Opinion

A Matter of Perspective

Monday, July 24, 2023

The last few years have been full of ups and downs, shifts and unexpected hurdles. 2022 was no different. However, what did change is that we have all become accustomed to expecting the unexpected. And understanding that nearly everything needs to be viewed with the perspective of “regular time” versus “COVID time.” And then, of course, factoring in key drivers such as supply chain, inflation, consumer sentiment, interest rates, the housing market and more.

We reviewed the 2020 stat data and then 2021 through the lens that times were dynamic, nothing was really normal and to truly understand what was happening, you needed to look beyond the numbers.

When we first received the 2022 numbers from Catalina Research, our trusted partner for this important issue, it took a minute to absorb what the report said — a possible manufacturer dollar sales growth of 7.5 percent. Even in comparison to 2021’s more than 20 percent growth, 7.5 actually seemed a bit high. Rising interest rates were negatively impacting housing starts and existing home sales and supply challenges all seemed to point to much less growth.

But the real story is understanding all the other stats surrounding that growth. A good portion of the dollar sales increases were due to increased manufacturer pricing — selling price rose by a possible 8 percent last year. In fact, resilient flooring was one category that showed growth in both dollar sales and square foot sales, most did not. And while still historically high, 2022’s growth is a sharp decline from 2021 when manufacturer dollar sales grew by 22.8 percent and square foot sales grew by 15.5 percent. 2021 was an anomaly for flooring, or so we thought.

The story for suppliers and retailers is a little bit different. This March, FCW published its annual Top 50 Retailer list for 2022 — the majority of which all posted growth, some double digit. In fact, 43 of the Top 50 posted a year-over-year increase. And that was against a year that was indeed out of the norm. According to Catalina, customer purchases could have increased by 5.8 percent overall with consumer purchases up 5.5 percent.

LVT, and all of its permutations, continues to be the leading growth category, even in the face of import challenges. Meanwhile, soft surface was the only category to see a decline in both dollar and square foot sales. Again, perspective. Carpet and rugs are still a $12.7 billion business and the largest piece of the flooring pie — 38.6 percent of the market in dollars. LVT’s growth makes it the next largest slice at 32.4 percent market share. How far this category has come.

Just 10 years ago, LVT wasn’t even its own category for Catalina and vinyl sheet & floor tile was just 12.6 percent of the business. LVT became its own category in FCW’s annual Statistical Issue when we reported 2015 numbers. At that time, LVT was 6.1 percent of the business. The significant change in landscape is a direct result of listening to consumer needs and lifestyle demands. It was through investment and innovation that took a category from a single-digit segment to almost eclipsing the traditionally largest category. And the use of the latest technology continues to fuel its growth.

Back to carpet. It is still the largest portion of flooring sales. It too has had a boost from investment in performance attributes and visuals. It may not continue to be the industry leader into the future but it sure is important to this business.

We are halfway through 2023 and Catalina reports that the average selling price declined creating a dip in dollar sales — an estimated 3.1 percent thus far. And square foot sales could be down more than 5 percent. The good news is that there is another half to this year. How will you approach it?

This industry has proven that in times of uncertainty, it wins the consumer dollars when it goes smart and aggressive investing in better products, uniquely addressing lifestyle needs and doing it in a way that meets consumers’ aesthetic desires.

Stay safe. Stay inspired.