U.S. Luxury Vinyl Tile Market Briefing
for the Resilient Floor Covering Institiute
May 9, 2018
Provided by: Santo Torcivia, President Market Insights LLC
Reading, PA
610-927-2299
San
Market Insights LLC
Briefing Topics • Founder & Company Background • General Flooring Industry Trends • Luxury Vinyl Tile (LVT)
Market Insights LLC
Background
Market Insights LLC
Founders Background Founder: Santo Torcivia, President, Market Insights LLC
• Graduated Temple Univ.: BA Economics • 1973 to 1981: American Bank & Trust; lastly
as VP Marketing • 1981 to 1997: Mannington Mills; VP Business
Analysis & Planning • 1997 to present; Pres. Market Insights LLC • Contributing Editor & Economist- Floor
Focus magazine • Expert Witness in US Federal Court • BOD charitable & faith-based organizations
Market Insights LLC
Company Products • Market Monitor Report • U.S. FLOOReport • Canada FLOOReport • County Market Report • Speaker & Marketing Consultant • Custom research
• Penetration reports • CARE state recycling reports • Market expansion analysis Market Insights LLC
Clients • Flooring manufacturers • Raw material suppliers to flooring industry • Flooring adhesive & accessory producers • Associations • Distributors • Retailers & Retail/Contract Groups • Investment Banks • Logistic Firms • Floor Focus magazine
Market Insights LLC
General Flooring Industry Trends
Market Insights LLC
Imports Share of U.S. Flooring
Market Insights LLC
Note: Figures shown are imports share of total product type consumption per yearSources:U.S.CensusBureau,IHSMarkit
0%
10%
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70%
80%
90%
100%
Impo
rts %
of P
rodu
ct C
onsu
mpt
ion
Total Fl. Resil. Fl. Lamin. Fl.Wood Fl. Cer. Tile Carpet & Rugs
Imports Dominate U.S. Flooring & China Dominates Imports
Market Insights LLC
Source:U.S.ITC,MarketInsightsLLCresearch
0% 20% 40% 60% 80% 100%
Total
Resilient Fl.
Laminate Fl.
Wood Fl.
Ceramic Tile
Carpet & Rugs
Rubber Fl.
% of Total
% Imports/Total% China/Imports
Flooring Sales by Channel- 2017
Market Insights LLC
Source:U.S.FLOOReport-2018Edition
0%
10%
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100%
Cha
nnel
% o
f Pro
duct
Sal
es
All OtherContractorsOther RetailersHome CentersFlooring Stores
Flooring Use in U.S. Buildings in 2015
Market Insights LLC
Total Resilient Laminate Wood CeramicBuilding Types Flooring Flooring Floors Floors Fl. Tile Carpet
Health Care 9% 17% 7% 3% 8% 6%Education & Institutional 30% 43% 20% 52% 43% 22%Retail 29% 17% 49% 28% 31% 34%Offices 22% 20% 11% 17% 8% 25%Lodgings 10% 3% 13% 1% 9% 14% Total- 100% 100% 100% 100% 100% 100%
Health Care 100% 50% 1.1% 0.4% 10% 38%Education & Institutional 100% 37% 0.9% 2.1% 15% 44%Retail 100% 16% 2.1% 1.1% 11% 70%Offices 100% 24% 0.7% 1.0% 4% 70%Lodgings 100% 8% 1.6% 0.1% 9% 81% Total- 100% 26% 1% 1% 11% 61%
Total Quantity Market (SF, MM) 4,065 1,066 52 49 433 2,465
Building Type Shares per Product Type (percents add down)
Product Type Shares per Building Type (percents add across)
Market Shifting to Hard Surface Flooring
Market Insights LLC
Source:U.S.FLOOReport-2018Edition
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5,000
10,000
15,000
20,000
25,000
30,000
0%
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70%
1995
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2011
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2013
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2015
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2018
2019
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Tota
l Flo
orin
g M
arke
t ($,
MM
@ m
sp)
% o
f Tot
al F
loor
ing
$
Total Flooring $ % Soft Surface % Area Rugs % Hard Surface
Laminate Flooring Only Hard Surface Laggard
Market Insights LLC
Source:U.S.FLOOReport-2018Edition
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2,000
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1995
1996
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2001
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2007
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2009
2010
2011
2012
2013
2014
2015
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2018
2019
2020
Tota
l Har
d Su
rfac
e ($
, MM
@ m
sp)
% o
f Tot
al F
loor
ing
$
Hard Surface $ % Ceramic Tile % Laminate Fl.% Wood Fl. % Resilient Fl.
LVT Carrying Resilient Flooring
Market Insights LLC
Source:U.S.FLOOReport-2018Edition
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1,000
2,000
3,000
4,000
5,000
6,000
0%
2%
4%
6%
8%
10%
12%19
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
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0920
1020
1120
1220
1320
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1820
1920
20
Tot
al R
esili
ent F
l. ($
, MM
@ m
sp)
% o
f Tot
al F
loor
ing
$
Total Resilient Fl. $ % Resil. Sheet % LVT % VCT
U.S. Population Moving South & West favors tile & wood looks
• Sandy soil • Mediterranean/ Spanish architecture • Growing Latino & Asian populations • More tract housing & apartments • Generally warmer climate= outdoor living--
brings outside to inside • Commercial fashion follows residential:
lodgings, retail, education, institutional
Market Insights LLC
Market Insights LLC
% Change of states not shown: Alaska= 20.2% & Hawaii= 21.0%Total U.S. Population % Change= 16.0%
State Percent Change in U.S. Total Population 2000 to 2017
Recent Flooring Trends Conclusions
• Population shift favors hard surface flooring versus soft surface- LVT & ceramic primarily
• LVT attributes favor the product: – Competitive price – Attractive styling- wood look, boards, etc. – Easy to install – Durable & quiet
• Market moving slowly to sustainability (maximum price premium= <10%)
• Slow online sales growth (<5%)
Market Insights LLC
Luxury Vinyl Tile
Market Insights LLC
2 Basic Types of LVT: Flexible & Rigid
– Flexible: Wearlayer over printed deco sheet with vinyl carrier & backing
Rigid/ Non-WPC: Wearlayer over printed deco sheet with solid foam or polymer core/backing
Rigid/ WPC: Wearlayer over printed deco sheet with wood polymer composite core & backing, moisture resistant
Market Insights LLC
LVT U.S. Plant Investments
Market Insights LLC
Brand/ Manufacturer Acquisition Amount(Headquarters Nation) Plant Location Notes* Amount Invested Notes/Remarks
($, MM) ($, MM)Amtico/ Mannington (US) Madison, GA (*2/) 130 50 50% of sales in USArmstrong (US) Lancaster, PA N/A 41 Resd'l LVT
Kankakee, IL N/A 15 Est., Comm'l LVTCongoleum (US) Trenton, NJ (*1/) N/A 40 Est., over 10 yrs.+FloorFolio (US) Edison, NJ* N/A 15 Est.Gemtec (US) New York (Brooklyn), NY (*1/) N/A 10 Est., over 10 yrs.+IVC/ Mohawk (US) Dalton, GA (*3/) N/A 80 NOX Corp. (South Korea) Fostoria, OH N/A 35 Est.Shaw (US) Ringgold, GA N/A 100 Tarkett (Fr.) Florence, AL (*4/) 25 25
Totals- 90 411 =(B) =(A)= (50% x $130MM + $25 MM)
Total Investment (adjusted acquisition price & investment)= 501 =(A) + (B) N/A =not applicableSources: Company reports & web sites, FloorDaily.net, and Market Insights LLC
U.S. LVT Sales by Type- 2017
Market Insights LLC
Source:MarketInsightsLLCresearch,Mar.2018
Non-Rigid30%
Rigid SPC15%
Rigid WPC37%
Other18%
U.S. LVT Market
Market Insights LLC
Sources:U.S.InternationalTradeCommission,U.S.FLOOReport-2018Edition
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500
1,000
1,500
2,000
2,500
3,000
0%
10%
20%
30%
40%
50%
60%
70%
80%19
9619
9719
9819
9920
0020
0120
0220
0320
0420
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0620
0720
0820
0920
1020
1120
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1720
1920
20
LVT
Mar
ket C
onsu
mpt
ion
($, M
M @
m
sp)
Res
il. T
ile Im
ports
% o
f LVT
Con
sum
p.
LVT % Imports/Total Resil. Tile
U.S. LVT & Resilient Tile Imports by Nation of Origin FY 2017
Market Insights LLC
Total Imports Value FY 2017 ($, MM @ landed duty value)= $2.2 Bn.Note: Imports shown include LVT and other resilient tilesSource:U.S.InternationalTradeCommission
China, 87%
Korea, 8%
Taiwan, 2%
All Others, 3%
U.S. LVT Market is Heavily Private Labeled- 2017
Market Insights LLC
Total Market in 2017= $2.1 Bn. At mill sell price*Note: Domestic brands have U.S. production but may import private label LVT;
private labels have no U.S. productionSource:MarketInsightsLLCestimate
Total Private Label, 54%
Domestic Brand*, 46%
Wood Flooring Most Desired Flooring by Consumers
Market Insights LLC
Wood Advantages: - Adds value to home - Most attractive - Easy Maintenance
% Shown= % Ranking Product First out of 5 placesBase: n= 1,059 consumersSource: Floor Focus consumer research, June 2014
22%10%
44%
15%7%
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% of
Con
sum
ers
Consumers Rank Ordering of Flooring Types by Desirability- 2014
Would Not Consider#5 (Fifth)#4 (Fourth)#3 (Third)#2 (Second)#1 (First)
Wood Flooring Looks Dominate Hard Surface Floor Sales- 2017
Market Insights LLC
Source: Market Insights LLC research, 2018
0%
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80%
Resilient Sheet Luxury Vinyl Tile Ceramic Tile LaminateFlooring
% o
f Sal
es
U.S. Wood-Look Flooring Market FY 2017= $6.3 Bn.
Market Insights LLC
Total Wood-Look Flooring Market FY 2017 ($ @ mill sell price)= $6.3 bn.
Resilient Sheet2%
Luxury Vinyl Tile26%
Ceramic Tile7%
Laminate Flooring
11%
Wood Flooring54%
Wood-Looks Expanding Residential Market for Products
Market Insights LLC
% of Resilient Laminate Wood CeramicRoom Product Installed Purchs. Sheet LVT Floors Floors Flr. Tile Carpet
Kitchen 10% 30% 21% 22% 8% 18% 1% Bathroom 19% 46% 11% 19% 6% 23% 3%Foyer/ Entry/ Hall 11% 4% 16% 13% 19% 14% 13% Subtotal/ Wet Areas 41% 80% 48% 53% 33% 55% 16% Dining Room 8% 2% 15% 7% 13% 11% 10% Living or Family Room 10% 3% 24% 9% 16% 21% 13% Bedroom 28% 5% 4% 22% 33% 8% 41% All Other Rooms 14% 10% 9% 9% 5% 5% 20%
Total- 100% 100% 100% 100% 100% 100% 100%Source: Market Insights LLC research
Room Shares by Product FY 2017
Residential Flooring Retail Sales by Price FY 2017
Market Insights LLC
Total Resilient Laminate Wood CeramicRetail Price Points Flooring Flooring LVT Floors Floors Flr. Tile Carpet
Under $2.00/SF 52% 59% 16% 30% 2% 33% 72%$2.00 to $2.99/SF 19% 15% 22% 38% 7% 26% 16%$3.00 to $3.99/SF 14% 12% 28% 22% 18% 21% 8%$4.00 to $4.99/SF 8% 9% 18% 8% 30% 9% 2%$5.00 to $5.99/SF 5% 5% 12% 2% 27% 6% 1%$6.00/SF or more 3% 0% 4% 0% 16% 5% 1% Total- 100% 100% 100% 100% 100% 100% 100%Avg. Retail Price ($/SF) $2.31 $2.07 $3.46 $2.49 $4.86 $2.80 $1.62Installed Retail Cost ($/SF) $3.32 $4.96 $4.24 $7.21 $5.80 $2.87Source: Market Insights LLC research
Average Retail Pricing FY 2017
Implications of New Wood Look Floorings in Residential Market
• New realistic wood simulations allowing LVT & ceramic tile to expand beyond wet areas
• LVT & ceramic tile threaten wood flooring, carpet, & laminate flooring in public spaces
• Simulations are realistic: look, boards, etc. • LVT & ceramic tile durable and quiet • LVT has low product & installed cost • Real wood flooring will always appeal to
fashion conscious/upscale consumers
Market Insights LLC
LVT Installations by Market Segment FY 2017
Market Insights LLC
Source:U.S.FLOOReport-2018Edition(MarketInsightsLLC)
ResidentialReplace.70%
NewResidential
9%
HealthCare3%
Educ. &Institutional
2%
Retail7%
Offices7%
Lodgings2%
LUXURY VINYL TILE
Residential
Lodgings
LVT Conclusions • Styling positive- Wood look, Boards, etc. • Easy installation- snap, floating, or full-glue • Pricing is competitive • Competitive alternative to wood flooring • Durability & moisture resistance, quiet • Many applications- residential or commercial • Logistics favor big boxes- in boxes on skids • Competitive situation = low mill prices
=attractive retail margins • Private labels= cost disadvantage • Near Perfect Product
Market Insights LLC
Questions & Comments
Market Insights LLC
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