A softer new home construction market, slower overall DIY activity at most of the nation’s home improvement centers and a dramatic falloff in laminate flooring imports from some of the major European providers all contributed to sales declines in the category for 2023.
FCNews research shows laminate flooring sales at the first point of distribution reached $1.247 billion last year—a 9.8% decrease from 2022. In that same vein, volume shipped came in at 970 million square feet, a drop of 11.7% compared to the year prior, which saw 6% growth.
“We experienced a slow start to kick off 2023, and we continued to see softness throughout the entire year,” Derek Welbourn, Inhaus CEO, stated.
Other executives, including David Moore, senior product director, Mohawk, also saw volume across the category take a dip in 2023. He attributed the falloff to key retail segments typically supportive of laminate. “We’re pretty sure the volumes were down a little bit, when you look across the whole channel, especially what we saw at the home centers,” he explained.
The discrepancy in the rates of decline in value versus volume, observers agree, had much to do with changes in pricing trends and costs associated with availability of higher quality laminates. “In other words, manufacturers increased prices,” said Barbara June, president of the North American Laminate Flooring Association (NALFA), noting the square-foot price for laminate rose more than 2%. This is corroborated by FCNews research, which put the average wholesale price for laminate at $1.28 per square foot—that’s the highest level the category has seen since 2008.
While laminate flooring products that retailed at the upper end managed to hold their margins, some observers noted aggressive pricing at laminates’ opening price point at various outlets. “Coming off 2021 and into 2022, we saw some price erosion on the lower end that started to flush its way through the supply chain in 2023,” Mohawk’s Moore said. “Around the same time, we saw material costs starting to come down after price increases on earlier [shipments] went into effect. With volume being flat to slightly negative, combined with a little bit of pricing erosion on the low end, that’s going to weigh on your revenues.”
Despite laminate’s sizeable falloff in sales and volume—the first time the category has shown a decrease since 2018—its overall share of the floor covering pie has not changed appreciably year over year. This is primarily due to the fact that the U.S. flooring market as a whole was down in 2023—10.1% in terms of revenues and 9.1% with respect to volume. At the end of the day, laminate represented nearly 5% of total industry sales and 5.5% of total industry volume last year. That’s right in line with 2022, which had laminate at 4.9% of total sales and 5.65% of volume.
Taking carpet out of the equation to determine laminate flooring’s share of hard surfaces reveals more telling findings. In 2023, laminate’s share of hard surfaces (which includes resilient, ceramic, wood and rubber) came in at 8.1% of sales and 9.9% of total hard surface volume. While that’s consistent with the category’s year-over-year performance, it pales in comparison to the market share represented by competing hard surfaces—aside from rubber. For instance, resilient accounted for nearly 56% of all hard surfaces solid in 2023, followed by ceramic, which represented 21% of hard surface dollars. Hardwood, by comparison, accounted for 13.4% of all hard surfaces sold in the U.S., FCNews research showed.
Things get really interesting, though, when comparing laminate’s 2023 performance with its showing 10 years ago; in 2013, laminate represented 6% of total sales and roughly the same percentage with respect to volume. However, laminate’s share of the total hard surface pie was much greater at that time, largely because the resilient category had not yet morphed into the behemoth that it represents today. In 2013, laminate represented 11.2% of all hard surface dollars and 16.3% of hard surface square footage sold.
Sales by end-use sector
Last year also saw some shifts in the major segments that account for the bulk of laminate flooring consumption. Based on the aforementioned softness in DIY purchases—particularly at the home centers—the portion of the pie dedicated to residential replacement sales fell slightly to roughly 77%, down from nearly 80% in 2022. That’s in line with the commensurate decrease in flooring category sales at Home Depot and Lowe’s, where flooring department sales were off 5% and 17.3%, respectively. The only outlier was Floor & Decor, whose flooring sales actually grew 3.5% in 2023. (Note: Floor & Decor management does not consider traditional home centers its primary competitors.)
With respect to commercial end use, slow adoption in settings entailing heavy applications also had a negative impact on laminate sales. Combined, specified commercial and Main Street laminate consumption accounted for 4.4% of category sales—that’s down from 5.5% the year prior and off 8.5% from 2018. This despite the proliferation of high-performance, water-resistance laminate products boasting AC-4- and AC-5-rated wear layers, which are suitable for many light commercial applications, supplier say.
In truth, the only end-use sector within the laminate category that did not show a decrease was new residential sales, which rose slightly from 16.5% to 17% of sales from 2022 to 2023. The reason, observers say, was this: While builders have certainly scaled back on the overall number of planned projects, they continued to look for ways to lower construction costs for those builds that moved forward.
One key strategy that builders are employing entails sourcing lower-cost building materials to make homes more affordable amid higher mortgage rates. That fits right into the wheelhouse of the laminate category—a product segment that continues to enjoy a renaissance of sorts.
Sales by channel
The U.S. laminate market also experienced shifts with respect to the major channels through which the category is sold. The specialty retailer segment of the market actually saw an uptick in 2023, growing its share from 15% in 2022 to 22% last year. Looking back to 2018, specialty retail accounted for 28% of category sales while the cluster that includes Floor & Decor, IKEA, Lumber Liquidators, et. al., accounted for merely 7% of laminate sales.
Fast forward to 2023, Floor & Decor—part of a retail class of box-style merchants—increased its share of laminate sales from 16% in 2022 to 20% last year. Again, this was largely at the expense of home centers, whose share collectively dropped from nearly 63% in 2022 to 53% last year, FCNews research shows.
Import vs. domestic
The trend that began to take root pre-pandemic—drastically reduced laminate shipments from China combined with higher domestic production and a modest rise in shipments from European producers—continued in 2021 and 2022. In 2023, however, the industry saw a decline in laminate flooring imports across the board.
Figures supplied by the European Producers of Laminate Flooring (EPLF) showed deliveries to the U.S. and Canada declined from 401.3 million square feet in 2022 to roughly 232.6 million square feet in 2023— that’s a staggering reduction of 42% year over year, and the largest decline of EPLF shipments to all the regions supplied by the association’s producers. Observers attribute the dramatic decline to softness in the new home construction sector as well as the impacts of rising material costs, inflation and slower demand.
China also saw its share of laminate flooring shipments to the U.S. market continue to fall as producers there retool more of their manufacturing operations to churn out more rigid core flooring products. FCNews research puts its share of the U.S. laminate market at around 26% in 2023, down from 28% the year prior. The decline is even more pronounced when you look at China’s share of the U.S. laminate market in 2018; during that time, China accounted for 70% of all laminate imports with Germany, Austria and other European suppliers representing roughly 21% of the market. By comparison, Germany, Austria and other key European suppliers accounted for nearly 40% of laminate imports—and that was a down year.
Research conducted by NALFA support these findings. At play, according to the association, are many contributing factors, including raw material availability, tariffs, etc. Tighter production/quality standards are also weeding out suppliers that don’t meet emerging specifications. “At NALFA, one of our important goals is to ensure that the consumer gets a properly performing floor,” June stated. “The European Union and North American suppliers manufacture to high standards, meeting and exceeding the criteria for LF-01, NALFA’s voluntary ANSI standard for product certification. At the end of the day, an excellent floor at a fair price is a win for all of us.”
To that end, U.S.-based laminate suppliers continue to gain ground by increasing their domestic capacity. Swiss Krono, a private-label supplier that provides product to an estimated 25%-35% of the brands serving the U.S. market, has invested $400 million over the past few years in a move to vertically integrate MDF production in its Barnwell facility.
“There are certainly advantages to being close to the market,” said Kyle Brown, executive vice president of Swiss Krono USA. “Obviously, with domestic manufacturing and warehousing we can offer very quick response times. In fact, for most of our retail partners, we’re just down the road. That’s especially helpful when you’re working on forecasting, etc., because you’re not trying to coordinate across difference time zones. That’s a huge advantage to us being here.”
But perhaps it’s the supplier’s clients that stand to benefit the most from being close to their partner’s manufacturing base. “By working with a domestic supplier like us, there’s an overall reduction in the need for retailers to stock inventory,” Brown added. “If you’re a retailer ordering by the container load, you’re buying FOB and loading up working capital and tying it up in inventory and long lead times. Right now we’re working off a mix between make to order and make to stock. Most of our business is make to stock, so we hold inventory here domestically to make sure it’s in the right place at the right time for our commercial partners.”
Domestic suppliers that manufacture their own brands also attest to the advantages of stateside production. Case in point is Mohawk, which runs round-the-clock laminate production at its plants in Thomasville and Garner, N.C. “During 2020, 2021 and 2022, we were making as much product as everyone wanted,” Moore explained. “The investments that we’ve made in our factories—as well as just some changes that we’ve made internally—will put us in a great supply position for the foreseeable future.”
More importantly, it paves the way for more rapid development and deployment of technologies in what is still a highly competitive arena. The company continually leverages its capabilities on both the manufacturing and design fronts. Whether it’s WetProtect, the latest click system or advancements in digital printing (i.e., Signature Technology), the goal is to continue to build upon its signature RevWood laminated wood line as interest in the laminate category remains high.
“We’ve always been, from a feature and benefit perspective, positioned at the ‘better’ and ‘best’ part of the market,” Moore added. In particular, he cited the various RevWood tiers that provide retailers with trade-up opportunities. And it’s all made in the U.S.A. “That’s really where RevWood has made a name for itself. And then we’ve continued to expand that with our Pergo Elements products.”
For many U.S.-based floor covering retailers and distributors, the COVID-19 pandemic served as a jarring wake-up call. Beyond the obvious health and lifestyle ramifications, the pandemic exposed glaring weaknesses and shortcomings in the nation’s supply chain—particularly when it came to popular resilient flooring materials imported from overseas. And as bottlenecks at many of the country’s ports became commonplace, that forced many specialty flooring retailers and wholesalers to explore alternatives to resilient products that they had long sourced, reliably, from Asia and other parts of the world. While the logjams have largely disappeared, the primary beneficiary of that pivot to alternative hard surface flooring sources was clearly laminate.
“Domestic laminate manufacturing has served us well for many years,” said John Hammel, senior director, hardwood and laminate, Mannington. “It allowed us to service our customers over the fluidity of the last few years at a time when others struggled. Since the beginning of 2022 we’ve been able to consistently service all orders within three weeks.”
Another upside to domestic production for Mannington— whose laminate flooring manufacturing operations are based in High Point, N.C.—is the relative proximity to its corporate headquarters in Salem, N.J., where most of its design team members are located. This, according to Hammel, allows more seamless collaboration between different departments. “Our style and design team continues to develop in-house designs that lead the industry in their realism,” he explained, citing Mannington’s TruDetail Digital print technology, which allows for a much larger number of unique EIR planks and, by extension, greater realism.
The list of advantages of domestic laminate flooring production don’t end there. Major homegrown suppliers of the product—both branded and private-label suppliers—also cite the benefits of having production facilities that are near to their primary customer bases. Even laminate brands that source some of their products from overseas locales see the upside to obtaining some product locally. A prime example is Eternity, which works with laminate flooring producers from multiple locations, including Spain, China, Portugal and, of course, America. The objective is to provide both a robust and redundant source of supply. “U.S. Mills is our partner on the waterproof laminate line that we’re marketing here in the States,” said Isaac Lee, director of marketing, Eternity, headquartered in Pacoima, Calif. “They’ve been a very consistent, high-quality supplier for us.”
That dependability is due in large measure to U.S. Mills’ infrastructure, experience and advanced capabilities. With a state-of-the-art operation in Clarion, Pa., U.S. Mills has the means to service a wide range of clients across different categories.
Outlook for 2024
Many executives view laminates’ lackluster performance in 2023 as a fluke, and they are banking on a rebound in 2024 in anticipation of lower interest rates and a resurgence in key end-use markets. “There is opportunity in the remodel and new construction segments, even though the latter is expected to remain soft,” Mannington’s Hammel said. “We also continue to see opportunity in specialty retail and small/medium-sized builders—especially at the premium end of the market.”
Mohawk’s Moore is also counting on improvement in the new home construction sector, which would bode well for laminate. “If the builder market comes back substantially quicker than people are expecting, that would be a good thing—but we’ve got to be able to respond to it,” he told FCNews. “Builder has really been a big guessing game in the market.”
Other executives believe technological innovations will be the driver. “I think the laminate market will continue to gain market share in 2024 and beyond,” said Billy Ko, CEO of Johnson Hardwood. “Manufacturers are introducing exciting new features and capabilities, significantly improving the visuals compared to the past. With these improvements, laminate makes for an increasingly attractive option for consumers dissatisfied with the performance of other product categories. As long as we can avoid the race to the bottom, I believe consumer sentiment will continue to shift, leading to a moderate increase in both sales dollars and volume.”
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