Laminate 2013 - Aug/Sep 2013

By Jessica Chevalier

Combating the commoditization of the laminate category is an ongoing battle for the independent flooring retailer. It’s a matter of education, undoing the negative associations customers have with the category as a result of the $0.99/square foot home center product and instructing them about the benefits of better-end product. For some retailers, the strategies are successful, resulting in either increasing or steady laminate sales over the last few years. For others, damage from commoditization has been difficult to overcome.

All of the retailers we interviewed have been selling laminate flooring for years. In fact, Bernie Mallon, store manager of Ruggieri Carpet One in Cranston, Rhode Island, believes he made the first residential laminate flooring sale in the U.S. Though the category had a lot of wind behind it after its introduction to the U.S. in 1994 and for quite a few years afterward, its proliferation in the home centers changed the category’s trajectory. Now, customers who begin their shopping at the big boxes may only see laminate flooring as the cheap option, never truly understanding the category.

But laminate has a lot going for it. It’s durable. It’s easy to install. It’s competitively priced, and its visuals are among the most realistic in the industry. And these are the benefits that independent retailers attempt to sell when they educate a consumer about the product category.

FLIPPING THE SCRIPT
“The only way to combat the commoditization of laminate is through education,” says Joshua Roberts, general manager of Roberts Carpet and Fine Floors of Houston, Texas. Roberts carries the widest price range of laminates of all the retailers we contacted, from a walk-out-the-door at $0.99 to $6.00 per square foot, and he estimates that approximately 12% of his total offering is laminate.

“Most people that come into a floorcovering store have no basis for what they think they are coming to buy. We overwhelm them with options, then remove some of these based on their wants and needs.” Roberts has sold laminate flooring since Pergo first brought the category to the U.S., and reports that sales are down significantly from what they once were. He finds this surprising, since floating floors are ideal for the Houston area where, he says, “the ground is like gumbo due to the moisture content. The slab will be exposed to moisture; it’s not a question.

“When people aren’t considering laminate,” Roberts adds, “it’s because they say wood is so cheap that they might as well go with the real thing, but I ask, ‘Do you want to be a slave to your floors?’ It’s about lifestyle. I don’t want to be yelling at my daughter every time she walks in the house in her cleats, so I have laminate in my home.”

Roberts laments that, as the bulk of laminate business has moved into the home centers, the explanation of differences between the laminate products has disappeared, and the category is sold solely on price. “Nobody is explaining to customers why they might want to choose 12mm over 7mm. In fact, very few people in those outlets even have that knowledge.”

On the other end of the country, Justin Baldwin, laminate and vinyl product manager at Avalon Carpet Tile and Flooring, which has stores in New Jersey, Pennsylvania and Delaware, competes with home centers by putting emphasis on his higher quality laminate offering. Baldwin carries 30 laminate SKUs, which range in price from $0.99 (only two SKUs) to $4.49 per square foot. He says that often his laminate customers come in asking for hardwood but choose laminate once they are educated on the benefits of the category. Avalon carries a wide range of laminate brands: Quick-Step, Mohawk, Armstrong, Pergo, Shaw and Mannington. The store started selling laminate flooring in the late 1990s.

For Baldwin, sales of laminates have increased over the last two years, and the company is now inventorying product and has increased its average ticket by selling higher end laminate. Quick-Step’s Reclaimé line, which retails from $3.99 to $4.49 per square foot, is one of its best sellers.

When Baldwin is training his sales staff, he instructs them to pinpoint specific attributes of the products. To reinforce this technique, Avalon prints labels that break down all the attributes of a product and posts them on the showroom samples. Of course, this is also helpful if a customer is exploring the showroom alone, either by choice or because the sales staff is otherwise occupied. Says Baldwin, “Almost every customer starts at Home Depot or Lowe’s. They have shopped other places, and they are looking for value. They have seen value there, and we have to offer value too.”

Baldwin says that the most important question to the customer is, “Where are you going to install this?” If the answer is a heavy traffic area without a lot of moisture, then laminate will wear better than either hardwood or LVT.

In Louisville, Kentucky, Nick Freadreacea, owner of The Flooring Gallery, takes a similar approach to Baldwin. He has laminates ranging from $0.88 to $5.50 per square foot. “The entry level is just to show that we can meet what the box stores offer,” he says. The Flooring Gallery carries Mannington, Quick-Step, Mohawk and Armstrong, but, by far, his strongest sales are in the products that he private labels through local distribution.

The Flooring Gallery was another early adopter of laminates. “At the time,” says Freadreacea, “it represented a very innovative product and differentiated itself from any other product offered.” Today, however, The Flooring Gallery’s laminate sales are in decline. Freadreacea reports, “In the past two years, our sales have dramatically reduced, and I would say we are doing half the volume we were doing at the height of the product’s lifecycle.”

Freadreacea says, “There are several reasons that the laminate category has suffered. First, the home centers were allowed to discredit the product by consistently offering lower quality and lower pricing. They took all the value out of brands like Pergo. The second reason was the introduction of luxury vinyl planks. The realism of luxury vinyl, along with its resistance to moisture, makes it a very attractive product.”

Jim Donohoe, regional sales manager of Customer Carpets, which has eight stores in the Buffalo, New York area, recently added Quick-Step to its product mix, which includes Armstrong, Shaw and HGTV. Donohoe had been looking for a premium product line to fill the hole that Wilsonart created when it left the market in 2010. The company did well with Wilsonart and now uses Quick-Step as its “go-to” laminate display because of its unique looks and wide board offerings. Custom Carpets sells laminate flooring ranging from $1.49 to $5.40 per square foot. Overall, Donohoe’s laminate sales have remained steady over the past couple of years. About 10% of his total offering is laminate flooring.

Donohoe touts the product’s durability when he’s selling it, as well as laminate’s ability to be installed over an existing floor. He emphasizes to customers that not having to install a subfloor means that they are investing their money in a product, not in preparing for a product, and that the saved money can be put towards a higher quality floorcovering. Says Donohoe, “Many vinyl customers will upgrade to laminate when they find that vinyl may require a subfloor.”

Mallon of Ruggieri Carpet One has also seen his laminate sales decline. “Laminate sales have been decreasing every year for a while now,” he says. The company currently sells Carpet One’s Laminates for Life brand as well as Armstrong. Mallon eliminated his store’s Pergo and Faus displays last year.

When Mallon is selling laminates, he emphasizes the category’s durability and stain resistance, “Even hair colorant will not stain them!” he says. The negative for his customers is in the fact that it’s not an authentic material, “For resale reasons, most people still prefer the real thing.”

THE DIY DILEMMA
Laminate flooring fits well in the home center business model because its nature as a floating floor makes it attractive to do-it-yourselfers (DIY). While all the retailers that we consulted sell laminate for DIY projects, most of their better products are professionally installed.

One of the major complaints about laminate flooring is its hollow sound underfoot. Says Mallon, “A quality laminate installed by a professional over a good underlayment looks and sounds a lot better than a DIY project that your neighbor tackled.”

Roberts agrees and points out that a professional installation that properly places plastic and foam beneath the laminate protects the flooring investment.

This speaks to the quandary of laminates: one of the category’s most appealing characteristics plays a significant role in its demise. People choose laminates because they are easy to install, but the easy-to-install laminates carry with them traits that give the category a black eye.

Of course, consumers understand that they get what they pay for, but there’s a good chance that a homeowner who’s been dissatisfied with their lower end laminate is not going to spring for another with competitively-priced clickable LVT and hardwood on the market.

“At Ruggieri Carpet One, we install almost every job we sell,” says Mallon.

The story is similar at Roberts, where less than 15% of laminate customers buy material only. And Freadreacea reports, “It seems that we install the majority of the better material that we sell. Consumers generally DIY the less expensive material.” At Avalon, about 30% of laminates are installed professionally.

Among Custom Carpets’ eight stores, Donohoe sees installation trends break down along economic lines. “At our two stores in more affluent areas, they install. In rural markets, there are more DIYers.” Overall, he estimates that the majority of his laminate sales are DIY.

THE SELLING POINTS OF HIGH END PRODUCT
Among the retailers with whom we spoke, the durability of laminate seemed to be the most important selling point. For active households, it is second only to ceramic for durability. It is resistant to scratches, dents and staining. In other words, it’s able to stand up to abuse from both kids and pets.

In general, high-end floorcovering products are generally more attractive than base-grade ones. No surprise there. The same is true of laminates, except with laminates the difference can be dramatic. Fewer repeats, edge finishes, texturizing: these elements make significant improvements to the realism of laminate flooring.

Randy Booth, regional sales manager for Quick-Step, advises, “People selling features and benefits are those people making money with laminates. Part of what they need to sell are edge treatments, which are only in higher end product.”

Booth shares a story from the National Wood Flooring Association show in April. The flooring in one booth was a mix of hardwood and laminate. Some of the hardwood experts at the show expressed interest in buying the laminate product, not realizing it wasn’t hardwood. So, at the high end, the realism of laminate can be very convincing, even to the expert’s eye.

Of course, a laminate with an American cherry visual is also a better choice for an active family than authentic American cherry because it will endure much more wear and tear than the authentic material, which has a soft grain. Additionally, the laminate category can offer exotic wood looks with no danger to the actual plants and at the same cost that they offer an oak or pine visual. In fact, because the visual of a laminate floor is printed on paper, it can resemble absolutely anything that’s desired.

Says Freadreacea, “Laminate offers a beautiful visual and very good scratch resistance. It is the perfect product if a consumer wants to install over an existing surface, and it can be repaired easily in most cases.”

For Baldwin, it’s also important to emphasize where the product is made. Though the bulk of low-end laminates come from overseas, many of the high-end laminates are U.S. products. Says Donohoe, “We explain that if a product is dirt cheap, it is probably coming from the Pacific Rim, where there are fewer controls.

Quick-Step’s Booth suggests that formaldehyde off gassing can be a significant issue with low-end imported laminates, saying that sometimes what is shipped to consumers is different from what was submitted for California Air Resources Board (CARB) testing, which analyzes building materials for toxic elements that can negatively impact air quality.

THE FUTURE OF LAMINATES
The outlook for laminates among the retailers with whom we spoke is mixed, and many start with the phrase, “If the category can…” and end with one of these statements, “overcome its problems with moisture,” “offer independent retailers something different from what is offered in box stores,” and “stay ahead of LVT with visuals.” Of course, those are big ifs.

Interestingly, in their comments about the future of laminates, not one retailer mentioned the need for manufacturers to improve the sound of the product. Could it be that today’s underlayments and laminate constructions have finally fixed the perennial hollow sound problem for the category? And, if so, is it possible that the category may be able to overcome its other challenges as well?

Baldwin believes that laminate flooring will continue to dominate in the DIY category, and he predicts that the category’s visuals will continue to improve, “Every time we think that the printing reaches its peak,” he says, “it gets even better.”

Baldwin also predicts that the market will see laminate hybrid products that address laminate’s moisture issues. In fact, U.S. Floors has recently released a new product called Stratum that combines the features of laminate and LVT. Stratum has a waterproof and inert core and cork backing to help reduce sound resonance. It will be interesting to see what other products develop along these lines, taking the strengths of multiple flooring categories and creating a new product entirely.

Says Roberts, “Where laminate is at serious risk is with floating LVTs. Floating LVTs are not price comparative to basic quality laminate, but if these LVTs become significantly cheaper, then they will be a threat.”

Donohoe believes that laminate can hold its ground by tapping more deeply into one of its strengths: its visual capabilities. Donohoe points out that, in his area, laminate is often used in basement rec rooms, which tend to be dark. “All the laminates look the same right now,” he says. Moving away from the typical wood looks and toward lighter, more colorful visuals can help differentiate the category and solve a design quandary, bringing color to a notoriously dim space. Since rec rooms often serve as rooms in which families watch sports, bringing in team colors through laminate flooring might also be an opportunity.

Freadreacea believes that the longevity of the category is just as dependent on changes to the business side, “For laminate to make a resurgence at the retailer level, manufacturers will have to find a way to offer something different from what is in the big box stores. As long as the boxes have similar product at very low margins, there is not a lot of incentive for the retailer to support and grow the product category.”

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