imports<br />
continue to grow (by 3.8 percent in 2011,<br />
according to Catalina) the TCNA said that<br />
imported product’s market share in comparison<br />
to domestically made tile declined<br />
over the last five years to 69.2 percent.<br />
Look ahead<br />
Despite the lingering effects of an overbuilt<br />
housing market, the continued difficulty<br />
to obtain financing for real estate projects,<br />
budget shortfalls and the anxiety surrounding<br />
the prolonged European debt crisis, there<br />
are signs that the U.S. design and construction<br />
industry will be improving and with it,<br />
along with tile and stone industry.<br />
Improved price competitiveness and<br />
consumers’ overall rising preference for hard<br />
surface flooring has already helped ceramic<br />
tile experience some of the strongest industry<br />
gains in the first half of 2012.<br />
Ceramic tile sales (shipments minus exports<br />
plus imports) are estimated to increase by 6.5<br />
percent in square feet and 7.7 percent in dollars<br />
in the first half of 2012 over the previous year,<br />
according to Catalina’s second quarter report<br />
for 2012. This could push ceramic tile square<br />
foot sales to account for 12.3 percent of total<br />
U.S. floor coverings square foot sales in the first<br />
half, and 12.7 percent on a dollar basis. FCW<br />
Chart 14<br />
Ceramic tile market value and volume<br />
(in billions)<br />
3.5<br />
3.0<br />
2.5<br />
2.0<br />
1.5<br />
1.0<br />
$2.83 (R)<br />
2.66<br />
$2.51 (R)<br />
2.26<br />
$1.91 (R)<br />
2007 2008 2009 2010 2011<br />
1.85 (R)<br />
$2.08 (R)<br />
1.99<br />
$2.21<br />
2.08<br />
Chart 16<br />
Stone market value and volume<br />
(in millions)<br />
2,000<br />
1,500<br />
1,000<br />
500<br />
0<br />
$1,689<br />
436.4<br />
$1,408<br />
351.6<br />
$1,079<br />
2007 2008 2009 2010 2011<br />
270.8<br />
$1,062<br />
260.0<br />
$1,064<br />
261.5<br />
Chart 15<br />
Market sales<br />
Square feet<br />
Ceramic tile imports value and volume<br />
(in millions)<br />
3,000<br />
Source: Catalina Research R=Revised<br />
Market sales Square feet<br />
Chart 17<br />
Ceramic tile export value and volume<br />
(in millions)<br />
80<br />
Source: Catalina Research<br />
2,500<br />
2,000<br />
1,500<br />
1,000<br />
500<br />
$ 2,084 (R)<br />
2,176<br />
$1,721 (R)<br />
1,684<br />
$1,203 (R)<br />
1,332<br />
$1,276 (R)<br />
1,393<br />
$1,325<br />
1,409<br />
66<br />
52<br />
38<br />
24<br />
$52.3<br />
56.6<br />
$56.2<br />
61.3<br />
$50.3<br />
55.6<br />
$50.3<br />
50.8(R)<br />
$52.5<br />
53.7<br />
0<br />
2007 2008 2009 2010 2011<br />
10<br />
2007 2008 2009 2010 2011<br />
Market sales<br />
Volume<br />
Source: Catalina Research R=Revised<br />
Market sales<br />
Volume<br />
Source: Catalina Research
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18<br />
Tile & Stone<br />
July 23/30, 2012<br />
Perspective<br />
Sean Cilona, marketing director for Florida<br />
Tile; Gianni Mattioli, president of Marazzi<br />
USA; Lindsey Waldrep, VP of Marketing<br />
for Crossville; Granitifi andre & Iris Group<br />
President and CEO Graziano Verdi; and Lori<br />
Kirk-Rolley, senior marketing director for Dal-<br />
Tile discuss today’s market conditions.<br />
What trends are driving growth today?<br />
Cilona: Stone is an expensive, higher-end product,<br />
but we’re defi nitely seeing demand for natural<br />
stone, like our PietraArt, Stone is a product that<br />
has a long lifespan and the versatility is endless.<br />
Mattioli: We continue to focus on new products,<br />
new technology and new sizes. We have invested<br />
highly in the inkjet and high-defi nition technology.<br />
The wood look also seems to be very popular.<br />
Verde: We’re convinced that the green economy<br />
is important not only due to the ethical value of<br />
environmental awareness and construction of<br />
an eco-sustainable world in today’s society but<br />
also because of the economic opportunities<br />
and new business potential it has to offer.<br />
Granitifi andre uses natural elements to recreate<br />
some of the world’s best-known marbles<br />
without the consequences for the environment<br />
that come with extracting quarried marble.<br />
Kirk-Rolley: While we’re seeing our growth<br />
being driven on the residential remodeling<br />
side, we are seeing a pickup in business in new<br />
home construction and commercial projects.<br />
Waldrep: We’ve always been strong in the<br />
architectural market and our new launch Laminam<br />
by Crossville is a full line of lean profile, large<br />
format porcelain products through an exclusive<br />
distribution agreement with Italian manufacturer<br />
Laminam, a division of Systems Group. .<br />
Chart 18<br />
Ceramic tile average value<br />
per square foot<br />
$1.15<br />
$1.10<br />
$1.05<br />
$1.06<br />
$1.14<br />
$1.05<br />
$1.06<br />
$0.0<br />
$1.03<br />
2007 2008 2009 2010 2011<br />
Source: Catalina Research<br />
Chart 19<br />
Ceramic tile by<br />
end-use market<br />
($2.21 billion) 0.2%<br />
19%<br />
14.6%<br />
25.1%<br />
40.7%<br />
Chart 20<br />
$4.12<br />
0.4%<br />
Residential builders: $323 million<br />
Residential replacement: $899 million<br />
Manufactured housing: $9 million<br />
Commercial new construction: $555 million<br />
Commercial replacement: $420 million<br />
Transportation: $4 million<br />
Source: Catalina Research<br />
Stone average value per<br />
square foot<br />
$4.00<br />
$4.00<br />
$4.08<br />
$3.98<br />
$4.07<br />
$3.85<br />
$3.87<br />
$0.0<br />
2007 2008 2009 2010 2011<br />
Source: Catalina Research
July 23/30, 2012<br />
Laminate<br />
19<br />
Flatline: 2011 highs, lows<br />
By Raymond Pina<br />
The U.S. laminate floor wholesale market<br />
essentially remained flat in 2011, growing<br />
just 0.13 percent in value due to rising prices<br />
while declining 0.82 percent in volume,<br />
according to Catalina Research.<br />
The category’s wholesale value and average<br />
square foot pricing stopped declining, and<br />
domestic products overtook imports for the<br />
first time since 2008. But sales volume was<br />
dominated by the home center channel and<br />
continues to decline due to pressure from<br />
vinyl and engineered wood flooring. What’s<br />
more, this trend is continuing through 2012,<br />
according to Stuart Hirschhorn, director of<br />
research, Catalina Research.<br />
Chart 21<br />
Laminate purchases by<br />
end-use market<br />
(Total: $894.2 million)<br />
Chart 22<br />
Laminate flooring market value and volume<br />
(in millions)<br />
1,400<br />
1,200<br />
1,000<br />
800<br />
600<br />
400<br />
200<br />
7.5%<br />
$1,275.6(R)<br />
12.2%<br />
Residential replacement<br />
$718.0 million<br />
Residential builders<br />
$67.1 million<br />
Commercial replacement<br />
$109.1 million<br />
1,160.2(R)<br />
$1,047(R)<br />
80.3%<br />
Source: Catalina Research<br />
1,038.9(R)<br />
$901(R)<br />
Market sales<br />
“Overall demand for laminate flooring<br />
has leveled off,” Hirschhorn said. “The<br />
gains of domestic shipments were offset by<br />
declines in imports last year. We do see an<br />
estimated 1.5 percent increase in the first<br />
half of 2012 but that will keep the category<br />
well within the 950 million to 960 million<br />
square foot range.”<br />
Catalina estimated the 2011 U.S. laminate<br />
floor wholesale market at 949.8 million square<br />
feet and $894.2 million with an average square<br />
foot price increase of 1.1 percent to 94 cents.<br />
Domestic rising<br />
While Catalina reports an aggressive<br />
13.8 percent increase in sales volume for<br />
domestically-made laminate product in<br />
2011, overall category growth was stalled by<br />
a 13 percent decline in imported product,<br />
according to Hirschhorn.<br />
“It’s been like a rollercoaster where<br />
imports will out-pace domestics one year and<br />
then it flip flops the next — though there’s<br />
definitely a shift towards sourcing domestic<br />
2011 key points<br />
Laminate sales remain virtually flat in<br />
2011, growing 0.13 percent in value and<br />
declining 0.82 percent in volume.<br />
Average square foot pricing rose 1.1<br />
percent in 2011, though pricing was off<br />
14.5 percent from 2007 and 53 percent<br />
from 1997.<br />
Domestic suppliers account for 51.2<br />
percent of U.S. square footage sales, a<br />
leading position not enjoyed since 2008.<br />
Laminate has lost 9.1 percent of market<br />
share since 2007.<br />
912<br />
$893(R)<br />
2007 2008 2009 2010 2011<br />
Square feet<br />
957.7(R)<br />
$894.2<br />
949.8<br />
Source: Catalina Research<br />
R=Revised<br />
Chart 23<br />
Laminate flooring imports value and volume<br />
(in millions)<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
$589.7(R)<br />
550.0<br />
$453.2(R)<br />
461.9<br />
Market sales<br />
products to offset rising import prices and<br />
increasing transportation costs,” he said.<br />
As a result, Hirschhorn said U.S. laminate<br />
floor manufactured shipments now account<br />
for 51.2 percent of U.S. sales volume.<br />
“There’s a paradigm shift from outsourcing<br />
to insourcing happening in flooring,<br />
especially in laminate flooring,” said Tony<br />
Sturrus, president and CEO of Shippenville,<br />
Pa.-based Clarion Industries. “This rapid<br />
shift is primarily being driven by the shrinking<br />
cost advantage China has versus the U.S.<br />
Labor is a relatively small component of the<br />
highly automated laminate manufacturing<br />
process so that Chinese advantage has little<br />
impact. China’s manufacturing costs are<br />
going up and they’ve devalued their currency<br />
but it’s not sustainable.”<br />
The home centers, pricing pressure<br />
Though domestic suppliers are taking<br />
share, it hasn’t had an impact on average<br />
square foot pricing because an estimated<br />
60 percent of product is sold at low-cost<br />
mass merchants such as Home Depot,<br />
Lowe’s and Lumber Liquidators, according<br />
to Catalina Research. While average square<br />
foot pricing increased by 1.1 percent last<br />
year due to increased raw material and<br />
transportation costs, it remained down<br />
14.5 percent from 2007 and a whopping 53<br />
percent from 1997.<br />
Catalina Research estimates laminate<br />
floor sales represent 5.0 percent of the<br />
industry’s total 2011 value, a 2 percent<br />
decline from 2010 and a 9.1 percent<br />
decrease from 2007.<br />
However, laminate suppliers focused on<br />
the specialty retail market said that average<br />
pricing is increasing as dealers turn to better<br />
quality goods.<br />
“The better dealers have learned it’s not<br />
worth the effort to try and compete against<br />
home centers on pricing,” said Dan Natkin,<br />
director of wood and laminate business,<br />
Mannington. “They may have one or two<br />
products at an attractive opening price<br />
$461.9(R)<br />
486.0(R)<br />
$476.2(R)<br />
Square feet<br />
522.7(R)<br />
$419.2<br />
2007 2008 2009 2010 2011<br />
Chart 24<br />
454.8<br />
Source: Catalina Research<br />
R=Revised<br />
Laminate flooring average<br />
value per square foot<br />
$1.20<br />
$1.00<br />
$0.80<br />
$0.60<br />
$0.40<br />
$0.20<br />
$0.0<br />
$1.10<br />
$1.01<br />
$0.99<br />
$0.93(R)<br />
$0.94<br />
2007 2008 2009 2010 2011<br />
Source: Catalina Research<br />
R=Revised<br />
point, but their emphasis, and what their<br />
customers are increasingly buying, are<br />
thicker products with better quality and<br />
overall design.”<br />
Fred Giuggio, vice president of sales and<br />
marketing at Kronotex USA, said average<br />
price points are increasing in both the specialty<br />
retail Formica brand business as well<br />
as in private label business at Home Depot<br />
and Lowe’s.<br />
“The shift to domestic product has<br />
increased quality and we’re seeing a subsequent<br />
uptick in sales price,” he said.<br />
Armstrong raised its laminate floor pricing<br />
5 percent last month, but currently other<br />
leading suppliers haven’t followed suit.<br />
An increase in price wo n’t stick, said<br />
David Carballo, vice president of sales, Faus.<br />
“We just had a product line review at Home<br />
Depot and these guys are putting a lot of<br />
pressure on price,” he said. “Lumber Liquidators<br />
is advertising price like crazy.” FCW
20<br />
Resilient<br />
July 23/30, 2012<br />
Vinyl sales hit record high<br />
By Raymond Pina<br />
Sales of vinyl sheet and tile flooring hit a record<br />
high wholesale value of $2.11 billion in the<br />
U.S. last year, according to Catalina Research.<br />
Though total 2011 vinyl floor sales grew 5.8<br />
percent in value and 3.2 percent in volume,<br />
it is the ongoing 15 percent growth in higher<br />
priced luxury vinyl tile (LVT) and fiberglass<br />
sheet flooring that has pushed the segment to<br />
record heights.<br />
Gains in up-market LVT and fiberglass<br />
volume forced 2011 average vinyl floor pricing<br />
up 2.9 percent over 2010. The category’s average<br />
square foot price has jumped a remarkable<br />
22 percent since 2007.<br />
“New innovative products, many incorporating<br />
locking systems for the first time, stimulated<br />
demand and led to vinyl taking share from<br />
every other category,” said Stuart Hirschhorn,<br />
director of research, Catalina Research. “What’s<br />
more, commercial, especially replacement<br />
commercial, faired better during the recession<br />
than the residential sector and vinyl has a huge<br />
concentration of that commercial business.<br />
2011 key points<br />
Vinyl sheet and fl oor tile sales hit record<br />
high with category sales increasing 5.8 percent<br />
in value and 3.2 percent in volume.<br />
Average square foot pricing for vinyl increased<br />
2.9 percent this year over last year<br />
and increased 22 percent from 2007.<br />
Vinyl imports decreased 6.2 percent in<br />
2011 as suppliers increase domestic<br />
production of LVT and fiberglass sheet.<br />
Other resilient flooring — which includes<br />
cork, other plastics, rubber and linoleum —<br />
increased in sales value by 4.2 percent but<br />
decreased 2.5 percent in volume in 2011.<br />
Average square foot pricing has increased<br />
43.7 percent since 2007.<br />
Chart 25<br />
Resilient purchases by end-use market<br />
(Total: $2,396.3 million)<br />
0.6%<br />
0.1%<br />
Vinyl floors also had the highest increases in<br />
pricing due to record oil and raw material costs<br />
but they still remained competitive and highly<br />
desirable, if not more so.”<br />
Sales of commercial vinyl composition<br />
tiles (VCT) also grew an estimated 3.3 percent<br />
in volume to 1.01 billion square feet,<br />
according to Hirschhorn.<br />
Leading executives, who have reported double-digit<br />
increases in their LVT and fiberglass<br />
businesses over the past three years, agreed with<br />
Catalina Research’s overall category growth<br />
rates, but remain hesitant to declare 2011 a<br />
record year.<br />
“Having the category up 5 percent sounds<br />
about right, but I don’t think anyone would<br />
paint 2011 as a historically positive year,” noted<br />
Allen Cubell, vice president, residential product<br />
management, Armstrong Floor Products.<br />
While LVT, fiberglass and VCT continue<br />
to grow, Catalina Research estimates traditional<br />
felt-backed vinyl sheet sales declined<br />
7 percent to 907 million square feet in<br />
2011, with volumes evenly split between the<br />
residential and commercial markets. What’s<br />
more, the report highlights that fiberglass<br />
volumes, accounting for 195 million square<br />
feet of sales in 2011, is trending to reach traditional<br />
felt numbers by 2015.<br />
“We see 2011 fiberglass sales at 184 million<br />
square feet; so we’re in the same ballpark,”<br />
said David Sheehan, vice president of<br />
residential resilient business, Mannington.<br />
“Residentially, we see vinyl sheet at 462 million<br />
square feet. Sheet vinyl was up until 2010<br />
when fiberglass sales started kicking in and<br />
we think fiberglass now represents about 40<br />
percent of residential sheet.”<br />
Similarly, Catalina Research estimates<br />
2011 LVT sales volume at 785 million square<br />
feet. But some companies that focus primarily<br />
on high end branded product said the<br />
number is higher than their own estimates.<br />
“You’d have to think a lot of that number<br />
includes peel-and-stick tiles where the defini-<br />
Chart 26<br />
Vinyl sheet and floor tile market value and volume<br />
(in billions)<br />
3.5<br />
3.0<br />
2.5<br />
2.0<br />
1.5<br />
1.0<br />
0.5<br />
0<br />
$1.93(R)<br />
3.27<br />
$2.11(R)<br />
3.25<br />
tion of LVT kind of runs amuck,” explained<br />
Cubell. “Lowe’s and Menards do bring in a lot<br />
of cheap tile from Asia. If Catalina is looking<br />
at those imported cash-and-carry tiles, then<br />
I can understand how it gets to its number.”<br />
Hirschhorn added, “There was a large<br />
jump in peel-and-stick tile sales at home centers<br />
where laminate would have traditionally<br />
been used. There was also a record number<br />
of new suppliers entering the LVT market.”<br />
Imports decline, domestics grows<br />
Despite a large number of suppliers, distributors<br />
and retailers expanding into the vinyl<br />
Chart 27<br />
$1.82(R)<br />
2.78<br />
2007 2008 2009 2010 2011<br />
Market sales Square feet<br />
R=Revised<br />
Vinyl sheet and floor tile imports value and volume<br />
(in millions)<br />
1600<br />
1400<br />
1200<br />
1000<br />
800<br />
650<br />
400<br />
200<br />
0<br />
Chart 28<br />
$605.8<br />
1,503.7<br />
$687.6<br />
1,481.8<br />
$613.8<br />
1,247.4<br />
$2.00(R)<br />
$728.8<br />
2.86<br />
1,335.2<br />
$2.11<br />
$764.4<br />
2007 2008 2009 2010 2011<br />
2.95<br />
1,251.8<br />
Market sales Square feet R=Revised<br />
Source: Catalina Research<br />
Vinyl sheet and floor tile exports value and volume<br />
(in millions)<br />
400<br />
market with imported LVT in 2011, Catalina<br />
Research has category imports declining 6.2<br />
percent for the year — mostly due to a shift<br />
towards increased domestic production.<br />
“It makes sense that vinyl imports were<br />
down last year with both IVC US and Armstrong<br />
making fiberglass here in the states,”<br />
said Cubell. “We shut down a tile and VCT<br />
plant in Montreal, Canada which brought our<br />
imported tiles way down. And we shut our<br />
fiberglass plant in England so our imported<br />
fiberglass went to zero. And those import<br />
numbers are only going to keep decreasing as<br />
Continued on page 22<br />
11.6%<br />
31.2%<br />
Commercial new construction<br />
$747.5 million<br />
Residential replacement<br />
$743.5 million<br />
Commercial replacement<br />
$611.1 million<br />
350<br />
300<br />
250<br />
200<br />
301.2<br />
331.7<br />
310.5<br />
377.6<br />
363.3<br />
25.5%<br />
Residential builders<br />
$278.0 million<br />
Manufactured housing<br />
$13.8 million<br />
150<br />
100<br />
50<br />
$138.0<br />
$160.9<br />
$141.6<br />
$163.8<br />
$176.8<br />
31.0%<br />
Transportation equipment<br />
$2.4 million<br />
Source: Catalina Research<br />
0<br />
2007 2008 2009 2010 2011<br />
Market sales Square feet<br />
Source: Catalina Research
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22<br />
Resilient<br />
July 23/30, 2012<br />
Perspective<br />
What led to vinyl’s record year? Industry<br />
executives Russell Rogg, CEO, Metrofl or;<br />
Keith Lacagnata, vice president of sales and<br />
marketing, FreeFit; Pat Buckley, vice president of<br />
product management, Congoleum; Jonathan<br />
Train, vice president of product development,<br />
EarthWerks; and Allen Cubell, vice president,<br />
residential product management, Armstrong<br />
put it into perspective.<br />
What fueled vinyl flooring’s rapid increase<br />
in sales and market share in 2011?<br />
Rogg: There is no doubt that the advent<br />
of click LVT (luxury vinyl tile) has only<br />
increased the amount of share the category<br />
is taking from laminate fl ooring residentially<br />
and commercially. Laminate has some<br />
drawbacks. Using click LVT has become a<br />
natural next step for folks who were familiar<br />
with installing laminate.<br />
Lacagnata: When you combine the tremendous<br />
gains of LVT and fi berglass sheet, you begin<br />
to understand how these products are<br />
encroaching upon the entire industry. Without<br />
Chart 29<br />
Other resilient flooring* market value and volume<br />
(in millions)<br />
400<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
Chart 30<br />
Resilient floor covering sales by volume<br />
(Total square feet: 3.20 billion)<br />
1.8%<br />
0.4%<br />
24.6%<br />
$282.5<br />
2007 2008 2009 2010 2011<br />
6.1%<br />
352.9<br />
5.4%<br />
$279.8<br />
28.4%%<br />
330.8<br />
Market sales<br />
$263.5<br />
33.3%<br />
question they are taking share from every<br />
category, but particularly laminate. Gains that<br />
would have gone to laminate got siphoned off<br />
to LVT last year.<br />
Buckley: Category price increases were<br />
a big factor. When you combine that with<br />
double-digit growth in LVT and sheet you<br />
get impressive increases in category value.<br />
LVT is by no means inexpensive, selling on<br />
average for $3 or $4 per square foot. That<br />
translates into $36 to $40 per square yard.<br />
Catalina’s number might be a little high but<br />
not too far off.<br />
Train: Sheet vinyl increased slightly in total<br />
volume due to an improved economy and<br />
increase in value as more people continued<br />
to move toward fi ber products. I also think<br />
that price increases added to total value. For<br />
LVT, my guess is that the value increased at<br />
least 10 percent last year. And LVT continues<br />
to gain market share from other categories<br />
Cubell: The growth of LVT in general tends to<br />
be at higher average unit values. Raw materials<br />
have been going up. Freight has been going up.<br />
There are a number of factors going on, all<br />
driving the average square foot value up.<br />
280.1<br />
$270.1<br />
250.2<br />
Square feet<br />
Source: Catalina Research<br />
*Other resilient flooring includes cork, other plastics, rubber and linoleum<br />
VCT/Linoleum<br />
1,064.0 million<br />
Vinyl sheet<br />
907.0 million<br />
LVT<br />
785.0 million<br />
Fiberglass backed<br />
195.0 million<br />
Rubber<br />
57.0 million<br />
Cork<br />
12.0 million<br />
$281.5<br />
244.0<br />
Other plastic and flooring materials<br />
175.0 million<br />
Source: Catalina Research<br />
Chart 31<br />
Other resilient flooring* imports value and volume<br />
(in millions)<br />
Chart 32<br />
Other resilient flooring* exports value and volume<br />
(in millions)<br />
Chart 33<br />
Other resilient flooring* average<br />
value per square foot<br />
$1.20<br />
$1.05<br />
$0.90<br />
$0.75<br />
$0.60<br />
$0.45<br />
$0.30<br />
$0.15<br />
$0.0<br />
240<br />
210<br />
180<br />
150<br />
120<br />
90<br />
60<br />
30<br />
0<br />
100.0<br />
87.5<br />
75.0<br />
62.5<br />
50.0<br />
37.5<br />
25.0<br />
12.5<br />
0<br />
$0.80<br />
$106.1<br />
$27.6<br />
2007 2008 2009 2010 2011<br />
$0.85<br />
196.7<br />
51.4<br />
$0.94<br />
$43.3<br />
Market sales<br />
1.08<br />
91.2<br />
1.15<br />
2007 2008 2009 2010 2011<br />
*Other resilient flooring includes cork, other plastics, rubber and linoleum<br />
Record high<br />
Continued from page 20<br />
$107.6<br />
230.3<br />
2007 2008 2009 2010 2011<br />
Market sales Square feet<br />
Other resilient Includes imports of flooring made of other plastics, cork, linoleum, rubber and other materials.<br />
Mannington shifts more of its LVT production<br />
to its new Amtico facility in Georgia.”<br />
Amtico, Armstrong, Centiva, Congoleum,<br />
Mannington and Tarkett all supply the LVT<br />
market with domestic made product.<br />
“Most of our products are made in the U.S.A.<br />
and have always been so,” said Pat Buckley, vice<br />
president of product management, Congoleum.<br />
“Our most popular products — DuraCeramic,<br />
DuraPlank II and AirStep — are all made here<br />
and increasing in popularity.”<br />
Other resilient flooring<br />
Sales of cork, rubber, linoleum and floors<br />
$95.4<br />
$34.3<br />
227.7<br />
70.9<br />
Square feet<br />
$109.6<br />
$40.9<br />
213.5<br />
76.7<br />
$117.2<br />
$40.4<br />
74.7<br />
161.9<br />
*Other resilient flooring exports include flooring made of other plastics, linoleum, rubber and other materials<br />
Chart 34<br />
Vinyl sheet and floor tile average<br />
value per square foot<br />
$0.8<br />
$0.7<br />
$0.6<br />
$0.5<br />
$0.4<br />
$0.3<br />
$0.2<br />
$0.1<br />
$0.0<br />
$0.59(R)<br />
$0.65(R)<br />
$0.65(R)<br />
$0.70(R)<br />
$0.72<br />
2007 2008 2009 2010 2011<br />
Source: Catalina Research<br />
made of “other plastics” increased 4.2 percent<br />
in value last year, mostly due to price<br />
increases tied to higher raw materials costs,<br />
while sales volumes declined 2.5 percent,<br />
according to Catalina Research.<br />
“When the economy gets back to normal this<br />
segment will get back to where it was before,”<br />
said Ivan Stoler, president, Allstate Rubber.<br />
Valued at $281.5 million dollars in 2011,<br />
this “other” category is near its 2007 record<br />
sales level of $282.5 million dollars, but<br />
down some 30.9 percent in volume during<br />
the same period. Currently, the category<br />
accounts for less than 2 percent of industry<br />
sales. But, the segment has experienced the<br />
industry’s highest price increases with 2011<br />
average square foot pricing up 6.5 percent<br />
over 2010. FCW
July 23/30, 2012<br />
23<br />
Mohawk releases third sustainability report<br />
[Calhoun, Ga.] Mohawk Industries, Inc.,<br />
based here, has released its third annual<br />
sustainability report this year. While adhering<br />
to the Global Reporting Initiative (GRI)<br />
standard, in place since their first report, the<br />
company entrusted FIRA, an independent<br />
firm headquartered in The Netherlands, as<br />
the report assurance provider.<br />
“We are dedicated to integrity and open<br />
communication with all of our stakeholders,<br />
which is why we have always used an<br />
independent auditor to verify the accuracy of<br />
information before we release the report,” said<br />
Jenny Cross, director of global sustainability at<br />
Mohawk. “Using GRI standards to report the<br />
progress we’ve made in our sustainable practices<br />
ensures that our organization is measuring<br />
and documenting its practices in a manner<br />
consistent with global best practices.”<br />
Mohawk stressed the importance of<br />
understanding that sustainability is more<br />
than just environmental initiatives — people,<br />
the planet and profit are the pillars. “If we<br />
don’t keep our people healthy and smart, our<br />
business will not be sustainable,” said Cross.<br />
During 2011, for example, Mohawk<br />
expanded Healthy Mohawk, one of its most<br />
successful wellness programs to date. (The<br />
basis of the program was to combine telephonic<br />
specialty nurse management and<br />
on-site Healthy Life Centers [HLC] to the<br />
most densely populated employment centers.)<br />
Two new HLCs have been set up in the<br />
Dallas area for Dal-Tile employees.<br />
From 2010 to 2011, Mohawk saw a 7 percent<br />
increase in preventative care, a 9 percent<br />
decrease in radiology and scans, and a 50 percent<br />
decrease in diabetes-related hospital stays.<br />
In four Georgia HLC locations, exercise and<br />
nutrition classes are now offered.<br />
New initiatives to sustain the planet<br />
include adding an on-site fueling station for<br />
its vehicles reducing the amount of miles its<br />
trucks must drive to and from an off-site location<br />
by 39,000 miles a year. “Typically at our<br />
distribution station we would go fill up, but<br />
your vehicle can only be so heavy. We would<br />
have to go back again and put the rest of the<br />
product on. No w, we can do it on-site and<br />
take the mileage out,” said Cross.<br />
Mohawk is continuously working towards<br />
their goal of becoming 25 percent more water<br />
and energy efficient by 2020. It has changed<br />
its dying process for carpet, and now uses the<br />
continuous dye method which uses less water.<br />
Though the company experienced a 4.8 percent<br />
increase in water usage in from 2010-2011 due<br />
to the state of the market and their product mix<br />
changing slightly, “[Mohawk] expects the spike<br />
to work its way out in the coming years,” predicted<br />
Cross. “We appear to be on track to meet<br />
our goals.” Over the last six years, Mohawk has<br />
reduced water usage by 1.13 billion gallons.<br />
— Taryn Baum<br />
FloorForce partners with Fabulous Floors<br />
[Boca Raton, Fla.] FloorForce has<br />
announced a marketing partnership with<br />
Fabulous Floors Magazine. Fabulous Floors,<br />
the first consumer magazine devoted solely to<br />
flooring styles, will provide a widget for Floor-<br />
Force retailers to put on their websites, which<br />
opens a digital version of Fabulous Floors<br />
Magazine, exclusive to FloorForce customers.<br />
The digital magazine will provide consumers<br />
with ideas and inspiration on flooring products<br />
while ensuring that manufacturers have a direct<br />
line to consumers. For retailers, the added sticky<br />
content provides not only added value for their<br />
customers but ensures that they remain on their<br />
site longer — encouraging them to purchase<br />
products or visit the store.<br />
“The Fabulous Floors widget is just another<br />
great example of the value that FloorForce<br />
brings to the flooring retailer, the manufacturer<br />
and to the consumer,” said John Weller,<br />
marketing director for FloorForce. “We have<br />
also launched a bi-monthly newsletter for our<br />
retailers called CloudBurst, and a blog site<br />
named Floorboard that is plum full of content<br />
that our retailers can use to populate content<br />
onto their own social media networks. Both<br />
of these were developed to further our one<br />
and only goal of helping the flooring retailer<br />
accelerate sales through technology.”<br />
Added Fabulous Floors publisher Margo<br />
Locust, “Floor Force websites currently reach<br />
more than 36,000 consumers searching for<br />
flooring per week and this number is growing<br />
all the time — having this exposure for our<br />
informative content is wonderful.” FCW<br />
Trade associations partner with UPenn<br />
[Philadelphia] Commencing in January<br />
2013, the University of Pennsylvania will<br />
begin a partnership program with the Association<br />
of Rug Care Specialists (ARCS), National<br />
Wood Flooring Association (NWFA), North<br />
American Association of Floor Covering<br />
Distributors (NAFCD) and the World Floor<br />
Covering Association (WFCA) to provide<br />
participants with an opportunity to study the<br />
essentials of business management and to<br />
develop new skills and strategies needed to<br />
grow their businesses.<br />
“The partnership is an incredible opportunity<br />
for trade association members to develop<br />
their management skills and learn strategies for<br />
growing their business at one of the country’s<br />
most respected academic institutions,” said Jim<br />
Walters, immediate past chairman of WFCA.<br />
“We have been interested in small businesses<br />
for a while — we have the Pennsylvania<br />
Small Business Development Center<br />
housed on our campus and we got them<br />
involved in the idea of creating a program to<br />
support trade association members in growing<br />
their businesses,” said Rita McGlone,<br />
executive director of training and consulting<br />
services at the University. “The common<br />
theme throughout the program will be to utilize<br />
each other by working as peers in small<br />
groups towards a particular goal.”<br />
The program will run anywhere from 9-12<br />
weeks, a length that will be determined once<br />
the curriculum has been finalized. It will<br />
combine traditional face-to-face classes with<br />
online courses to minimize time spent away<br />
from businesses.<br />
While not a credit-granting program,<br />
partakers will obtain a certificate from the<br />
University upon completion. “They will<br />
be able to receive actual skills to take back<br />
to their businesses and implement them<br />
in real time to be able to see the return of<br />
their dollars quickly,” said Ken Adams,<br />
president and CEO of ABC Oriental Rug<br />
and Carpet Cleaning and a member of the<br />
ARCS board of directors.<br />
The University is looking for 25 to 40<br />
participants, qualified by being a member<br />
of at least one of the associations and by<br />
being either a business owner or in a position<br />
of management in the industry. “Our<br />
members were surveyed to see who would<br />
be interested, and we provided those<br />
results to UPenn. After speaking with the<br />
other associations, it was decided that there<br />
was enough interest to move forward,” said<br />
Anita Howard, senior director of communications<br />
and events, NWFA.<br />
“Most of the businesses in our industry<br />
are run by generations of families, and now<br />
we have a younger core of people coming<br />
in. The economy and business environment<br />
has totally changed — we knew a course that<br />
taught management skills wo uld be something<br />
that would be great for us,” said Adams.<br />
The partnership will maximize the<br />
resources available at the University,<br />
including the Center for Organizational<br />
Dynamics, Department of Economics, and<br />
the Wharton Small Business Development<br />
Center. Potential courses include Marketing<br />
for Success, Financial Management,<br />
Family Business Planning and Succession<br />
Issues, and Negotiating Skills. FCW<br />
Shaw’s Epic<br />
Continued from page 3<br />
Shaw’s Kathy Young, director of marketing,<br />
said the company is thrilled that De<br />
Giulio chose Epic for this year’s kitchen.<br />
“It’s always a pleasure to work with the<br />
kitchen designer to choose a Shaw floor that<br />
brings his or her dream kitchen to life, and<br />
Epic has provided such a strong foundation<br />
for this year’s stunning Kitchen of the Year,”<br />
said Young. “Top kitchen designer Mick<br />
De Giulio has merged the beauty and hand<br />
detailing of our Epic hardwood with such a<br />
fun and dynamic chevron design to create a<br />
truly fashion-forward style statement in this<br />
fabulous kitchen. The result is a truly inspiring<br />
project for home enthusiasts.”<br />
Shaw is employing a number of marketing<br />
initiatives in order to tout its featured<br />
Epic hardwood flooring on the consumer<br />
level. Through social media outlets such as<br />
Facebook, Pinterest and its ShawFloors.com<br />
website, the company is showcasing photos,<br />
insightful descriptions and special insider previews<br />
of the kitchen.<br />
According to Christina Honkonen, marketing,<br />
communications specialist at Shaw,<br />
“This creative content empowers Shaw consumers<br />
with rich interior design and flooring<br />
inspiration. With new style ideas around<br />
every corner, from the chevron design created<br />
with our Epic hardwood in the butler’s<br />
pantry to creative tabletop displays that<br />
provided finishing touches.”<br />
Shaw also created a marketing kiosk with<br />
two tailored promotionals that encouraged<br />
visitors to ask the company specific questions<br />
relating to flooring installation, design ideas<br />
and flooring maintenance. Each Kitchen of the<br />
Year visitor could register to win a $1,000 floor<br />
giveaway, and a 10-percent off discount was<br />
made available to everyone.<br />
“Our outreach this year was designed to<br />
spark real and insightful dialog with our customers<br />
that will ultimately lead to a visit with<br />
their nearest Shaw retailer,” added Honkonen.<br />
Other featured brands in the kitchen<br />
included KraftMaid cabinetry, Whirlpool<br />
appliances and Kohler faucets.<br />
— Mallory Cruise
Marketplace<br />
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Randy Me ritt<br />
By Kimberly Gavin<br />
ple realize,” he said.<br />
s a ds value<br />
By Janet Herlihy<br />
itself. “We create value by sharing knowledge<br />
that helps our customers make more money<br />
— be it bath rugs retailers, designers in commercial<br />
o retailers in a depre sed residential<br />
market. It drives our i novation and helps<br />
people partner with us long term,” he a ded.<br />
“If we don’t kno what the consumer<br />
wants, we can’t deliver it,” a ded Gary<br />
Johnston, senior marketing manager. “If we<br />
don’t know how she shops, we can’t help our<br />
retailers deliver the right experience.”<br />
Flooring sho pers today fa l right in line<br />
with census age groups, the research shows:<br />
26 percent are betw en 25 and 34; 26 percent<br />
are betw en 35 and 4; 26 percent are betw en<br />
45 and 54; and 2 percent are between 5 and<br />
65 years of age, respectively.<br />
party to further validate the report.<br />
Most are colleg educated — 32 percent have<br />
Introducing Dr. Erich Joachimsthaler, an<br />
an undergraduate degr e, 29 percent have some [Las Vegas] Mohawk’s 20 1 Fiber Satisfaction<br />
Study put SmartStrand to the test keting and branding and founder of Vivaldi<br />
expert and author on busine strategies, mar-<br />
co lege and 18 percent have a post-graduate<br />
degr e. The majority also work full time (45 with consumers and the result showed that Partners, Tom Lape, president of Mohawk’s<br />
SmartStrand buyers were significantly more residential and commercial carpet busine s,<br />
satisfied than nylon buyers. The study results said, “We went outside the industry to s e if<br />
were revealed at Surfaces.<br />
SmartStrand rea ly stands up to its claims.”<br />
cording to the report, buyers noted Joachimsthaler was contracted to make<br />
wit how easy Smart-<br />
sure the research could pa s the rigor of<br />
p e review and presented his findings at a<br />
on here. He confirmed the research<br />
0, 0 consumers and<br />
ple,<br />
ance to<br />
19<br />
By Amy Joyce Rush<br />
iodical<br />
expanding internationa ly.”<br />
Continued on page 6<br />
By Kimberly Gavin<br />
of brands.<br />
officer for Invista.<br />
Brian Carson<br />
fiber does both.”<br />
John Turner, Jr.<br />
Invista’s TruSoft<br />
loor Covering W ekly a nounces th entries in its third annual Gr en-<br />
Step Awards — a program that recognizes the industry’s path in environmental<br />
sustainability and responsibility. Th entries now go to a<br />
distinguished panel of judges who wi l selec this year’s recipients.<br />
“This industry has b en, and continues to be, a leader in the gr en movement,”<br />
said FCW’s executiv editor Kim Gavin. “From i novative produc to<br />
proce ses and practices that are second to none, the floor covering industry<br />
continues to make great strides in it sustainability efforts and provide lead-<br />
A l ok a the 20 1 entries for Gr enStep begins on page 4. The judges’<br />
ership to other industries.”<br />
takes place in Dalton, Ga.<br />
Continued on page 17<br />
By Janet Herlihy<br />
After nine years of Carpet America Recovery<br />
Effort (CARE) leadership, combined with support<br />
from a l segments of the industry, carpet<br />
reclamation/recycling is back on its way to<br />
becoming common practice in the U.S.<br />
FCW Insider<br />
o dical<br />
Continued on page 4<br />
Some recycling centers were forced out of<br />
business while others stockpiled post consumer<br />
(PC) carpet, hoping for a time when<br />
Continued on page 18<br />
Continued on page 19<br />
al<br />
By Janet Herlihy<br />
Continued on page 14<br />
great Surfaces<br />
26<br />
The Last Word<br />
Finally, the real numbers<br />
This is the 20th year that Floor<br />
Covering Weekly delivers its<br />
Annual Statistical Report<br />
of the size and scope of the flooring<br />
industry. Twenty years ago, we were<br />
the only ones to bring accurate, vetted<br />
data to the industry at large — the only others who had<br />
access to this kind of information were large companies,<br />
mostly manufacturers, who had to pay for it. Today, you<br />
have access to some of the exact same data they do.<br />
Back then, no one could say with any accuracy — outside<br />
of their own small world and product segment — the size<br />
or scope of the market. Certainly, there was no consensus<br />
as each manufacturer had its own point of view. Too often,<br />
those manufacturer’s views were colored by their own limitations<br />
— the market segments they served, even down to<br />
the actual products they made, and, of course, their own<br />
competitive issues.<br />
Today, those same limitations exist. And while conversations<br />
with leading manufacturers and executives is part of<br />
our process for understanding the changes in the market,<br />
guesses about market size — even educated guesses — are<br />
simply insufficient.<br />
Instead, we stick to primary data — quantifiable numbers<br />
that are tracked, updated and revised by the U.S. government<br />
through various agencies. We understand that anecdotal<br />
information is by its very nature inaccurate and incomplete.<br />
By the numbers it looks pretty good<br />
While it does have its place, it is really only through disciplined<br />
research and a thorough and unbiased understanding<br />
of the market that you can get any reliable data.<br />
For our numbers, we turn to Catalina Research, a professional<br />
research organization that is recognized as one of the<br />
industry’s leading sources.<br />
Once we have reliable data, we look to Jonathan Trivers<br />
and his marketWise report to help make further sense of it<br />
all. In marketWise, Trivers gives us a different and unique<br />
view of what the industry looks like from the outside —<br />
where products are sold, the forces driving retail and<br />
changes in the market.<br />
As a result of these efforts, we are able to bring to you<br />
what is unequivocally the industry’s best data and market<br />
analysis. We spend a lot of time, money and effort in getting<br />
this information to you, but as far as we’re concerned,<br />
you deserve no less.<br />
In these times, more than ever, solid information is critical<br />
for our readers and for this industry. The truth is that<br />
nothing less than our very survival depends on it. Armed<br />
with accurate data, key insights about the dramatic changes<br />
happening throughout all channels, combined with a thorough<br />
understanding of the dynamics behind the numbers<br />
and maybe you have a chance. Otherwise, you’d just be<br />
guessing. And when your job, your business and your family’s<br />
future is on the line, guessing is just not good enough.<br />
You deserve better.<br />
— Santiago Montero<br />
FLOOR COVERING WEEKLY<br />
The Industry’s Business News & Information Resource<br />
FCW Editorial and Sales Headquarters<br />
50 Charles Lindbergh Blvd., Suite 100, Uniondale, NY 11553<br />
<br />
Editorial (516) 229-3600(516) 227-1342<br />
(770) 919-7747 (770) 919-1348<br />
(516) 227-1407(516) 227-1342<br />
Editorial<br />
Santiago Montero Publisher & Editor in Chief smontero@hearst.com<br />
Kimberly Gavin Executive Editorkimgavin@aol.com<br />
Amy Joyce Rush Managing Editorarush@hearst.com<br />
Raymond Pina Senior Editor raypinafcw@yahoo.com<br />
Mallory Cruise mcruise@hearst.com<br />
Janet Herlihy jgherlihy@sbcglobal.net<br />
Tanja Kernkern.tanja@gmail.com<br />
Maya Avrasin m.avrasin@gmail.com<br />
Columnists<br />
Jon Trivers I take the fl oor<br />
Chris Ramey Strategic insights <br />
Kermit Baker Beyond the numbers <br />
Ed Korczak As I see it <br />
Manny Llerna Retailing road map<br />
Marge Redmond Heard on Main Street<br />
Christine Whittemore Flooring the customer <br />
Tom Jennings First things fi rst<br />
Advertising<br />
Southeast, Midwest, West Coast U.S. & Canada<br />
Charlton Calhoun (770) 919-7747(770) 919-1348<br />
Northeast U.S.<br />
Cal Calhoun (770) 919-7747(770) 919-1348<br />
Classifi ed Ads<br />
Stacey Iaccino (516) 227-1407(516) 227-1342<br />
Vol. 61 No. 4 A Hearst Busine s Publication February 20/27, 2012 $4<br />
Read on its own, this year’s annual statistical report<br />
isn’t necessarily a shout-it-from-the-rooftops<br />
.excitement fest. But taken against the backdrop of<br />
the past five years, I think it’s pretty darned good.<br />
While the value of U.S. flooring in dollars didn’t escalate<br />
dramatically, sales did climb higher in 2011 than they did<br />
in 2010. Sure it was a mere 2.5 percent, but considering<br />
that change in dollars was negative in 2007, 2008 and 2009,<br />
that’s a positive trend, especially coming on the heels of a<br />
4.1 percent growth in 2010.<br />
But square foot sales actually dropped in 2011 versus the<br />
prior year, but by a very small 1.5 percent. Volume losses in<br />
2007, 2008 and 2009 were in the double digits.<br />
After two years of slipping beneath the $1.00 per square<br />
foot mark, average flooring sales climbed back up to $1.02<br />
per square foot. That’s a good thing, because the recession<br />
we are still climbing out of was characterized by the<br />
unusual escalation in raw materials prices. That left us with<br />
the unusual position of low demand for the product but<br />
high costs to produce and transport.<br />
The ability to get square foot prices up indicates that<br />
there was enough demand in 2011 to pass along raw materials<br />
increases. The statistical report doesn’t measure it, but<br />
manufacturer profitability (and hopefully distributor and<br />
retailer) should have also seen improvements.<br />
I see much of what has been happening over time continuing<br />
to happen. Wall-to-wall carpet loses share to hard surface<br />
Shaw’s Merritt sees improvement in 2012<br />
L<br />
Invista taps into today’s consumer<br />
Invista spends a lot of time and money trying<br />
to stay on top of wha the carpet consuming<br />
public wants and n eds on behalf of its Stainmaster<br />
brand. The latest round of research,<br />
which surveyed 1, 0 fl oring consumers<br />
about their shopping habits, is adaman that<br />
the industry must be clear with its me saging<br />
and recognize that the consumer is ge ting<br />
information in a variety of ways, a cording to<br />
Steve Griffith, chief marketing officer.<br />
“We talk to the consumer every month<br />
to different degr es,” Griffith explained to<br />
FCW. The company conducts verbal phone<br />
surveys, conducts online Internet panels as<br />
we l as hires research firms to speak directly<br />
to the customer. “The n eds of consumers —<br />
especia ly in today’s climate — change more<br />
ik every company in the fl oring busine<br />
s, Shaw Industries has had to change will be contentious. There will probably be lenges, but it was strong through th end of<br />
say this one will be like previous elections, it the commercial busine s. There will be chal-<br />
course through the worst rece sion in more fighting on airwaves than we have s en 20 1 and backlogs are g od. We wi l k ep<br />
modern memory, a period that’s also s en in the past. Everybody is frustrated on both riding that carpet tile horse, it’s rea ly hot.<br />
drasti changes in the carpet industry. Shaw sides of the fence. How that will affect busine<br />
s and titudes I don’t know. But that’s from tile versus broadloom is higher per unit.<br />
And the beautiful thing for us is that revenue<br />
president, Randy Merri t, recently spoke with<br />
FCW Executive Editor Kimberly Gavin about certainly a factor at some level.<br />
ge ting through the rece sion and how the fiber<br />
How has the product mix changed?<br />
shakeup has changed the busine s.<br />
Does commercial hold up in 2012? Me ritt: In a lot of the residential cha nels,<br />
Me ri t: That’s certainly po sible. That said, including multifamily, manufactured housing<br />
What does 2012 look like to you?<br />
the government wi l spend le s money. Institutiona<br />
ly, there is le s money a the public some busine s coming back to the mid-to –<br />
and retail, we’ve s en trading down. There is<br />
Me ri t: We’ve a l said the same thing for the<br />
last thr years, and we’ve b en wrong the sch o level. We wi l s e improving hospitality<br />
busine s. Health care wi l continue to be mi dle gets be ter. As you trade down, you se l<br />
mid-higher end. It’s not luxury, bu the u per<br />
las thr e years. But anytime th economy is<br />
trying to recover, things should gain momentum.<br />
The big question to me is what impact some impact on spending, but I don’t see units but you have le s revenue.<br />
g od. Corporately, the election may have le s per unit, so you se l the same number of<br />
th election wi l have. I don’t think you can any reason why I would be pessimistic about<br />
Continued on page 18<br />
FloorForce’s new website<br />
Continued on page 18<br />
Dr. Erich Joachimsthaler<br />
and Mohawk’s Tom Lape<br />
SmartStrand gets high marks<br />
Vol. 61 No. 1 A Hearst Business Publication January 2-16, 2012 $4<br />
Ru se l Gri zle, incoming CEO, with Tom Davis, retiring CEO at Ma nington<br />
Grizzle takes helm<br />
at Mannington<br />
Invista launches TruSoft<br />
tion and development for Invista, elaborated,<br />
“We’ve tried to build on the softne s and the<br />
Invista is launching the latest in its arsenal of performance origina ly launched with Tacte<br />
se in 20 and Luxure l in 2009. TruSoft is<br />
soft fiber products for the residential carpet<br />
to focus on how to improve ourselves in all market with TruSoft. This nylon 6,6 fiber is the softest Stainmaster available. A the same<br />
areas of our operations, be more efficient, the newest addition to the Stainmaster family time, we want to deliver performance. This<br />
[Salem, N.J.] Russe l Gri zle t ok over as move more product and therefore try to grow<br />
CEO of Ma nington Mi ls on Jan. 1, and regardle s of the state of the industry.”<br />
A cording to Invista executives, TruSoft Extremely soft fibers are available in the<br />
while he brings with him a d ep respect for the While Gri zle is emphatic tha the company is the softest Stainmaster fiber to date. It also marketplace in bath mats, for example. But the<br />
company’s we l-defined culture, he has a few wi l continue to focus on the core U.S. market offers the performance that consumers have softne s often comes at a price. The powderpuff<br />
f el of a bath mat comes withou the tip<br />
ideas of his own on how to grow the busine s. and that it wi l remain commi ted to U.S. come to expect from the Stainmaster brand,<br />
“Our core values of who we are, are very manufacturing, he s es both global competition<br />
and growth o portunity outside the U.S.<br />
in mainstream residential se tings. TruSoft is<br />
according to Steve Griffith, chief marketing definition and durability nece sary to perform<br />
we l defined — care, do the righ thing, work<br />
hard/play hard, control our own destiny. I “We wan to continue to expand on our T.M. Nuckols, director of product i novadon’t<br />
s e those changing. They were part of the manufacturing base in the U.S. but also have<br />
company for almost 1 0 years,” said Gri zle. international operations in the future. We<br />
A the same time, he is we l aware of the don’t wan to lose sight of our core market,<br />
n ed to organica ly grow and transform but you have to l ok at emerging parts of the<br />
Ma nington acro several key areas including<br />
lean manufacturing, waste elimination growth. So in the next five years or so, I s e us<br />
world that have so much tail wind in terms of<br />
and global expansion.<br />
“We are trying to bring in some of the Gri zle has spent the last 21 months at<br />
newer managemen techniques that you read Ma nington Mi ls as COO preparing to take<br />
about from a l other parts of the world and the CEO position as Tom Davis retires after<br />
other industries,” he said. “It’s a time for us<br />
Preserving the past, positioning for future<br />
Pre-Surfaces issue 2012<br />
F<br />
<br />
<br />
Carson and Turner reveal<br />
leadership plans<br />
GreenStep 2011<br />
entries are in<br />
[Calhoun, Ga.] Mohawk Industries named Brian Carson president of Mohawk Flooring<br />
Busine s Unit and John “J.T.” Turner, Jr., as president of Dal-Tile begi ning this month.<br />
Carson replaces Frank Peters and Turner fo lows Harold Turk. Here, both Carson and<br />
er share their plans to direct the companies and their brands into 2012 and beyond.<br />
FCW<br />
Vol. 60 No. 7 A Hearst Busine s Publication April 4/11, 20 1 $4<br />
FLOOR COVERING WEEKLY<br />
<br />
selections wi l be a nounced thi summer when the a nual awards ceremony<br />
Carpet reclamation and<br />
recycling on road to recovery<br />
The rece sion deal the nascent industry<br />
a blow when markets for recycled carpet<br />
declined along with sales of new carpet.<br />
Murray leads Shaw’s sustainability<br />
Shaw Industries recently ta ped Paul Mu ray, former environmental health and safety and<br />
sustainable busine s practices leader with contract furniture giant Herman Mi ler, to head<br />
up its environmental sustainability efforts. Mu ray, who is Shaw’s vice president of environmental<br />
sustainability and environmental affairs, relocated from Michigan to take on a new<br />
challenge in a car er that spans over 20 years in the sustainability field. FCW executiv editor<br />
<br />
GreenStep<br />
on the residential side of the business.<br />
High-end hard surfaces maintain<br />
popularity because the high-end shopper<br />
has returned to the market with<br />
her desire for ceramic tile, stone and<br />
wood intact. Luxury vinyl tile was a<br />
big winner throughout the economic<br />
downturn, and is maintaining momentum. The area rug<br />
market appears to be gaining from the hard surface demand.<br />
The residential market picked up last year, but only about a<br />
point and a half.<br />
The commercial market stayed strong, growing nearly 5<br />
percent over the previous year. Here, the carpet tile business<br />
continues to prosper because it’s an easy product to<br />
work with. Resilient is a solid second with heavy emphasis<br />
on fashion and style.<br />
Builder flooring purchases were down significantly from<br />
what they were in 2007 — the year that market crashed.<br />
Thus far in 2012, housing starts are trending up by double<br />
digits in the first quarter. Existing home sales grew in the first<br />
quarter of 2012. The economy seems to be improving at a<br />
slow but steady rate. Unemployment remains a concern, but<br />
the consuming economy seems to be holding ground.<br />
In all, the 2012 Annual Statistical Report brings good<br />
news. The snapshot shows a challenging year, but better<br />
than the one prior. This year is shaping up to be even better.<br />
Each improvement gains us a little more breathing room.<br />
2.25% CVD imposed<br />
<br />
Vol. 61 No. 3 A Hearst Busine s Publication February 6/13, 2012 $4<br />
FLOOR COVERING WEEKLY<br />
The Industry’s Busine s News & Information Resource<br />
SURFACES<br />
POST<br />
Painful cuts last year pave<br />
the way for Beaulieu in 2012<br />
2012<br />
Flexible format brings<br />
new success to show<br />
*For more Surfaces coverage s e pages 10 & 26<br />
according to Ralph Boe, president and CEO.<br />
While Boe characterizes the company as [Las Vegas] While Hanley W od reported Tarkett used this o portunity to launch<br />
The fa l of 2011 was a difficult one for Beaulieu.<br />
Thr e of its senior level executives left he’ sti l oking for a few key executives. 10 percent over 2011, a tend es were torn on strong once again pulled retailers into its<br />
“we l managed going into 2012,” he admits that attendance a this year’s Surfaces was up a new display and selling system and Arm-<br />
the company — James Le slie, COO, and For the time being, operations report to whether 2012 would prove to be be ter than large ba lr om space with a wide range of new<br />
Jeff Meadows, CMO, both left in November, him directly; David Vita oversees sales and last year. But, there did s em to be consensus product and a strong distributor presence.<br />
preceded earlier that year by Patricia Flavin, marketing for a l specified commercial busine<br />
s; and, Steve La d heads hospitality. On of positive things to come.<br />
Beaulieu, the two largest exhibitors, found it<br />
tha the show was a su ce s and a harbinger At the same time, Ma nington and<br />
senior vice president of marketing. While the<br />
company was forced to close down thr e of the residential side, Casey Johnson heads While traffic s emed a bit light at times, rewarding to be on the show fl or. “We have<br />
its plants due to slower than expected sales, direct sales; Kathy Fisher overs es home centers;<br />
Joe Wi liams leads the company’s export on the show fl or but exhibited just outside g od show for us,” said Dan Natkin, director<br />
the inclusion of vendors who chose no to go benefi ted from not scaling back, and it was a<br />
on a more positive note, it was also able to<br />
restructure its $230 mi lion debt.<br />
and distributor busine s; and, Wendy Jaynes in m eting r oms, conference r oms and of Ma nington’s w od and laminate busine<br />
s. Ed Duncan, Ma nington’ senior vice<br />
Today, Beaulieu of America has hit the is now marketing manager for the Bli s brand. ba lr oms created crowds off the main fl or.<br />
ground ru ning, a leaner mor efficient organization<br />
that is ready and determined to uphold another flat year,” Boe said. “Refinancing is back Mohawk, which held its western<br />
“We are going into 2012 prepared for That exhibitor flexibility is what brought president of marketing, a ded, “We<br />
and grow its place in the carpet industry, complete and we have finished our consolida- regional event just outside th exhibit<br />
a ba lr om. Arm<br />
— Kimberly Gavin<br />
Production<br />
Thomas YoungProduction Managertdyoung@hearst.com<br />
Matthew Lippl Production Artistmlippl@hearst.com<br />
Administration<br />
Sherridan Basdeo Advertising Administrator sbasdeo@hearst.com<br />
Carolyn Giroux Audience Development Directorcgiroux@hearst.com<br />
Adriana Marzovilla Financial Manageramarzovilla@hearst.com<br />
George R. Hearst Jr. Chairman<br />
Frank A. Bennack Jr. Vice Chairman<br />
Richard P. Malloch Group Head & President<br />
Steven A. Hobbs Executive VP & Deputy Group Head<br />
Robert D. Wilbanks Group Controller<br />
Sales Headquarters<br />
50 Charles Lindbergh Blvd., Suite 100,<br />
Uniondale, NY 11553<br />
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*This limited warranty begins on the date of purchase and continues for the life of the carpet. Proration may apply to<br />
lifetime limited warranties. For complete details, see limited warranty brochure available at retail locations or call<br />
1-800-438-7668. © 2012 INVISTA. All Rights Reserved. STAINMASTER® is a registered trademark of INVISTA. C04052