The year began with great potential for the flooring industry but faced a significant decline when the COVID-19 pandemic struck, leading to global lockdowns. However, resilient flooring, especially in rigid core formats, experienced a resurgence with double-digit growth in the latter half of the year, driven by an increase in remodeling projects due to stay-at-home mandates.
As reported by Catalina Research, resilient flooring sales in 2020 may have risen by 13.8 percent in terms of revenue. Sales of luxury vinyl tile (LVT) could have surged by 23.3 percent, primarily fueled by a 39.3 percent increase in rigid core flooring sales, according to Catalina. These increases were even more pronounced than the growth seen in 2019, which was not affected by the pandemic.
Consequently, resilient flooring might have represented 25.2 percent of total dollar sales in floor coverings for 2020 and 30.1 percent of total square footage sold. This marks an increase from 17.0 percent and 21.1 percent, respectively, in 2017, as noted by Catalina.
Pandemic shutdowns influenced residential renovation markets
In 2020, the success of resilient flooring was largely driven by residential sales, as homeowners redirected funds that would have gone to annual vacations or outings towards home improvements.
These upgrades included the creation of home offices and versatile spaces to support those working and learning from home, as well as refreshing outdated décor—something that became more apparent as people spent increased time in these older areas of their homes.
The extended time at home during the pandemic prompted many homeowners to reassess their living environments. Residential replacements significantly boosted sales in 2020, and with the thriving real estate market in 2021, Bill Anderson, CEO of Karndean Designflooring, anticipates continued robust growth in sales.
Ana Torrence, hard surface category manager for Engineered Floors, observed that during the pandemic, consumers shifted their spending from entertainment and travel to remodeling and enhancing their homes. She also pointed out that the strong housing market is a result of this trend, citing government stimulus checks distributed across the U.S. as another factor driving home improvement projects.
Ed Sanchez, vice president of product management for Mohawk's resilient division, mentioned that many consumers who were not adversely affected by COVID transitioned their workspaces to their homes, leading to significant investments in home office setups. With travel plans on hold, many individuals redirected vacation funds into home enhancements, likely contributing to a quicker recovery.
This trend is expected to persist. Global Workplace Analytics, a research and consulting firm focused on future workplace dynamics, predicts that by the end of 2021, 25-30 percent of the workforce will be working from home several days a week. This shift is likely to stimulate both home renovations and new construction, as workers with reduced commuting times move away from urban centers, according to Doug Jackson, president of Cali. He believes this is promising for the resilient flooring market.
Resilient flooring experienced an upswing in 2020
Although the industry faced an initial decline in sales, the recovery was rapid. In 2020, we witnessed a V-shaped rebound. There was a significant drop in March and April of that year, but this was quickly followed by a robust recovery in May and June. This strong demand has persisted into 2021, according to David Sheehan, vice president of residential resilient business at Mannington Mills.
The housing market overall saw an increase, a trend attributed by Sam Kim, MSI's senior vice president of product, to several factors: Millennials reaching adulthood, the industry addressing years of under-construction, and the ongoing view of homes as valuable investments. He pointed out that rigid core products are gaining popularity, partly due to their numerous performance advantages.
John Rocconi, Stanton's senior director of hard surfaces, noted that the resurgence in resilient sales can be linked to three main factors: first, record low interest rates bolstering a strong recovery in the housing market; second, rising incomes and government stimulus initiatives leading to increased consumer spending; and third, a sustained preference for LVT products, particularly the newer SPC constructions, which are contributing to the growth of this segment.
Wendy Booker, vice president of marketing and new product development at AHF Products, agreed that various elements played a role in the rebound of resilient flooring. For instance, there was pent-up demand from the regular repair and renovation business that had been paused earlier in the year. Additionally, people were spending more time at home, focusing on creating a positive living environment. The combination of postponed travel, dining out, and stimulus payments resulted in extra disposable income that many consumers opted to invest in their homes. Furthermore, there has been a surge in the builder market.
The reduction in vacations and the enhancement of home spaces may also lead some individuals to spend more time at home in the future. Even though more Americans are traveling in 2021, the trend of prioritizing home life and transforming our residences into personal retreats is expected to continue, shared Nate Hohenstein, director of strategic accounts for Novalis Innovative Flooring.
Jamann Stepp, vice president of hard surfaces at The Dixie Group, stated that sales are likely to remain strong but warned that inflation is a critical factor to consider. The prices of consumer goods have risen, exerting new pressure on the building materials sector, including flooring. Ultimately, it boils down to the balance between supply and demand, he explained.
Flooring Suppliers to diversify outside of China
In September 2020, the 25 percent tariff on flooring produced in China was reinstated. Although many industry players were not overly worried about the financial impact of this change—given that 59 percent of LVT imports in 2020 still originated from China, according to Catalina—manufacturers have been actively seeking to broaden their production bases beyond China, especially as ocean freight costs continue to rise.
There has already been a significant shift from flooring made in China to alternative sources. With the steep increases in ocean freight costs, suppliers are likely to explore options that enhance affordability and value, stated Jason Nigh, vice president of sales for Swiff-Train. He noted that the tariff makes other production sources more attractive.
Blakley Satterfield, product manager for residential resilient at Mannington, remarked that the demand for resilient flooring will keep driving manufacturing options both within and outside of China. While diversifying the supply of this material is beneficial for price competition and availability of imports, China will continue to be a major supplier in this category.
David Thoresen, senior vice president of product and innovation at Armstrong Flooring, mentioned that while manufacturers may seek alternatives outside of China, they are unlikely to look beyond Asia. Vietnam and South Korea are becoming increasingly popular options, and if it weren't for container shortages and COVID-19 outbreaks, these countries would likely be seeing considerable success.
Herb Upton, vice president of residential product and channel management at Shaw Industries, emphasized that diversifying the supply chain is essential for meeting demand and mitigating events that could affect customers and consumers. Changing market conditions—such as logistics and container limitations, rising ocean freight costs, and ongoing uncertainties from the pandemic—could lead to unexpected disruptions. Shaw is making deliberate efforts to bring some manufacturing back domestically while continuing to collaborate with partners in China and Southeast Asia.
More suppliers are establishing manufacturing plants in various countries, including the U.S., but China's infrastructure has been well-established for a long time, as it has been the hub for much of this innovation. Consequently, domestic manufacturing capacity remains relatively small.As long as the demand for LVT flooring remains high, changes in imported products from China and other international suppliers are expected to be minimal. Tressa Samdal, director of easy luxury marketing and product management at Happy Floors, noted that even with a rise in domestic supply, it still falls short of meeting the consistently increasing demand in this category.
Tommy Junker, director of sales and marketing for ROKplank, mentioned that the capacity for premium features like EIR, painted bevels, and wide, long formats is still concentrated in factories in China. While several companies, including ROKplank, have made investments in the U.S. market, this limited increase in production will hardly impact the overall demand for rigid core products.
CFL has also expanded its capacity with a new facility in the U.S., but they still plan to source materials globally. Lacy Price, U.S. marketing manager, stated, "We expect some changes, but even with our new plant in Calhoun, Georgia, we have only increased our manufacturing capabilities. Our global presence has expanded, allowing us to diversify our sourcing."
Sanchez remarked that more manufacturers are likely to move production to the U.S. in the future. However, he pointed out that the demand for resilient flooring in the U.S. will surpass domestic production capabilities, leading to continued imports. He also highlighted that the demand for rigid core flooring is rising in other regions, including Asia and Europe, which has primarily focused on flexible LVT products until now.
Resilient Flooring market faced supply chain, freight, and pandemic challenges
Although the resilient flooring market was more robust than ever in 2020, it faced several challenges.
Stepp from Dixie Group pointed out that ocean freight rates have become a significant issue, currently four times higher than they were a year ago. He also noted a decrease in exports from China as more SPC factories open domestically and in other countries like Vietnam, Cambodia, and South America.
Upton mentioned that the combination of increased demand and severe restrictions on shipping containers, along with ongoing supply chain disruptions, has impacted service timelines for rigid core products in both 2020 and 2021. While these challenges are expected to persist throughout the year, Shaw is actively working on innovative supply chain solutions and utilizing its strong financial position to lessen the effects on customers and end consumers.
Anderson from Karndean explained that COVID-19 was undoubtedly the primary challenge in 2020, compounded by the difficulties faced by traditional brick-and-mortar stores that were forced to close. He expressed gratitude for the creativity shown by their customers and team, which allowed them to finish the year successfully in multiple aspects. He cautioned that rising freight costs and container shortages are likely to remain issues throughout 2021.
Sanchez acknowledged that the pandemic posed the greatest obstacle in 2020, including dealer shutdowns and manufacturing disruptions, but he praised how dealers responded to the situation. He highlighted their remarkable adaptability to COVID-related constraints, such as scheduling visits, creating COVID-safe showrooms, enhancing their online presence, and finding alternative ways to showcase resilient flooring products. All these efforts contributed to a quicker recovery than anyone had anticipated.
Rigid core SPC flooring dominated the market growth
For nearly ten years, rigid core products have been a significant driver in the market, and it's easy to see why: features like waterproof capabilities, simple click installation, and resistance to dents are just a few reasons for their success. Ongoing enhancements are being made in both WPC and SPC, with MgO still remaining an unpredictable factor.
Bill Anderson, CEO of Karndean Designflooring, noted that rigid core products generally stimulate growth because they require less preparation, are straightforward to install, and cause minimal disruption in homes during the installation process. He anticipates that the popularity of rigid core will continue to rise throughout 2021, as healthy growth is observed across all product categories so far this year.
David Thoresen, senior vice president of product and innovation at Armstrong Flooring, stated that value, design, and performance are all key factors driving the growth of rigid cores. He mentioned that rigid core is becoming increasingly popular due to its visuals, which closely resemble hardwoods, along with its strong performance at a more affordable price point.
Herb Upton, vice president of residential product and channel management at Shaw Industries, shared that rigid core products are highly sought after by today’s consumers due to their incredibly realistic appearances and ease of care and maintenance. While SPC is often preferred for Main Street and high-traffic installations, he noted that WPC may also gain popularity due to its sound-dampening and comfort advantages, making it ideal for those who are spending more time at home.
Local Investments in SPC flooring manufacturing are increasing
Among the two leading rigid core formats, SPC has recently garnered significant attention as a versatile option.
Investments in new manufacturing and research and development have been increasingly directed towards SPC, according to Ed Sanchez, vice president of product management for resilient flooring at Mohawk. He mentioned that manufacturers and suppliers view SPC as the future direction consumers are moving towards, making it logical to invest in enhancing a product that is expected to generate ongoing profits.
Lacy Price, U.S. marketing manager for CFL, stated that SPC offers the right combination of product quality and pricing for most consumers while maintaining strong performance. She observed that as more contractors gain confidence in using the product for their projects, it is gaining credibility with key decision-makers, which is contributing to its growth.
Sam Kim, vice president of product for MSI, projected continued robust growth for SPC due to its ability to provide trendy high-definition graphics along with a compelling value proposition: waterproof, dent-resistant, maintenance-free, easy and quick installation, and pet-proof features.
Nate Hohenstein, director of strategic accounts for Novalis Innovative Flooring, pointed out that SPC possesses certain performance attributes that elevate it above other rigid core products. He also noted that there are fewer barriers to entry in the SPC market compared to WPC, making it accessible for anyone interested in participating. He emphasized that this trend is strong in 2021 and will persist as production expands to countries like the U.S., Vietnam, and Cambodia.
John Rocconi, senior director of hard surface for Stanton, remarked that SPC is rapidly becoming the preferred choice for rigid flooring due to its enhanced indentation resistance, outstanding dimensional stability, broader temperature tolerance, and longer installations without transitions. He added that this trend will continue as consumers seek high-performance products, regardless of format.
Wendy Booker, vice president of marketing and new product development at AHF Products, highlighted that the performance benefits of SPC resonate well with both consumers and retail sales associates, particularly because of its waterproof capabilities and dent resistance. She noted that while the growth rate may slow in the coming years, interest remains strong.Lindsey Nisbet, the marketing vice president at Swiff-Train, stated that the advantages in performance and ease of installation are what contribute to the success of SPC, particularly since it can be sourced from various locations worldwide. SPC is suitable for residential retail, builders, multifamily housing, and commercial projects. She noted that advancements in technology and production techniques are continually enhancing rigid flooring, and this sector is expected to expand due to the inspiration and enthusiasm surrounding it.
Doug Jackson, president of Cali, added that SPC is hard to surpass, especially as the variety of colors and designs continues to improve. While there will always be customers who prefer hardwood, the appeal of easy-to-clean, pet-friendly, and waterproof planks is becoming increasingly difficult to overlook.
The housing market created demand for resilient vinyl flooring
In 2020, the housing market faced a shortage primarily because individuals were moving from densely populated areas like cities to more spacious suburban environments. Low interest rates enabled buyers to manage the rising home prices as they sought existing homes or secured loans for new constructions.
There was consistent growth in new housing starts throughout 2020, and many markets are still reaching record highs. According to Herb Upton, vice president of residential product and channel management at Shaw Industries, rigid core products are becoming popular in new builds as a cost-saving measure for younger and first-time homebuyers.
The housing market began to gain momentum towards the end of 2020, with many people searching for new homes and renovating their current properties to prepare them for sale, stated Ed Sanchez, vice president of product management for resilient flooring at Mohawk. He noted that some homeowners opted to take advantage of low loan interest rates to invest in renovations rather than selling their homes.
Blakley Satterfield, product manager for residential resilient at Mannington Mills, concurred, explaining that homeowners refinancing to benefit from low interest rates could use their equity to enhance their homes. Those capitalizing on the seller's market were able to boost their home's value by updating their flooring.
David Sheehan, vice president of residential resilient business at Mannington, remarked that the scarcity of available homes kept builders busy in 2020, creating strong demand in both building and remodeling sectors.
All types of flooring have gained from this unusual housing market. The rise in new construction has significantly contributed to increased sales in resilient flooring. Wendy Booker, vice president of marketing and new product development at AHF Products, pointed out that the influx of people relocating from urban centers, combined with an overall housing shortage, has heightened demand across all flooring categories, including vinyl.
Cali president Doug Jackson noted that a robust housing market in 2020 fueled resilient sales. Although there were about three challenging months starting in March, the recovery was stronger than expected. As Americans began working from home, they started seeking larger, more appealing spaces, and resilient flooring often provided the ideal solution for families looking to make quick upgrades.
Additionally, many who might have sold their homes in 2020 chose instead to remodel. Nate Hohenstein, director of strategic accounts for Novalis Innovative Flooring, mentioned that more individuals invested in transforming their homes into their desired living spaces rather than putting them on the market.
Sheet vinyl & LVT holding on to market share
While sheet vinyl and flexible LVT may not be experiencing growth at the same pace as rigid core products, there will always be a demand for these items in the market. In fact, some manufacturers are focusing on innovative designs within these categories.
Sheet vinyl provides excellent value, with ongoing improvements in its design. It is just as durable as other options and remains very competitive in terms of cost, according to David Thoresen, senior vice president of product and innovation at Armstrong Flooring.
David Sheehan, vice president of residential resilient business at Mannington Mills, stated that flexible LVT and sheet vinyl are once again viewed as growth products. However, sheet vinyl has faced challenges in meeting demand due to a shortage of raw materials. He anticipates growth for sheet vinyl in 2021.
Ed Sanchez, vice president of product management for Mohawk's resilient division, highlighted the antimicrobial benefits of sheet vinyl. He also noted that in RVs and mobile homes, sheet vinyl is preferred for its quick installation and ability to deliver impressive visuals without significantly increasing costs, all while providing waterproof advantages. Additionally, sheet vinyl performs better under movement compared to other formats, such as when driving over bumps.
Tressa Samdal, director of easy luxury marketing and product management at Happy Floors, mentioned that sheet vinyl will remain popular in settings like hospitals, RVs, tiny homes, and for quick rental solutions.
Flexible LVT also has specific applications and is favored in multifamily installations or areas subjected to heavy rolling loads.
In multifamily and commercial sectors, there is an increase in rigid core installations; however, Tommy Junker, director of sales and marketing for ROKplank, believes that flexible LVT and sheet vinyl will not see a significant decline, primarily due to their pricing.
Wendy Booker, vice president of marketing and new product development at AHF Products, concurred that the highly affordable price point ensures continued demand for flexible LVT and sheet vinyl, particularly in multifamily settings.
Ana Torrence, hard surface category manager for Engineered Floors, suggested that there will likely always be a market for flexible LVT products because of their value and capacity to handle heavy rolling loads.Flexible LVT holds a strong position in both commercial and Main Street markets. Due to the high levels of foot traffic and wear in these areas, a flexible gluedown LVT installation is the most effective choice for these demanding environments, according to Sheehan. He also mentioned that the shortage of rigid products has prompted some residential customers to opt for flexible LVT because it is readily available.
Bill Anderson, CEO of Karndean Designflooring, stated that flexible LVT (both gluedown and loose lay) provides significantly greater design options compared to rigid alternatives and is particularly relevant in commercial settings. This is attributed to its complete adherence to the subfloor and the capability to replace individual pieces if necessary. While gluedown installations remained relatively stable in 2020, he pointed out that this was likely due to the decline in commercial activity caused by the pandemic.
Comments
Post a Comment