Housing boom drives new floor products

Demand up for laminates, tiles at carpet's expense

July 24, 2005|By COX NEWS SERVICE

One of the home improvement industry's hottest growth markets these days is right underfoot.

Flooring products have exploded into a dizzying array of textures, colors, sizes and price ranges, encompassing everything from do-it-yourself laminates to high-end Travertine tiles. Carpet makers, whose sales suffered amid the rise of laminates and ceramic tile, now offer glueless, modular carpet tiles that can be used to cover a small area or an entire room.

"Flooring products have taken a quantum leap forward," said Al Stewart, editor of National Floor Trends magazine, which tracks the industry. "Demand is up, the products have never been better, and prices - for now at least - are mostly stable."

Contributing to the flooring craze is the booming housing market - along with home improvement television shows that showcase design ideas. Engineered laminates that look like real wood or tile, but are much cheaper and more versatile, have created whole new product lines and sparked fierce competition among manufacturers.

"Floors used to be beige," said analyst John Baugh with Baltimore-based Legg Mason Wood Walker. "It was once fashionable to have wall-to-wall carpeting. But once everybody got it and it was the same color, it went too far. We've seen a move to natural products like stone, ceramic, wood and cork, to name a few."

More discounts

Retail giants Lowe's and Home Depot are vying for their share of the market as they spice up displays, expand offerings and push installation services with zero percent deals and discounts.

Atlanta-based Home Depot Inc. is testing stand-alone flooring stores and recently expanded the test to seven stores in Texas and Florida.

Overall flooring sales grew 10.5 percent last year, to $45 billion in sales, according to Market Insights/Torcivia, a flooring industry research and consulting firm in Reading, Pa.

Laminates and ceramic tile grew much faster, at 23.9 percent and 17.6 percent, respectively, while carpet and rug sales grew 9.2 percent. Vinyl flooring appears to be suffering most from recent trends, with sales up just 1.4 percent.

"Last year was a pretty good year," said Santo Torcivia, president of Market Insights/Torcivia. "Housing starts hit nearly 2 million units last year - that's a record. A lot of the drivers in the floor covering business are in new [home] construction."

Homeowners spent $130 billion on improvements to their homes between April this year and last, according to a report by Harvard University's Joint Center for Housing Studies. Since the first quarter of 2004, spending is up 5.2 percent, the report said.

"New technology has enabled manufacturers to duplicate the look of much more expensive flooring," said Stewart, the trade journal editor. "Then, of course, there is a wave of Chinese manufacturers trying to crack the market. This phenomenon has helped bamboo become one of the fastest-growing areas of hard-surface flooring."

`Fashion statement'

Floors aren't just for standing on anymore, managers say.

"We're trying to add an element of fashion," said Al Pacheco, Home Depot's divisional merchandise manager of flooring.

Lowe's, too, refurbished its flooring departments and overhauled its installation services business last year. The company reported in the latest quarter that flooring sales were "above average."

Clint Davis, vice president of merchandising and flooring, said Lowe's is selling lots of laminate, Brazilian cherry wood floors and ceramic tile.

"It's definitely a fashion statement," Davis said. "It's affordable today. Manufacturers can produce it more efficiently, and that has driven the costs down."

Torcivia said Home Depot and Lowe's dominate the ceramic tile category. But specialty retailers still dominate sales and installations in most other flooring categories.

"Home Depot and Lowe's have been very successful at garnering the do-it-yourself customers, but they have not been able to gain the installed customer," Torcivia said. "That's the market the flooring specialty stores have managed to keep."

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