Hardwood Floors Oct/Nov 2019

MANUFACTURERS

2020

in 2019. It doesn’t appear that pricing will change much in 2020 either, with more than half of manufacturers saying they’ll hold steady on pricing. Manufacturers report top opportunities going into the second half of 2019 and into 2020 to include: • a more level playing field for wood flooring due to the tariffs; • increased awareness of wood flooring quality; • prefinished and wide wood flooring products; trusted vendor to customers while the wood flooring industry is in transition. Based on current trends, manufacturers shared insights on demand expectations for certain wood flooring products going into the year 2020. Products they believe will remain the same for demand include dark colors, gray stains, white stains, unfinished, and water-based finishes. They expect demand in the following product categories to increase: wide plank, long boards, natural wood colors, factory finished, matte finishes, and engineered. Hand-scraped flooring is anticipated to decrease in demand in 2020 along with solid flooring and semi-gloss finishes. Manufacturers in the survey said that buyers are looking for products that are lower maintenance and eco-friendly. One manufacturer explained the shift is likely due to an increase in consumer awareness of composite “waterproof ” wood flooring alternatives. Yet another • the adoption of automation; • new product launches; and • a focus on continuing to be a

manufacturer said: “We believe that we will begin to see consumers tiring of all the vinyl and resilient in the market and making a move back to prefinished hardwood. The overall market is going to demand wider, textured, lower-gloss products.” Manufacturers reported demand for certain species to shift in 2020, with bamboo falling in popularity and white oak continuing to rise. Reasons for these expectations include trends toward grays and whites, as well as U.S. consumers favoring heavier grained, more-common species. One manufacturer said: “Bamboo has a poor track record with many retailers, so is not really a viable option, and the cork sector seems to be limited to underlayment versus a choice for flooring itself due to the dramatic increase in vinyl products.” About 38 percent of manufacturers reported seeing smaller margins on wood-flooring sales as a result of Chinese tariffs. In addition, 31 percent of manufacturers have witnessed a decrease in overall wood-flooring sales, 31 percent have changed their product mix as a result, and 31 percent reported no impact on their business from the tariffs. Despite favorable forecasts for 2020, manufacturers admit they have some worries going into the new year. When asked to select their top three concerns, they listed non-wood floor covering competition, the economy, and the political climate. Only about 13 percent indicated any concerns about a potential housing market bubble collapse.

About 25 percent of NWFA manufacturers surveyed indicated that sales of wood-flooring products in 2018 stayed about the same compared with sales in 2017. Another 25 percent reported sales were down somewhat (3 - 7 percent) and almost 19 percent said sales were down significantly (more than 8 percent) for the year. Sixty percent of manufacturers estimated that their total volume of wood-flooring related product sales was up to $25 million, with about 75 percent of respondents utilizing traditional wood-flooring distributors as their primary sales channel. Other sales channels included direct to flooring-specific retailers (50 percent) and direct to builders and installers (44 percent). A quarter expects to shift channels in the coming year. Halfway through 2019, respondents were asked about their forecasts for the full year 2019. Almost 30 percent expect sales to be down significantly (more than 8 percent), while almost 24 percent expect modest Many manufacturers are optimistic about 2020 sales growth. More than 47 percent expect to see modest improvements in sales (3 - 7 percent), while almost 18 percent expect to see significant overall growth. When asked why, one manufacturer answered that pricing is trending slightly upward; another offered that their forecast is due to an increase in market share. Regarding pricing, a majority of manufacturers (60 percent) reported that prices largely remained the same growth (3 - 7 percent) and about 18 percent forecast significant growth.

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