Resilient Flooring: State of the industry 2022
Last year saw the resilient flooring category embark on its most fierce growth trajectory yet as consumers continued to spend their hard-earned cash on home renovations and upgrades versus travel, dining and entertainment. New work-from-home lifestyles also continued to drive consumer spending as many looked to expand their existing homes to feature new office space or outdoor sanctuaries.
As a result, the resilient flooring category registered a staggering $8.426 billion (not including rubber) in sales in 2021—an industry-leading 30.3% increase over 2020’s revised $6.463 billion. In terms of volume, the category accounted for 5.881 billion square feet (not including rubber) at the first point of sale, a 9.8% increase from 5.357 billion square feet in 2020.
This year, however, the craze could be cooling. Make no mistake, resilient flooring continues to be red-hot and shows signs of continued growth. However, that growth may return to more sustainable levels by the end of Q4 2022. “High single-digit to double-digit growth is possible for the first half of 2022,” said Adam Ward, vice president of product management, resilient, Mohawk. “I think everybody is starting to see some softening trends out there due to a variety of factors. Last year was a strong year as everybody knows, but the pandemic has shifted where more people are spending their dollars on vacations and other leisure activities that they may not have been able to do the last year. That’s probably driving what I would call ‘return to normalcy’ in the flooring market.”
David Sheehan, vice president of residential resilient at Mannington, agreed, citing the noticeable slowdown at retail in 2022. “The LVT category is forecasted to be up low double digits in dollars and only single digits in square footage,” he said. “It remains to be seen if these numbers will be realized as a slowdown at retail began at the beginning of the summer as consumers shifted their spending from home improvement to travel and entertainment. The big question regarding the back end of this year is whether we will see a fall selling season.”
For Shaw, the resilient flooring category is up—despite an obvious slowdown—driven by a strong Q1 as well as a strong builder channel, according to Jeff Francis, resilient category director. “We have seen some softening in demand due to U.S. economic inflation in Q2-Q3, but overall numbers are strong,” he noted. “From a demand perspective, the impacts of the pandemic were felt in Q1-Q2 2020. Ever since that time, demand has been strong and has not missed a beat. From a supply perspective, the disruptions continued throughout 2021 but are now leveling off.”
While a slowdown at the retail level may be felt at this point in the year, strategies are being devised to help address that challenge. Bill Anderson, CEO, Karndean Designflooring, noted, for example, that diversification at the retail level has helped curtail any slowdowns in the residential market. “Toward the end of June residential remodel showed signs of slowing a bit, but more retailers than ever are diversifying their business and dipping into the commercial space through Main Street,” he explained.
In fact, the truth remains that the resilient category is the leader in terms of overall growth within the flooring industry and there are no indications that it will lose that lead. That continued growth is driven by several major factors—including the pandemic-related boom in the housing/construction industry, the end of eviction moratoriums—which has spurred activity in the multi-family sector—and the attractiveness of the category’s features and benefits.
Jennifer Zimmerman, chief commercial officer, AHF Products, for example, noted that the category is up in 2022 and remains strong, with the housing market a key factor in that growth. “The increase in new construction is a key factor in driving resilient sales, as is the increase from people moving out of urban areas,” she explained. “The overall housing shortage has driven demand for all flooring types, including vinyl.”
Steve Ehrlich, VP of sales and marketing, Novalis, agreed, noting, “The resilient category is booming in terms of both dollars and square footage in 2022. This has been driven in part by the high growth of the new construction industry but also by a skyrocketing renovation market. LVT is the premier choice in flooring today as it is economical, sustainable, beautiful, durable and easy to maintain.”
Ana Torrence, hard surface category manager for Engineered Floors, said the largest category for growth over the last couple of years has been residential replacement. “In 2022 we are seeing growth in multi-family due to the lifting of eviction moratoriums,” she noted.
Shaw’s Francis added that the next major focus for the resilient flooring category should be economic. “Service issues the past couple of years have been challenging, but now that we are back on level footing focusing on assessing inflation and demand for the next couple of years is the next big opportunity.”
While the pandemic brought with it unique opportunities for the flooring industry—i.e., a booming housing and renovation market—it also brought challenges. In 2022, economic challenges—including inflation, energy and material costs and freight—are gaining steam and have impacted the growth potential for the resilient flooring category.
“The pandemic continues to play a role from manufacturing challenges, inflation, supply chain constraints perspective,” explained Raj Shah, president, MSI. “The primary input for resilient is PVC, which is controlled by gas prices. In addition, domestic transportation pricing is directly related to this. We are hoping overall gas prices have peaked but pricing has not changed in the category due to this yet.”
Mannington’s Sheehan agreed, noting, “Flooring is a ‘postponeable’ purchase and these factors can influence a consumer’s confidence regarding their purchase. Lead times from overseas are improving, and we are seeing a slight decrease in the overall container rates. However, this has been offset by increases in inland freight from the ports.”
As recent as May, the industry has seen shutdowns at global ports that are still impacting raw materials pricing. “Pre-pandemic, we were seeing shipping container pricing increasing/availability decreasing and, when combined with the backlog in manufacturing and at ports caused by pandemic-related shutdowns, there is still a strain on the overall supply chain,” Karndean’s Anderson said. “Although international shipping costs are less volatile than they were during the pandemic, they are still high when compared with pre-pandemic prices. Port congestion and domestic freight costs are now the variable in the supply chain having the largest impact on procurement teams. From the supplier side, [inflation] has affected our overall shipping costs, along with causing us to re-evaluate ways we can prevent passing any unnecessary cost increases onto our customers.”
For Shaw, inflation and energy prices in particular are impacting overall demand. “Increasing raw material and transportation/distribution costs have impacted domestic demand for flooring,” Francis said. “The uncertainty around mortgage rates, gas and food prices, Ukraine, etc., all factor into what Shaw’s customers and consumers decide to spend their money on.”
AHF’s Zimmerman agreed, noting that extraordinary freight, raw material costs and supply limitations are still affecting the category and noted these challenges have even allowed other flooring types to make inroads, given the performance improvements of new laminate and hardwood products. “Inflation, too, has directly impacted manufacturing in the increasing cost of fuel and materials and this has contributed to price increases,” she added.
While challenges abound, industry experts agree nothing can stop the runaway train that is the resilient category in 2022. “Despite the decrease in overall expendable income and the increase in cost to produce, the resilient category continues to thrive due to the value it brings to the customer,” Novalis’ Ehrlich said. “Factors such as logistics, tariffs, raw material supplies, etc., have all impacted the residential category; however, these challenges have not been able to slow down the continuous rise of the LVT category. The benefits of this product far outweigh any of the current economic issues.”
Sourcing faces challenges
Historically an import-heavy product, the resilient category cannot be accurately assessed without looking at sourcing. From historically high freight costs to port congestion, trucking woes and product shortages, the category has much to contend with.
“Although international shipping costs are less volatile than they were during the pandemic, they are still high when compared with pre-pandemic prices,” Karndean’s Anderson explained. “Port congestion and domestic freight costs are now the variable in the supply chain having the largest impact on procurement teams.”
AHF’s Zimmerman agreed, noting, “Supply chain continues to be a major focus in the category. While we’ve seen some softening in pricing and product availability, we’re still dealing with shortages. It’s difficult to predict when things will get back to pre-pandemic levels.”
For some suppliers, the various challenges with supply brought on by the pandemic have helped reinforce the message behind Made in America. Those already producing in the U.S. say they’ve found the Made in America label now carries more weight while several major importers have opened their own U.S.-based factories to shore up product availability and lead time.
“It made the conversation a lot easier with our customers,” Mohawk’s Ward said. “Made in the USA became one of the top features that retailers and other customers wanted to hear about. Where it may have been further down the list before, now it’s at the top. As supply continues to improve and things get back to normal, I think the memory of what happened will stick in people’s minds a lot longer—they need to have that ability to get to their customers as soon as possible.”
When it comes to imports, Dick Quinlan, VP of sales and marketing at Wellmade—which opened a brand-new, 328,000-square-foot manufacturing facility in Cartersville, Ga., in 2020—noted, “Overseas sourcing continues to suffer from tariffs and elevated freight costs, while excess levels of inventory in the U.S. slow purchases from overseas. On the other hand, vinyl plank made stateside continues to gain traction due to shorter lead times and lower cost of capital resulting from reduced inventory needs.”
Novalis, too, is one of several suppliers that brought production stateside. The company now has a manufacturing facility in Dalton, which focuses on producing waterproof rigid core products and allows it to better meet the needs of its customers. “While the category as a whole has been impacted by sourcing challenges in the last year, here at Novalis we are the manufacturer so we can 100% ensure the quality, style and design of everything we sell,” Ehrlich explained. “We have the ability to control the ingredients as well as the environmental impact of everything we produce for our customers.”
AHF’s Zimmerman said investment in domestic manufacturing will continue as the benefits continue to outweigh the challenges. “The increasing freight costs have finally made U.S. products more cost effective,” she explained. “In the past, customers often asked for U.S.-made products but weren’t always willing to pay the difference. We have great stateside capacity at a time when domestic supply is important and world-class manufacturing capabilities that are invigorating our products and the categories we serve.”
AHF proved its dedication to U.S. manufacturing with its recent purchase of certain assets of Armstrong Flooring, which included three vinyl plants—two in Pennsylvania and one in Illinois. “We can maximize our domestic production capabilities and we’re also nimble enough to make timely adjustments in manufacturing and sourcing to address shifting demand,” Zimmerman added.
The truth remains, however, that domestic manufacturing represents only a portion of demand in the U.S. “Domestic production of rigid core vinyl has increased substantially over the last several years while newly minted plants are still ramping up to maximum production capacity,” Wellmade’s Quinlan explained. “Even so, the available stateside capacity represents a small portion of the total market demand for SPC vinyl plank.”
SPC vs. WPC
It seems like an age-old battle, but the truth is the SPC subsegment of the resilient category is still relatively new. Nonetheless, it has taken substantial market share from its WPC sister subsegment and remains the growth powerhouse of the category. Still, some suppliers say there’s value in both constructions and both should be considered based on the consumer’s need. Either way, executives say the resilient category continues to expand due to the value and unique features of these two subcategories.
“While the resilient category continues to dominate the flooring industry, it is rigid core that leads the pack,” AHF’s Zimmerman noted. “More and more market share is being given to SPC in the residential environment—waterproof, dent resistant, great looks.”
Wellmade’s Quinlan agreed, noting, “Growth of SPC vinyl will continue to outpace traditional LVT and WPC due to ease of installation and superior overall performance. SPC vinyl continues to gain traction in new home and multi-family construction as well as commercial applications.”
Mohawk’s Ward also said SPC is the construction format to watch when it comes to residential. “[WPC] is used in multi-family and commercial, but the residential remodel consumer has really moved to SPC,” he explained. “Our expectation is SPC will continue to take share there. If you look at what’s being invested in—in terms of new capacity—it’s SPC, not WPC. You still have a lot of legacy production there, but SPC—because of the benefits around dent resistance, dimensional stability or desirable attributes— will continue to take more share.”
While SPC’s popularity continues to grow, some suppliers still tout the benefits of WPC. Shaw’s Francis, for example, noted there are unique advantages to each product that depend on construction, application and consumer preference. “For example, advantages of WPC include noise abatement, warmth and comfort underfoot—making it great for bedrooms, second stories and anywhere in the home comfort and quiet is desired,” he said. “Shaw prides itself on offering a wide variety of products that fit any home, and we work hard to continuously innovate and provide solutions for our customers.”
For many suppliers, offering both constructions—along with glue-down—is key to optimizing value to the customer. “Because we supply glue-down, loose lay and rigid, it has allowed us to remain nimble through challenges in sourcing,” Karndean’s Anderson said. “Until the market and product availability settle down, it’s difficult to pinpoint a trend or a shift in consumer preferences among formats.”
Mannington’s Sheehan agreed, noting, “We actively sell all three and have observed consistent growth across the board. Mannington is unique with the Adura Selling System, which offers 90 visuals in all three constructions. This allows for a consultative sales process from the RSA and ensures the consumer installs the best product for their application. SPC leads the pack in growth, but both WPC and even glue-down continue to post strong year-over- year growth numbers.”
Commercial gains ground
Commercial flooring suppliers tout rebounding sales and specifications across key commercial segments for 2022. This is after two years of declining activity amid lingering ramifications from the pandemic. End-use segments such as hospitality, education and healthcare are picking up steam while LVT, sheet vinyl and—believe it or not—SPC gain ground.
“We started seeing [commercial] pick up at the end of last year and it has really been strong,” Mohawk’s Ward said. “Commercial was one of those areas that really tailed off during the pandemic while retail and new home building did really well—for obvious reasons. A lot of segments across commercial have picked up. We see that continuing into next year as there’s some pent-up demand from delayed, deferred or canceled projects.”
For AHF Products, there is resurgence of activity not only in ongoing projects, but also new projects and the continuations of those put on hold during the pandemic. “Hospital, education and healthcare are driving the market right now,” said Fred J. Reitz, vice president of commercial. “Resilient flooring is a great choice for all types of commercial spaces. Its long life, easy installation and maintenance—as well as the plethora of design choices—make it one of the best and most versatile product types in the market. For the commercial resilient market, the demand for VCT-like products—such as our exclusive Vinyl Based Tile (VBT)—are growing. LVT and VCT are the workhorses.”
Novalis’ Ehrlich even noted the growth of SPC within the commercial market and the felicitous nature of the resilient category overall. “The commercial market has bounced back strongly in all segments. The obvious glue-down category is still strong but loose lay is also still finding its way into a lot of job specifications. The big category increase is in SPC, which is taking more share in multi-family, Main Street and situational areas where it was never a go-to in the past. There is a perfect resilient product for almost every commercial application—that cannot be said for any other flooring category in the market.”