STATS: Laminate performance ends losing streak
By Reginald Tucker In 2020, something interesting happened in the U.S. laminate flooring market that hadn’t occurred since 2015—the category actually grew in terms of both sales and volume.
FCNews research pegged laminate flooring sales at the first point of distribution in the U.S. at $1.144 billion, a 5.8% increase over 2019. The volume of laminate flooring sold also grew, by 4.2%, to 976 million square feet, according to preliminary FCNews research. Anecdotal information suggests the higher ratio of sales growth to volume increases indicates more product was sold in the thicker, 10mm-12mm range vs. the thinner, entry-level 7mm-8mm offerings often found at discount merchandisers and big box stores.
The growth in sales and volume slightly increased laminates’ share of the total flooring market to roughly 5% of sales—up slightly from 4.7% of the total flooring market in 2019. That’s down slightly from 2015, when laminate flooring accounted for about 5.6% of total flooring sales and 5.6% of volume. But it’s off more significantly from 2010, when laminate accounted for 6.9% of dollars and 6.1% of volume.
The change in laminates’ share of total hard surfaces was negligible year over year. In 2020, the category represented 8.7% of hard surface sales, consistent with 2019 despite the category’s growth spurt last year. That makes it the fourth-largest hard surface category by value behind resilient flooring (50.7%), ceramic tile (21.8%) and hardwood flooring (17%). With respect to volume, laminate flooring slightly decreased its share of total hard surface square footage sold to nearly 10%. That’s down slightly from about 10.4% in 2019.
All in all, though, laminate’s performance in 2020 was welcomed news, especially considering how other hard surface categories continue to lose sizeable market share to competing segments such as the red-hot LVT/P, WPC and SPC categories.
“Retailers and contractors are realizing what we’ve said all along—that laminates’ life cycle is far from over,” said Dan Natkin, president of the North American Laminate Flooring Association (NALFA) and vice president of laminate and hardwood at Mannington. “It is a truly outstanding product category, and recent advances are drawing in new customers.”
Some of these innovations entail new or improved technologies designed to increase laminate flooring’s resistance to moisture while expanding its overall thickness to resemble that of real wood. At the same time, suppliers are utilizing innovations in digital printing and surface texturing to render more realistic visuals that reflect the demands of today’s consumers.
“Moisture-resistant and waterproof laminates will continue to lead the charge in this category,” Natkin explained. He cited the development of SpillShield Plus—an update on Mannington’s water-resistant technology developed for laminate. “We’ve enhanced the product by treating the bevels and the locking joints along with some other proprietary treatments. We’ve worked on the technology to make it waterproof from the top down from everyday household use such as spills and accidents.”
Industry observers agree the performance attributes of LVT and its subcategories continue to apply pressure on all categories, including laminate. All the more reason for laminate proponents to continue innovating as a means to recoup share. “The result is everyone is upping their game with design and innovation,” said Derek Welbourn, CEO of Inhaus.
Like Natkin, Welbourn said he sees opportunities for laminate to take back lost market share via new product/technology advances. “Water-resistant products and enhanced visuals with digital printing—combined with traditional laminate product enhancements such as embossed-in-register designs and beveled edges—will fuel growth of the laminate segment,” Welbourn said. “It’s all about creating greater value for consumers with products that offer durability, compelling looks and ease of use.”
That seems to be the rallying cry for other major manufacturers and importers committed to the long-term survival of the laminate flooring category. Case in point is Republic Floor. While many retailers and distributors equate Republic with its vast array of popular SPC and hardwood flooring offerings, the company stated its intent to vigorously compete in the laminate arena—a segment that currently accounts for 30% of its sales.
“We definitely see laminates coming back,” said Rotem Eylor, CEO of Republic Floor, which experienced an 8% increase in its laminate sales last year—a multiple of what the overall laminate category achieved in 2020. “But not the cheaper, 8mm or 10mm product—rather, the thicker 12mm format. That’s where we are going to focus.”
CFL Flooring, maker of the popular Atroguard waterproof laminate line, is also counting on technology to get retailers excited about laminate flooring again. “Laminate flooring provides RSAs with both a performance and design story,” said Barron Frith, president of the company’s North American operations. “Water-resistant laminate’s main advantages from a performance standpoint are still scratch and stain resistance.”
For some manufacturers, laminate has the upper hand due to its track record in the market. “Many consumers are already familiar with laminates, so they are aware of the benefits it offers compared to other flooring products,” said Jerry Guo, president of Lions Floor, which supplies a mix of hard surface offerings that include SPC. “There is a customer base that is still very loyal to laminates because it has been tested in the market. Plus, today’s products are thicker and more scratch resistant than the original versions.”
Another factor playing to laminate suppliers’ advantage is a broader move toward more environmentally friendly products. That, coupled with advances in digital printing technology, makes for a compelling proposition. “The continued improvement of laminate looks and textures along with exploiting laminate’s environmental/sustainability story appeal to the emerging millennial market as a best choice for flooring,” Frith stated.
Laminate suppliers say the application of innovative technologies will only continue to drive the category forward despite the market share WPC and SPC-type products have seized in recent years. In fact, some say laminate holds the advantage over competing products in some respects. “Thicker, water-resistant products give laminate a clear total advantage over vinyl products,” Guo said.
It’s not just manufacturers who say laminate has elevated its status in recent years. Distributors like Owings Mills, Md.-based Elias Wilf also attest to the tremendous strides that higher-quality laminates have made. “Laminate is a great example of how the industry has evolved,” said Jeff Striegel, president. “We’ve watched as the category shifted from a thinner, 7mm or 8mm product to a much more meaningful 12mm or half-inch version. When you look at laminate vs. LVP or SPC, laminate is twice as thick—people lose sight of that. The laminate category has also adapted by offering waterproof protection.”
Sales by channel
The strong performance of the nation’s leading home centers and big boxes (ranked by sales volume and number of stores) contributed mightily to the increase in laminate flooring sales in 2020. FCNews research shows America’s leading home centers (Home Depot, Lowe’s and Menard’s) accounted for more than 63% of laminate sales in the U.S. last year—that’s up from 59% the year prior.
Due in large measure to their “essential business” status amid the early days of the novel coronavirus outbreak in the U.S., home centers took full advantage of a captive retail audience. Home centers—given their wide product assortment and importance to the building/construction industry—were permitted to continue operating while many specialty retailers around the country were not allowed to open or had to operate under restrictions. Many observers say the competitive advantage had a direct impact on home centers’ sales results. For example, for fiscal year 2020, Home Depot generated $132 billion in sales—a 20% increase over 2019. More specifically, Home Depot’s flooring division–the retailer’s fifth-largest category—generated $8.55 billion in sales—up 9.6% over 2019.
At Lowe’s, the second-largest home center in the U.S., total home décor division revenues (of which flooring represents about 15%) accounted for roughly $31.6 billion in sales—an increase of 35% over the prior fiscal year. Lowe’s flooring sales—which represent the retailer’s 10th largest category—totaled $4.557 billion sales for fiscal year 2020. By comparison, the specialty flooring retail segment accounted for roughly 20% of laminate flooring sales in 2020, a drop-off of a few percentage points. However, that number is expected to climb higher this year as both independent and aligned retailers alike take another look at the category amid difficulties in sourcing other alternatives.
Industry observers are continuing to see a greater distinction between the types of laminate flooring products sold at home centers—which have been steadily building their share of laminate sales—and other retail outlets, especially specialty flooring dealers. Many laminate offerings at the big boxes fall in the $1.09 to $2.19 per square foot range and generally consist of 8mm products. By comparison, most specialty retailers—realizing it makes no sense to try to compete with volume-driven home centers on the basis of price alone—have opted for laminate products that are 10mm to 12mm in overall thickness. Not only are these step-up products that allow specialty retailers to earn more margins, but they also make it more difficult for consumers to shop for the same products in the box stores because it’s not an apples-to-apples comparison. Laminate flooring sold at many independent retail stores generally fall in the $3.49 to $4.99 range.
“Of course, you have the cheaper $1 per-square-foot products being sold in the market, but the focus for us is more on the higher end—the waterproof products,” said Adam Ward, senior product director, wood and laminate, Mohawk. “The part of the market that’s actually gaining share and holding strong would be those in the higher price range.”
In keeping with laminates’ performance in recent years, the residential replacement market continues to represent the bulk of category sales in the U.S. Renovation projects accounted for just over 80% of laminate flooring revenues, with about 14% attributed to the new home construction market. On the non-residential side of the business, Main Street applications grew its share to approximately 4.8% of sales—up a few percentage points over 2019. And while the well-documented performance of laminate flooring continues to improve, that hasn’t trans- lated into increased commercial flooring specifications. The specified commercial flooring market for laminate (roughly 0.2%) remains absurdly low compared to other segments.
That doesn’t mean laminate flooring suppliers are completely eschewing opportunities in the commercial arena. “We’re investing in the commercial market, and we do see some potential applications in the contract market for our RevWood and RevWood Select products,” Mohawk’s Ward stated.
The mix of laminate flooring import sources saw a slight shift in 2020. As the percentage of shipments of laminate flooring from China to America fell from approximately 48% in 2019 to 42% last year, imports from Europe to North America rose. Statistics provided by the European Producers of Laminate Flooring (EPLF) show members shipped 459 million square feet globally in 2020, a 2.74% increase over 2019. Looking at North America specifically, EPLF members shipped 49.1 million square feet to the region in 2020—that’s a 22.4% increase over 2019. That translates into 38.1 million square feet of laminate flooring shipped to the U.S., with the remaining 11 million square feet sold to Canada, EPLF stats show. EPLF members attribute the robust increases to a flurry of residential replacement activity in the U.S., which was reflected in the second-half sales surge.
Prospects for 2021
Laminate suppliers expect the momentum generated in 2020 to have similar positive results when all is said and done for 2021. While we’re still only in the second quarter of the year, the prospects of another growth year for laminate are looking good. “I expect business to gradually return to normal during the course of 2021 with total annual growth in the 3% to 4% range,” said Travis Bass, executive vice president of Swiss Krono USA, an OEM supplier based in Barnwell, S.C. “We expect our laminate sales growth will be in the 5% to 10% range for 2021.”
Mannington’s Natkin said he also predicts growth in the 3% to 5% range. Others say the category will fare even better than that. “We continue to see growth rates in the double digits as we are extremely focused on laminate and the advantages it brings to our customers,” Inhaus’ Welbourn stated. “We love laminate flooring.”