Laminate flooring is a segment growing in usage and profitability in some areas, but losing ground in others. This is among the findings gathered through the 2013 Floor Trends Laminate Market Study, conducted by parent company’s BNP Media’s Market Research Division.
Readers of Floor Trends and Floor Covering Installer were recently polled on a variety of topics, including their current and expected future sales, how frequently they recommend laminate to customers, factors affecting the sale of the product and perceived challenges in the segment, among other topics.
A slight drop in the perceived profitability of the segment relative to other flooring choices has been seen this year compared to the first half of 2012. While 62% of respondents thought laminate was a profitable alternative to wood, and 57% felt it was a profitable alternative to resilient, these percentages were still lower across the board compared to last year.
However, the perceived profitability of ceramic and stone compared to laminate is starting to slip. Ceramic dropped 1% this year compared to 32% believing laminate was a profitable alternative during the same period in 2012, and stone dropped 2% in 2013, to 21%. (See Chart 1.)
Sales and Tickets
Average monthly sales for laminate have fallen in 2013, to a mean of six per month compared to nine per month at this point last year. However, more respondents this year were making at least three monthly sales; 27% said they have been only able to pull in one or two sales a month, which represents a 10% drop compared to last year. Additionally, the percentage of total floor space devoted to the category has fallen this year, to a mean of 12%, the lowest in four years.
The good news is the average ticket amount per sale is up this year. In fact, laminate has enjoyed an increase each year since 2010 in the mean ticket price. In 2010, the mean was $1,488 spent per sale. This year, the price sits at $1,748, which also compares favorably to the last two years, $1,446 and $1,655, respectively.
Both the $500 to $999 and $1,500 to $1,999 ticket price ranges saw increases, rising from 19% of respondents in 2012 to 24% this year. The other price ranges were flat except for the $1,000 to $1,499 range, which plummeted from 27% of respondents enjoying those ticket prices in 2012 to only 16% seeing them so far this year. (See Chart 2.)
Year-over-year sales of laminate flooring are up compared to 2012, with a mean of $77,748 versus $75,665. However, the category has not yet returned to the amounts seen in 2011, which showed a four-year-high mean of $122,175, and 2010 with $98,494. For annual laminate flooring sales, the biggest jump compared to 2012 was right in the middle price range at the $50,000 to $99,999, which rose to 30% of respondents from 23%.
The average price per square foot among specialty retailers and contractors has also risen slightly compared to last year, with a mean of $3.28 versus $3 in 2012. That is still lower than 2011 ($3.45) and 2010 ($4.38). Thirty-eight percent of respondents have seen prices in the $2 to $2.99 range, an increase of 5% over last year.
At the same time, the average job has also gone up in size. The mean this year—476 square feet—was even higher than 2010, which posted the second-highest mean at 439 square feet. Respondents this year chose the category of “800 square feet or more” 10% more often compared to last year and 2011 (16% versus 6% for the previous two years). In 2010, this high-square-footage range was chosen by 11% of respondents. (See Chart 3.)
Expectations and Influence
Forty-five percent of respondents felt that residential laminate sales will remain flat this year, while 30% felt they would decrease and 25% thought an increase was coming.
For those who thought an increase was in the works, the most commonly cited reasons included “overall increase in flooring demand,” “price increases on hardwood flooring,” and “economy getting better.”
For those thinking sales would drop, the number one reason cited was the continued growing popularity of LVT.
In commercial, 50% of respondents see laminate sales remaining flat, while 41% saw a decrease coming, which is the highest percentage of respondents predicting a decline in four years. Just 9% were hopeful 2013 would show an increase.
Reasons cited for that increase included “increasing sales” and “new colors and designs.” However, LVT was the number one reason again for why a decline was expected, followed second by “negligible demand in commercial setting.”
This year matched 2010 for the percentage of respondents (64%) recommending laminate flooring to customers “often.” Additionally, only 28% said they “seldom” recommended the product, a better showing than the last two years, though still 4% less than 2010.
The three most commonly cited reasons for selling or promoting a particular brand over another were product reliability and quality (73%); product design and styling (66%), and ease of installation/maintenance (59%). These are comparable to 2011, though the percentages for the first two answers were slightly higher last year, while the last was slightly lower.
Challenges, Perceptions, Concerns
For the last four years running, the number one perceived factor affecting respondents’ laminate flooring business is an increased number of big box channels, cited by the majority of respondents at 73%. In second place was increasing competition from flooring channels, at 59%. Third, at 48%, was eroding profit margins.
Asked to predict what future challenges will be in the market, the majority of respondents chose alternative hard surface flooring (70%). This is the highest showing for that category in four years. In second was product innovation at 55%. “Installation services” and “ability to meet consumer demand” were tied for a distant third (15%).
Only 22% of respondents said their customers have had serious complaints about laminate floors this year. The majority said end users “seldom” or “never” complain. This is also typical of the segment for the last four years. The number one concern from customers is “damage due to water/moisture problems,” followed by “hollow-sounding/echo/noise” and “cleaning issues.”
According to respondents, the majority of their customers (58%) view laminate flooring as highly durable. Interestingly, despite all the technological advances to the visual aspect of laminate, only 37% are completely impressed by the selection and styling of the category, while 60% rated those qualities as “average” for laminate.
“Average” was also logged the most in overall appeal and quality (65%) as well as price (67%). Maintenance was split, with 38% feeling it was average, and 36% rating it highly.