It’s been a little more than three months since “60 Minutes” ran its story about certain laminate products at Lumber Liquidators having levels of formaldehyde that exceeded limits set by the California Air Resources Board (CARB). Limits that are expected to become national by the end of the year as the Environmental Protection Agency is developing a final rule under the revised Formaldehyde Standards for Composite Wood Products Act that was enacted in 2010 as title VI of Toxic Substances Control Act (TSCA), with a projected November release. Based on all reports, the federal standard will virtually mirror what is known as CARB 2, which was the second phase of the California rollout to eliminate this toxic substance.
And, two months after the CBS story aired, Lowe’s announced it was pulling certain Chinese-made laminate from its shelves out of “caution.”
When the story first broke, there was much discussion at trade shows, conventions and some of the industry press on what this will mean for the mass merchant and the laminate category—and wood, as that somehow got tied to the discussion even though the product was not part of the CBS exposé.
The story continues to make headlines as Lumber Liquidators fights the allegations all while seeing its CEO resign—forcing its founder to take over until a new top executive is found—and its stock take a major hit.
Floor Trends reached out to a number of specialty retailers to find out if and how these stories impacted their business as well as to learn what they did, if anything, in the immediate aftermath. It should be noted everyone polled praised the response from the industry’s larger manufacturers, with most noting the mills sent out compliance letters within a day—even before being asked. One dealer even remarked how a rep came to the store wanting to put a sign up by his company’s products stating they were compliant.
• Did you notice any kind of consumer kickback from either of these stories?
Michael Barrows and Riley Gazzaway of Atlanta Design Centers:
Barrows—We have actually had a conversation with a customer concerned with CARB 2 compliance [who actually] had the material tested.
Gazzaway—We acted without hesitation to satisfy the customer’s concerns [and replaced the floor]. Also, we notified the supplier, a reliable direct importer and distributor, and sent it the bill for the replacement. The products in question were immediately removed from our floor.
We would always try to enlighten the customer with our knowledge regarding the basis for their complaint but will always come down on the side of the customer.
Carlton Billingsley of Floors and More: After the “60 Minutes” segment, we were faced more with our customers asking about the product’s manufacturer and where it was located.
We have always proudly displayed on product samples Made in the USA and some of our customers appreciate and want to purchase from these manufacturers first if applicable. I vividly remember one consumer who was not going to purchase any products—flooring or accessories—that were not made in the U.S.
From the story, we have seen consumers more aware of the process of the flooring manufacturer, the source they purchase the flooring from and doing more research on the web before coming into the showroom.
Tony Greco of CAP Carpet: Immediately after the story, we were getting flooded with calls—at least a couple of dozen in the first week.
There has been a great deal of concern by the public—and even salespeople. The greatest concern has been from people who just had laminate installed. They were calling and asking if their floor was safe.
Ted Gregerson of JTG Enterprises: We had several customers come in looking for laminate and asked about where ours were manufactured. We [also] had a few customers who had purchased laminate flooring from us but had not yet installed it come in and ask about the product and its formaldehyde levels.
We immediately got them copies of the compliance letter from the manufacturer. Once they read it, they seemed reassured their laminate would not be a problem, and proceeded with the purchase and installation. We did not have any customers cancel their order because of the story and those who have made a purchase have had no concerns since the installation.
Dave Munson of Mankato Floor To Ceiling: We had just a few customers call right after the broadcast asking about their orders—even though they had not even ordered laminate flooring. Very few customers [have] ever even asked about this issue during the sales process after the broadcast aired.
Karen Siegrist of H.J. Martin & Son: Yes, we did notice consumers calling or coming into the store after the “60 Minutes” story. Most wanted to confirm the products they were looking at were safe and CARB compliant.
No one was frantic and no customers asked to have their laminate cancelled or ripped out of their homes—nothing extreme was happening.
Denise Smith of (Menefee’s) Flooring America: We had a lot of activity after the story. Anyone who was making a purchase, not just laminate, but wood as well was asking about the product’s safety.
About 50% of the customers asked where the product was made, as they want U.S.-made products. Even people buying carpet have been asking if it’s made in the U.S. They are saying, ‘We don’t want those Chinese off-gassing products.’ This was even on small sales.
We had a customer who had purchased from Lowe’s and canceled it because it wasn’t made in the U.S. and, instead, came to us because we had U.S.-made products. It’s a bit difficult because when they come in, they want the low price point. But it has also helped because now they are seeing you get what you pay for.
• Did you do anything as a business when either of these stories came out?
Gazzaway: I polled our retail sales associates in both the showroom and the outlet store and basically was told there were some customers that referenced the “60 Minutes” story but trusted us as their resource.
We did notice the boxes containing cabinets that we sell are clearly marked with “contains formaldehyde.” So we contacted our supplier and it rushed us proof that it is well within industry standards.
Billingsley: After the broadcast, I made sure we had a compliance letter from every flooring manufacturer in our showroom that was current and up-to-date. We continue to have this file of documents readily available if any consumer at any time requests this information.
We had a meeting with our personnel to discuss the broadcast, and any implications this could have on our business. Our strategy was to be transparent with facts and documentation, but not to bring up the subject with consumers and invoke fear, which would negatively affect the product category.
Our buying group, FCA Network, was also very proactive in sending each member a compliance letter from all our core vendors in one zip file.
Greco: We immediately put an announcement out to our salespeople noting we buy only the best and that the products follow CAP’s core values. Basically we told them they could feel confident in what they are selling meets all legal requirements.
We even found a third-party company to test a product if the customer asked. Luckily that hasn’t happened, as the testing is pretty expensive, but we were prepared just in case.
With laminate, we have always been very careful not to buy plunder and are confident our products are safe. We did reach out to our suppliers to make sure—even had every wood supplier send us documentation they were compliant with the Lacey Act.
Within 24 hours we had all the info with the exception of one supplier that said it wasn’t CARB 2 compliant. We elected to remove the product as even though we’re not in California we only want to sell CARB 2 compliant floors because we only want to sell the best and in no way do we want to sell a product that might do harm to the public.
In our ProSource stores, we buy inventory and sell special order so it took us a little longer to contact everyone as we have multiple suppliers.
Gregerson: We immediately put “Made in USA” labels on all our laminate samples and displays that are manufactured here. We also immediately had sales meetings in each of our stores. We discussed what was talked about on the episode with all our salespeople.
We made sure each of them clearly understood what formaldehyde was and what the issue with Lumber Liquidators and its products was, so they would be informed and be able to talk to customers about how our products differed.
We also forwarded all the letters of compliance our suppliers gave us directly to our salespeople, so they could store them on their tablets and either show or print them for their customers. We did the same for all hardwood floors we stock and/or display.
We did not advertise anything in the media about it, as it has always been our practice not to advertise anything that might be viewed as negative toward our competition.
However, we did not shy away from mentioning it during our sales presentations. The reason is, we feel there may be some customers who either saw the episode themselves or heard about it but are reluctant to bring it up. So we bring it up ourselves to let our customers know we are aware of the issue, we know which products Lumber Liquidators was selling and that we are confident our products are in complete compliance. By us bringing it up, not in a derogatory way to Lumber Liquidators but in a way that shows we are concerned about the problem, seems to give our customers confidence in us as a company.
Munson: We made our staff aware of the issue and explained the issues to them. We made sure they knew that we do not sell any Chinese made laminate. Our approach was to let the customer take the lead and ask the question. If they did, we were prepared to deal with the issue. You never get anywhere by bad mouthing a competitor.
Siegrist: Every designer and/or salesperson was aware of the situation and ready to handle questions. We also added a blog to our website addressing the issue for past, present and potential customers.
(Editor’s note: The blog explains what CARB 2 is as well as the federal law coming out and highlights the company’s various suppliers—laminate and wood—and how they are compliant. The blog also quotes H.J. Martin’s president and CEO, Edward Martin: “The safety of any product we sell is of utmost importance. We have the assurance of our suppliers the laminate and wood flooring products in our showrooms are safe and meet all federal standards…The importance of working with a trusted retailer has been one of the results of this concern arising. We have people available to answer any questions a customer might have and to address the make-up of specific products.”)
Smith: We forwarded all the documentations we received to our salespeople so they can pull them up on their tablets if a customer asks any questions during the sales presentation. Our owner, Rob Menefee, even emailed the “60 Minutes” story to everyone right after it came out so they were aware of it.
Flooring America also has a Made in USA promotion and they gave us the supplies needed to run one right after the story.
Interestingly, people have been satisfied with our reassurances that we haven’t needed to show them the documentation on the product; they are trusting us. One woman said she would come back as she wanted to research the brand herself. We see more people who have done research before coming to the store.
• Do you feel this will have any long lasting affect on the consumer toward laminate? What about the industry, do you see any long-lasting affect/changes from these stories?
Barrows—Yes, absolutely it will have an effect on laminate as well as some other household products for the short term.
Gazzaway—There will be hesitation or refusal by the informed public to purchase any wood material made in China. The uninformed public however will still be a laminate consumer but most of the products they are going to purchase will now be made in the USA or recertified and endorsed by the supplier.
Billingsley: I do not think this will negatively affect the consumer long-term toward laminate or hardwood. However, I do think consumers will be more aware of the “too good to be true pricing,” and question how one company can offer something that others will not.
Unfortunately, many consumers will be reminded of this story for many years while doing their research before shopping; this will create sales professionals to continue education on this subject and be prepared for the consumer’s questions.
The great news is, many who were not doing the right thing have been made aware that when you think no one is looking, matters as much as when they are looking.
Gregerson: When the episode first aired, we believed it was definitely going to have a negative impact on the flooring industry as a whole. However, we have seen the positive effect “Made in USA” labels, as well as having compliance letters for all our laminates and hardwoods on hand can have on customers.
Also, we see that by not shying away from discussing the topic, in fact bringing it up ourselves, can instill confidence in our customers.
While the “60 Minutes” episode might cause some customers who were initially looking at laminate flooring to switch to another product category such as LVT, and therefore effect the laminate category to some degree, we believe if flooring retailers handle the issue appropriately, it will not noticeably impact the flooring business at all.
Munson: For us I don’t see much difference. We actually sold more laminate last month than expected.
Siegrist: Not really. As low-end laminate sales in the U.S. shrink and go the way of the big box stores, higher end laminate gains the focus of customers. Laminates such as “Beach House” by Richmond Laminate have recently been sold—not for floors, but for walls. With the price of reclaimed hardwood going through the roof—and gaining popularity just as fast—designer-looking laminates are selling at one-third the price of reclaimed wood—and now are gaining popularity, too. Why not designer-looking laminate on the walls? It looks just as great as on the floor.
Smith: Laminate is a small portion of our business so I don’t think there will be a negative effect. In fact, I think it will help with regard to the better quality products—which are the kinds we sell.