Laminate Flooring Manufacturers Look Ahead With Optimism Following Strong 2002

LAS VEGAS, Jan. 28, 2003 - The laminate flooring industry has long touted performance as one of the product's primary benefits. Based on the category's 2002 sales, it seems that attribute extends well beyond the surface of the product. According to the North American Laminate Flooring Association (NALFA), whose members represent 78 percent of laminate flooring sold at retail today, not only did the category enjoy a strong 2002 from a sales and volume perspective, the outlook for 2003 looks just as promising.

"Even in a tough economy, the category performed exceptionally well this year with double-digit increases in both dollars and square feet sold," said Bill Dearing, president of NALFA. "The even better news is that this momentum shows no signs of slowing anytime soon. Assuming we have a positive economic rebound, we should see another year of double-digit growth in volume and value in 2003."

Members of NALFAreported a total of 530 million square feet of laminate flooring sold during2002, an increase of 17 percent over the previous year. This equated to $726 million in sales, a 13 percent increase over 2001. The only notable decrease was in average price per square foot, which went from $1.42 in 2001 to $1.37 in 2002.

"This is actually really good news," explained Dearing. "Considering the increased number of low-end, price-driven products entering the marketplace, the fact that price per square foot has remained relatively stable indicates a growing interest among consumers in the value-added features of mid-to high-end products that offer better performance and higher margins. This is great news for retailers and the industry in general."

Introduced to theNorth American market in the mid 1990s, laminate flooring was quickly acceptedby consumers as an alternative to hardwood and vinyl due to its durability and resistance to stains, fading and indentation from heavy objects. Additionally, it was incredibly easy to clean. Over the years, laminate decors have improved tremendously and the category has enjoyed rapid growth. According to NALFA, laminate now accounts for five percent of the overall flooring market.

While professionals still consider products requiring glue as the best installations, glueless or "click" products have made significant inroads over the past few years. Already accounting for 62 percent of the market, glueless products are offered by n early every manufacturer in the industry, most of whom are focused on increasing their share of this hot performing portion of the market through innovation in both installation techniques and design.

Among the most promising innovations to emerge from this category is the development of click joints with pre-applied glue. Combining the ease of click assembly with the added strength and protection against moisture and gapping, this technology promises to be one of the most significant growth areas during the next few years.

Unlike their European counterparts, who have resigned themselves to competing in a price-driven market, North American manufacturers maintain their faith in the profit potential of the upper-end segment. The focus continues to be on differentiation through more - and more realistic - textures and embossed-in-register looks.

While oak and other traditional wood looks continue to dominate both the traditional and glueless categories, many companies are introducing wood grain looks that expand into more exotic offerings like chestnut, maple, walnut, olive, cherry and hickory. Manufacturers also are developing more ceramic, stone and marble looks along with large-format tiles and accent tiles to offer more opportunities for customization.

"There is a definite demand for products with enhanced features and benefits," said Dearing. "As consumers become more knowledgeable about the category, they recognize and appreciate the difference these value-added features make and are willing to pay higher prices for more realistic looks."

Consumer demand for better decors and more realistic textures is good news particularly for specialty retailers, who will continue to drive category sales, according to NALFA.

"Consumers who shop at specialty stores are looking for more than merely a commodity floor. They want the best selection and the added confidence of working with a specialist," explained Dearing. "They also want the additional services such as customization and installation that they can get through specialty retailers."

The outlook for 2003 remains optimistic with continued growth in mid-up products predicted, along with a decreased influx of "new" commodity products. Rapid design and technological innovation is expected as manufacturers fight to differentiate themselves in the marketplace.

In terms of category growth, residential replacement will continue to be the overwhelming driver of North American laminate flooring sales. Currently accounting for 84 percent of consumption, according to Floor Covering Weekly, replacement is likely to generate an even greater percentage of growth due to the natural flooring lifecycle.

"Flooring typically has a seven-year cycle," explained Dearing. "With laminate having been introduced to the U.S. in 1995, we are just now approaching that seven-year mark when customers should be thinking about replacing their floors. Additionally, there is a whole generation of flooring customers who will be looking to replace flooring they purchased before laminate was even available in the U.S. If we can convert these consumers to laminate, we should see some significant growth in replacement flooring."

Traditionally, the second largest growth area for laminate flooring has been new home construction, and that trend should not change in 2003. While new home sales are predicted to slow somewhat, economists predict another record-setting year. The good news is, laminate flooring should experience growth whether records are set or not.

"Laminate flooring has an advantage over other categories because it's fairly inflation proof," said Dearing. "If, for instance, the new housing market takes an unexpected hit, we will likely see an increase in residential replacement as consumers start putting dollars back into their current residences."

The third - and most promising - growth area for laminate flooring is commercial end use, a segment that suppliers say represents the greatest potential for the category in the future. To maximize the potential of this relatively untapped market, NALFA is in the process of establishing industry standards for laminate products specifically designed for commercial use. As part of the process, NALFA will establish two performance levels for laminates used in commercial settings - "light commercial" and "commercial." The new NALFA Commercial Standards are scheduled to be finalized by Spring 2003.

For further information, please contact:
Allison Kurtz 800-837-7123 or 312-565-3900