floorcoveringnewsvolume 31/number 1 I fcnews.net I the publication more retailers prefer I June 27, 2016 I $2.00

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square foot of all flooring was$1.11 in 2015, up about twocents from 2014 and about fourcents from 2013. The averageselling price is also up signifi-cantly from $0.98 in 2010 and$0.94 in 2006.

To put things in further per-spective, floor covering sales in2015 hit the highest level since2007’s $22.337 billion and areup 26.4% from 2009, when theindustry bottomed out at$16.189 billion.

The good news doesn’t endthere. As mentioned previously,more floor covering was soldlast year in the U.S. than in anyyear since 2008. Unit growth isup 10.5% from 2011’s low point.

(Editor’s note: FCNews doesnot include stone flooring in itsaggregate total, nor does itinclude ceramic wall tile. Inaddition, rubber flooring num-bers include sheet, tile, acces-sories and cove base.)

Also for the fourth consecu-

tive year, every floor coveringcategory showed growth in dol-lars and all but laminate floor-ing in units with the resilientcategory continuing to be thelocomotive powering the indus-try and luxury vinyl tile the cat-alyst for this explosive growth.In 2015, resilient posted thelargest percentage gain of anyflooring category, rising 13.9%to $2.724 billion from $2.392billion in 2014. Since 2010, thecategory has increased a stun-ning 58.2% and is now at its dol-lar high point in history.

Resilient now accounts for13.3% of the total flooring mar-ket in dollars and 17% in vol-ume after a 17% rise in units to3.145 billion square feet. In2014, resilient held a 12.2%market share, which was upfrom 11.9% in 2013, 11.2% in2012 and 10.8% in 2008.Interestingly, its market share involume had stayed around 15%

try sales surpassed the $20 bil-lion mark for the first time since2007, and volume is at its high-est level since 2008.

Why has the growth beenslow and steady and not morerobust? For one, housing hasnot led the recovery from therecession and is actually laggingthe economy. Also, in pastrecoveries there has alwaysbeen a period of strong econom-ic growth before it settles intonormal growth mode. That hasnot happened with this recov-ery. When the dust settled, floorcovering sales in 2015 totaled$20.457 billion and 18.526 bil-lion square feet. While thesenumbers are well off 2006 highsof $24.715 billion and 26.36 bil-lion square feet of flooring soldin the U.S., these figures repre-sent the sixth consecutive yearof dollar growth and fourthstraight year of volume increas-es. On an even more positivenote, the average price per

Scoring FlooringIndustry Stats for 2015

2011 2012 2013 2014 2015

-13.8%*

4.7%*

$18.915$19.599

20.457

$17.380 $17.919

*Represents 2014–15 percentage change

Resilient Tile

Rubber Wood

Resilient

Laminate

Tile

Rubber

Carpet/Rugs

Wood Laminate

Carpet Rugs

3.2%*

16.734 16.980 17.639 17.956 18.526

(in billions of square feet)(in billions of dollars)

2011 2012 2013 2014 2015

T he flooring industry in2015 continued its recov-ery from the prolonged

recession. While growth ratespale in comparison to the mid-2000s heydays, the industry lastyear saw increases of 4.4% indollars and 3.2% in volume.This comes on the heels of 3.6%growth in dollars and 1.8% involume in 2014 compared to therespective 5.5% and 3.8%growth rates in 2013. Perhapsmore significant is total indus-

Continued on page 12

IN THIS ISSUE

By the numbersFCNews’ annual StatisticalIssue defines the flooringindustry in 2015 in terms ofdollars and units sold.

Carpet/Rugs .....................18Resilient ..........................22Wood ...............................30Laminate .........................36Ceramic...........................40

CommercialIncreased activity in key end-use sectors such as corpo-rate and healthcare is drivinggreater demand for carpet tileand LVT products.

PAGE 44

Total industry sales

$20.457 4.4% 18.526 3.2%

22 I June 27, 2016 fcnewsresilient

The crest of the resilientcategory’s wave willseemingly not fall. The

segment continues to post sig-nificant gains, with 2015’s per-formance perhaps the mostimpressive yet. Innovationcombined with an upswing insome commercial markets and

steady residential activity havedelivered increases for bothsheet and luxury vinyl tile.

The resilient upswingremains impressive with a per-centage gain of 13.9% in dollarsfrom 2014, rising from $2.392billion to $2.724 billion. Lastyear’s sales also represent a23.5% increase from 2013’s$2.206 billion and a 33.9% rise

from 2012. To put things in theproper perspective, the catego-ry is up a striking $1 billion inthe last five years (totalresilient sales in 2010 came inat $1.722 billion).

In contrast to the changefrom 2013 to 2014, squarefootage for resilient was up amonumental 15.5% from 2.688billion square feet two years

ago to 3.145 billion in 2015.Considerable gains in the cate-gory can be attributed to sever-al factors, particularly thegrowth of the sub-categoryoften referred to as WPC/com-posites/rigid-core products. Intotal, LVT overall took up35.6% of residential volumelast year with sheet command-ing 55.1%. Tile, which is basi-cally the peel-and-stick productsold through the home centerchannel along with productthat is less robust than LVT,captured 9.3%.

Residential LVT raked in$874.1 million in 2015, whichaccounts for 56.9% of overallresidential resilient sales.According to industry execu-tives, multi-family and residen-tial remodel were the marketsthat drove the category’sunprecedented growth. Incomparison to 2014, when res-idential LVT sales checked in at$630.5 million, a dollarincrease of 38.6% was posted.

“For 2015 we felt there wasmuch steadier business atretail,” said Kurt Denman, vice

By Jenna Lippinpresident, sales and marketing,Congoleum. “This seemed to beconsumer confidence drivenalong with the recovering hous-ing market. The combination ofthose two things made peoplewilling to cut loose a few dol-lars. The other part of that isthe shift from soft to hard sur-face; LVT is really benefittingmost from that movement.”

Russ Rogg, president andCEO of Metroflor, agreed. “Thedriving force for 2015 wasmulti-family,” he said. “We do alot of business there with someof our more entry-level dryback/glue down LVT specifica-tions and with a fair amount ofour Konecto [click] products.We did more in 2015 with juststandard retail, residentialremodel and replacement busi-ness. These are products soldthrough [specialty retail].”

The shift from soft to hardsurface in the multi-familychannel was also cited as agrowth factor by Dan Natkin,senior director of residentialproducts, Mannington. “Thisgrowth has definitely been a

LVT creates tidal wave of sales as vinyl remains Multi-family, residential remodel cited as top segments; WPC becomes important player

2011 2012 2013 2014 2015

13.9%*

$1.931$2.206

$2.392$2.724

$2.035

2011 2012 2013 2014 2015

17%*

2.352.59

2.6883.145

2.43

*Represents 2014–15 change

3.7%*$.487 $.514 $.524 $.540$.504 4.7%*.222 .227 .233 .244

.225

=Resilient =Rubber sheet and tile flooring, cove base, accessories

Total resilient sales (in billions of dollars) (in billions of square feet)

fcnews June 27, 2016 I 23

large contributor both in rentaland owned properties. Multi-family overall has been atremendous area of growth.LVT has played very well there.”

Jamey Block, vice presidentof product management forresilient at ArmstrongFlooring, said the growth inmulti-family and manufacturedhomes was “disproportionate.The strength in the multi-fami-ly new construction segmentwas partially offset by a weakgeneral remodel market. As themarket becomes more dynam-ic, we expect to see higherdesign in the residential mar-ket with builders and propertymanagement more focused onaesthetics.”

Other LVT manufacturersthat specialize in the producthave observed growing accept-ance and sale surges in the sub-category across the board.Jonathan Train, president andCEO of EarthWerks, which hasbeen making LVT for fourdecades, said LVT is taking mar-ket share from other flooringcategories in both residentialand commercial segments.“With the tremendous detail indesign and performance attrib-utes we are able to incorporateinto LVT, it has become a strongcompetitor for all hard surfaceoptions. The ease of installation,durability and overall styling hascatapulted this category to finda home in all sectors.”

Michael Raskin, presidentand CEO of Raskin GorillaFloors, said LVT no longer hasto be “sold.” Customers andend users are seeking out theproduct instead of having itpresented to them by salespeo-ple as an option. “The marketfor LVT is growing. More peo-ple are using it and asking for itoff the bat. You don’t have toeducate people about it any-more. When I first started Inever imagined people wouldask for LVT. It has taken on alife of its own. I think we’re infor a nice, long ride.”

InstallationOn the installation side of LVT,dry back or glue down remainsthe method of choice, capturing55.3% of the market, albeitdown from 66.3% two years agoin terms of dollars. It is a lessexpensive product than click,evidenced by glue down’s 62.4%share in terms of volume. Click,however, is moving positively asit grew from about 26% in 2014to 40.8% last year. WPC, whichsome estimate to haveapproached $200 million in2015, is a big driver of that shift.

Loose lay accounted for 3.9% ofresidential LVT sales in 2015.

“[Entry level] products par-ticularly for multi-family andbuilder segments tend to focusprimarily on glue-down LVTbecause that market is [value-driven],” Congoleum’sDenman explained. “We’veseen growth in click, whichtends to be more in residential,especially residential remodel.We are seeing some realgrowth in the multi-family useof click because they are betterproducts not just at the open-

the shining star

Continued on page 24

Resilient imports by country of origin(by dollar value)

Canada19.5%

China28.9%

Others7.7%

Korea12.2%

Germany5%

Sheet

U.K.5.7%

Japan2.7%

China76.7%

Others4.5%

Korea15.5%

Tile

Taiwan3.3%

Belgium18.3%

workout rooms, etc.”IVC’s Murfin said sheet was

also strong in multi- and single-family builder markets. “Thatis where a lot of the growthwas. There are still viable seg-ments in the retail part of thebusiness as [sheet] is still thebest value floor covering in theindustry. I think it’s just theupper end of sheet that facessome challenges relative to thelower end of LVT.”

Sheet is also affected by theshortage of experienced, knowl-edgeable installers as theprocess for rolling out and lay-

ing down the product takes acertain level of expertise.“Many skilled installers who areimmigrants left the U.S. duringthe economic downturn due tolack of work here,” Congoleum’sDenman explained. “The impli-cations of this were very real formore complicated installationsand can work against sheetproduct. But with the shortagethere can be a benefit at theother end of the business withLVT. It doesn’t require the samelevel of skill.”

In terms of sheet construc-tion, by most accounts fiber-glass continues to grow.According to industry figures,residential fiberglass sheet took

home $362.5 million last year,which is 60.7% of residentialsheet overall. Compare this tofive years ago, when fiberglassrepresented only $205 million

in sales. In terms of volume,fiberglass commanded 725 mil-lion square feet, or 61.4% ofresidential sheet volume.

“Glass is continuing to take

share and grow in relativeterms to the total market,”Mannington’s Natkin said.“But there are still pockets ofthe country that prefer felt,particularly in markets wherewe’ve seen more availability ofexperienced installers. It is get-ting harder and harder to findinstallers who know how toseam a floor for sheet vinyl.Price is definitely a factor inaddition to performance; glassperforms extremely well in athicker product. But when youstart getting thinner in aneffort to get a value product,glass doesn’t perform as well asa felt counterpart [with a simi-lar thickness].”

CommercialThe commercial side of thebusiness brought in $1.1884billion last year, with LVT con-tinuing to take share in thecontract market as well.However, while LVT com-manded a 48.5% share of com-mercial resilient dollars, it onlycaptured 29.4% in volume,illustrating its position as thehighest priced commercialvinyl product. At the other endof the spectrum, VCT com-manded more than half of com-mercial resilient volume at52.4%, or 529 million squarefeet of the total commercialvolume of 1.01 billion squarefeet, but that translated to $313million, or only 26.3% of dol-lars.

Metroflor’s Rogg cited edu-cation as one specific sectorthat is starting to specify LVTwhere it would have tradition-ally chosen VCT. “A lot of folksare looking at the value of LVTover VCT. The up-front cost ofLVT products are more expen-sive but life-cycle costs likecare and maintenance are caus-ing a lot of school districts tolook at greater up-front invest-ments knowing the life is moreeffective in the long run. Ithink [VCT is] beginning tofeel the pinch and it is going toget even worse.”

He noted an advantage inLVT over VCT lies in designoptions as well. “You can do somuch more with LVT from a

28 I June 27, 2016 fcnewsresilient

Continued from page 25Resilient Product origin

(in terms of dollars)

Domestic44%

Import56%

Sheet

Domestic58%

• All linoleum is imported• All VCT is domestic• About 80% of commercial sheet is imported• About 75% of residential sheet is domestic

Import42%

LVT

Domestic21.3%

Import78.7%

fcnews June 27, 2016 I 29

design perspective. You canmake the environment feelricher and more aestheticallypleasing with LVT than youever could with VCT.”

As previously noted, withcommercial sheet down 1.4%in dollars last year its volumedropped from 15% of the com-mercial market in 2014 to13.1% last year. LVT rose from25.3% to 29.4%.

“LVT continues to takeshare from all categories,” saidDavid Sheehan, vice president,commercial hard surface,Mannington Commercial.“Not much commercial sheet issold outside of healthcare butLVT benefited in all seg-ments—retail, healthcare, hos-pitality and education.”

In terms of general activityin the 2015 commercial marketoverall, Sheehan cited health-care and retail as the two maindriving sectors with hospitalityand education contributing toactivity as well. Rogg also men-tioned retail as well as hospital-ity, noting Metroflor “did notsee great gains in corporate oron the education front.Hospitality and retail waswhere we saw strong business.”

The WPC shakeup Several executives on theresilient side of the industrydescribed WPC—or compos-ites, rigid core, etc.—as “dis-ruptive.” While most compa-nies are taking a “wait-and-see” approach to determinejust how influential the newsubcategory is, compositeproducts are certainly makingnoise no matter how you lookat it. Many consider it a trade-up LVT option (think “best” ina good/better/best system) ora viable alternative to lami-nate where water is a con-cern.

“Up through last year,before everyone jumped intothe pool, [WPC] was playingmore as a trade-up to tradition-al LVT or a trade over fromlaminate,” Congoleum’sDenman explained. “Witheveryone in the pool now,you’re going to see companiescompeting at all price points so

it won’t just be a trade up; itwill be ‘trade across’ at pricepoints from traditional LVT.”

Natkin said Manningtonconsiders composites an addi-

tional LVT option. “In acomplete LVT programthere will be a range thatincludes a thin glue down,a slightly thicker gluedown and then a move upinto click LVT and clickrigid core. [WPC] is a nat-ural extension of the LVTproduct category in and ofitself. People are trying tomake it its own categorybut it really isn’t.Residentially it isabsolutely taking share as

a high growth category withinthe upper end of LVT.Commercially I think it has lessplay today mostly because thelocking systems and construc-

tion aren’t designed to handleheavy rolling loads.”

Raskin believes WPC—ledby USFloors’ COREtec—hasaffected the residential gluedown market specifically inaddition to “traditional” vinylclick product formats. “But thishas taken off faster than vinylclick for sure,” he noted.“[USFloors] did a good jobmarketing [COREtec] and theydefinitely did a nice job differ-entiating it. You’re going tohave this kind of product as asubcategory of LVT but it willfall in the class of engineeredLVT, which in my eyes is any-thing that’s different than dryback. And that’s where the

(in terms of dollars)

Residential sheet construction

Other11.5%

Felt 27.9%

Fiberglass 60.6%

(by volume)Other8.2%

Felt 30.4%

Fiberglass 61.4%

market is going.”While several players are

still catching on in the WPCarena, Rogg said the category“represented significantgrowth” in 2015. “I think it hasbeen one of the most revolu-tionary products to hit the LVTindustry in a long time—maybe ever. Clearly it has legs.We’re bullish on the category;it’s going to be very big. Welook at it as an extension of ourLVT portfolio. It was 3% of ouroverall business last yearbecause we are just gettingstarted. I would guess by theend of 2016 it will be 10% ofour business, maybe evenmore.”