Retail channels are important to wood flooring manufacturers and marketers since more than half of sales are made to the residential replacement market. Retail channels are expected to increase in importance during 2017 since residential replacement sales could lead industry growth. Growth is being driven by remodeling spending by non-moving households for the first time in a decade.
Buyers of existing homes usually drive the residential replacement market; however, low inventories of homes for sale are limiting the impact of this sector of the housing market. Meanwhile, remodeling spending by non-moving households is being stimulated by rising home values and increases in employment and personal income.
In 2016, wood flooring accounted for an estimated 16.6 percent of total floor coverings retail sales. This is up from 13.7 percent in 2012 and 9.6 percent in 2007.
Wood flooring made these inroads as manufacturers introduced easier-to-install prefinished products. This made wood flooring more retailer-friendly and stimulated wood flooring remodeling projects.
Consumers are more likely to visit a specialty floor coverings retail store when purchasing wood flooring. Consumers purchase from specialty floor coverings retailers since they are better at satisfying the needs of the higher-end buyer attracted to wood flooring than the big box retailers. This allowed specialty floor coverings retail stores to capture some 48 percent of total wood flooring retail sales in 2016. This is higher than specialty floor coverings retailers’ 40 percent share of total floor coverings retail sales.
Meanwhile, specialty floor coverings retailers increased their reliance on wood flooring as wood flooring increased in popularity. Today, some 20 percent of total specialty floor coverings retail store sales are from wood flooring, almost double the penetration rate a decade ago. On the other hand, wood flooring accounts for only about 12 percent of total home center floor coverings sales.
Home centers and value-priced retail chains, however, have taken share from specialty floor coverings retail stores. These channels gained share as manufacturers introduced pre-finished and easier-to-install wood flooring, and foreign manufacturers imported competitively priced engineered wood flooring. These flooring products were targeted to the do-it-yourself buyer who is generally served by home centers and value-priced hard surface flooring chains. In 2016, home centers and value-priced hard surface flooring chains captured 52 percent of total sales. This is up from a one-third share in 2002.
Home Depot and Lowe’s led the shift to big box stores during the past 15 years, since these chains aggressively built their chains to a combined 3,700 U.S. locations. Together, Home Depot and Lowe’s captured about 20 percent of total wood flooring retail sales in 2016, up from 18 percent in 2012. Lumber Liquidators made significant inroads in wood flooring retailing by developing a network of more than 375 retail stores across the United States. However, Lumber Liquidators’ wood flooring sales have been trending downward since 2013. Some of the lost share has been picked up by Floor & Decor with its chain of more than 70 warehouse-style locations. These four retailers represent more than 25 percent of total retail locations selling wood flooring.
These retailers rely heavily on the South Atlantic, Pacific, and East North Central states to drive sales. In 2016, retail sales in these regions are estimated to have accounted for about 55 percent of total wood flooring retail sales. These regions also experienced the sharpest gains during the current economic recovery.
During 2017, specialty floor coverings retail stores and value-priced hard surface flooring stores received a boost from the increase in non-moving homeowners remodeling spending.
Total specialty floor coverings retail store sales increased 5 percent to 6 percent in the first half of 2017. Meanwhile, Lumber Liquidators’ sales are recovering, increasing by 8.5 percent in the first half of the year. At the same time, Floor & Decor total sales increased by about 30 percent.
Catalina Research has tracked wood flooring industry trends throughout 2017 including an analysis of U.S. manufactured versus foreign-sourced products, solid versus engineered wood flooring, customer demographics and factors driving demand, and the outlook for 2018. This data and information is part of the Catalina Report on Wood Flooring. An Executive Summary of this report is available to NWFA members as a member benefit, and can be downloaded at nwfa.org. The full report is available for purchase from Catalina Research.
Stuart Hirschhorn is Director of Research for Catalina Research Inc. in Highland Beach, Florida. He can be reached at 561.988.0853 or shirschhorn@catalinareports.com.