Posted by: Tamer Atya | October 27, 2008

Market Study: Laminate Flooring Market sees Dips and Turns

Laminate flooring may be easy to install, but as a piece of the floor covering puzzle it is hard to pin down. While the products in the category have seen steady advances in performance and design, specialty retailers are reporting a sharp drop in annual dollar volume from laminate sales. Four years ago, those participating in our survey said they averaged more than $327,000 in sales for the category. Those responding to this year’s survey said the average was $100,411. The falloff is widely seen as a byproduct of laminate sales shifting to big box stores.

 

At the same time, it is clear there are also specialty retailers who are seeing a surge in demand. The percentage of survey participants who said they average more than 20 laminate transactions each month increased over the past year from 8% of those polled to 14%.  Similarly, the percentage of retailers who say they average anywhere from 11 to 20 laminate transactions a month increased from 9% last year to 14%.

 

Indeed, the Laminate Flooring Market Study conducted exclusively for NFT reveals a highly established product segment that appears to be in a state of flux. Perhaps most notably, the average retail price for a laminate transaction has been on a rollercoaster in recent years. In 2004, retailers told us their average ticket was $1,439. By 2006 the figure had climbed to $1,755, only to drop down to $1,555 the following year. Now retailers say the average is $1,621. Meanwhile, on a square foot basis, the average price rose slightly over the past year from $4.16 to $4.22 today. Also up is the size of the average job: from 379 sq. ft. in 2007 to 427 sq. ft. this year.

 

The issue of eroding profit margins is not as prevalent in the new survey as in previous studies. Two years ago, half of those polled described declining margins as a “significant issue” for the category. While it is still a concern, the percentage of respondents that specifically cited it fell to 41% this year. As has been the case for the past four years, the No. 1 issue for specialty stores selling laminate is the growing number of big box retailers. It was cited by 66%, compared with 54% in 2004.

 

What is clear is that retailers remain enthusiastic about the category and have in recent years become even more inclined to recommend it. In our study four years ago, about 60% of those polled said they frequently (or always) suggested laminate to consumers in their showroom. Today, the percentage stands at 77%. One reason dealers may be inclined to pitch the category is their ability to influence a purchase decision. Even in those instances when a shopper has a specific brand in mind, nearly half of the respondents said they usually can steer them to another brand.

 

The strides in engineering have also resulted in a category that is almost entirely glueless (93% according to the survey) and trouble free. More than 80% of those polled said they hear complaints “seldom or never.” Asked to list the concerns consumers express about laminate, dealers said the top two areas mentioned involve noise or sound followed closely by maintenance issues including how to keep it clean. One area that is clearly a strong suit is installation. Only 3% of those who responded indicated that consumers find installation an issue. When retailers were asked in 2005 to identify the top issues shaping the laminate business in the coming years, 22% identified installation. This year the percentage was 14%. Then as now, the top concern expressed by those participating in the survey is “product innovation.”

How Retailers Pick Their Brands

The quality and design of laminate products is still far more important than incentive plans, technical support or even consumer preference, retailers told us.

Asked the top three factors they consider when choosing the line up of suppliers vying for their laminate business, 61% cited product reliability and quality, 50% identified product design and styling and 47% said ease of installation/maintenance.  Meanwhile such factors as tech support, sales training and incentive programs were named by fewer than 10%.

Although Quick-Step remains the company most frequently mentioned when retailers are asked to identify their top selling laminate brand, there are indications that competition for the top spot is heating up. The percentage of retailers who identified Quick-Step as their top seller this year was 21%, a dip from last’s 27% figure. Mannington, meanwhile, posted the biggest gain. The company was named by 14% of the dealers, up from 8% one year ago. The company finishing third in the top-seller ranking is Wilsonart. It was named No. 1 by 11% of those polled (down from 18%) one year ago. Rounding out the remainder of the top 10 (and the percentage of dealers who named them No.1) are: Shaw (11%), Armstrong (8%), Mohawk (7%), Alloc (6%), Pergo (5%), Tarkett (3%), and Berry (2%).

This is a snapshot of an in-depth research study examining the retail market for laminate flooring. The conclusions are based on the opinions, preferences and purchasing behavior of 379 U.S. flooring retailers/contractors who are also active, qualified subscribers of National Floor Trends (NFT) magazine. The study was conducted between April 30 and June 2, 2008.
Source: National Floor Trends

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