Floor Coverings

Jan Hudak

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After expanding his international experience (in USA, Sweden and Slovakia) from studies and short traineeships & internships in insurance at Allianz and public sphere at Ministry of Economy, Jan joined Interconnection Consulting as the Market Analyst responsible for various industries. Among them are boats, parquets & flooring, finance, healthcare & pharma, FM and some of the special technical & construction industries. During his work at Interconnection, he was invited to present some of the findings and data at the conferences or EXPOS. In addition, he creates data solutions for B2B & B2C segment. Also, in Interconnection he is in charge of internship programme in Bratislava as mentor as well as providing assistance to other colleagues and recently he became a consultant for untypical projects and business development.

Contact me without obligation, I support you gladly!

Tel:+43 1 585 46 23 10

E-mail:hudak@interconnectionconsulting.com

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IC News

Strong Price Rise Leads to High Sales Growth in the Flooring Market

The global flooring market will more than make up for last year’s decline of around 6% with an increase in turnover of over 15% this year. However, the increased demand was met with supply bottlenecks at the same time, which on the one hand drove up prices, but on the other hand only marginally increased sales (+4.2%), as a new study by Interconnection Consulting shows.

Although the forecast for 2021 is very positive, optimism could be severely curbed by supply bottlenecks for raw materials, the study notes. The US is the leading market with a turnover of 27.4 billion euros followed by China 20.4 and India 19.4 billion euros. India, however, leads the way in terms of sales, with a global share of 36.4%, ahead of China 30.8% and the US 12.7%. Due to the sensitive price increases, the annual sales growth rates until 2024 will also increase more than the sales growth forecasts. For example, an annual increase in turnover of 10.6% is expected for the USA until 2024. The forecast for India is even higher, with an increase in turnover of 13.1% per year. However, sales will increase by only 1.7% per year in the US and 7.3% per year in India over the same period.

 

Home Office Renovations in Strong Demand

In 2020, the new construction sector was particularly affected by the decline. Sales in this segment fell by 15.6% globally, while the renovation sector declined by only 5.4%. “The boom in optimizing one’s own four walls stemmed not least from the fact that one’s own home has become not only a living space but also a working space since the pandemic,” explains Ivan Pjatko, author of the study. The ratio of residential to non-residential construction is around 60 to 40, with residential construction showing an even stronger dynamic for the next few years, with higher growth potential.

 

Trend Towards Natural Materials on the Rise

Ceramic tiles are the most popular floor covering worldwide with a sales share of 42.5%, followed by resilient floor coverings (16.0%) and laminate (14.6%). Laminate (+7.6%) will achieve the greatest sales growth across all product groups this year. The gap in turnover is narrower. Ceramic tiles account for about 20% of turnover, followed closely by wood/parquet flooring with a share of 17.1%. Only then do resilient floor coverings follow. There are also differences in the individual regions. In India, ceramic tiles account for the lion’s share with 56.7%. In the Middle East there is a growing trend towards wood/parquet flooring. The trend for eco-materials will continue to gain momentum, especially in Western Europe, the study shows. The most important global players are Amtico, Beaulieu, Gerfloor, Hamberger Flooring, Forbo, Interface, Junckers Kaerhs, Kronospan, Mohawk, Parador, Shaw Floors, Tarkett, The Dixie Group.

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Renovation Boom and Price Increases Set Sales Records for Floor Coverings

After a damper in 2020, the European market for floor coverings has again recorded high growth figures. Sales will rise from €25.8 billion to €29.2 billion in 2021 in the countries surveyed, which is a growth of 12.7%. By 2024, turnover is expected to rise to 34.5 billion euros, according to a study by Interconnection Consulting.

The reason for the increase in the turnover of floor coverings is less down to an increase in sales than to the fact that the prices of raw materials are being driven up due to supply bottlenecks. Turnover will accordingly rise much faster than sales in the next few years due to price increases and demand. In Germany, annual turnover growth will be over 6% until 2024, while sales is set tob e only 1.9% per year. In Italy, the ratio of turnover to sales growth is 6.1% to -0.1% annually. In terms of turnover, Germany is also the largest market in Europe with a share of 26.2% followed by France with 12.2% and the UK 10.9%. In terms of sales, Germany leads the ranking in Europe ahead of Russia and Turkey.

Renovation As Growth Engine

In 2020, it was mainly the new construction sector that was affected by the decline. Sales in this segment fell by 23.4% across Europe, while the renovation sector even grew by 6.4%. “Many people spent their time at home and therefore also used the time to renovate their four walls,” says Ivan Pjatko, the author of the study. In Austria, there is a trend towards natural raw materials such as wood, especially oak. Similar developments can be seen in Germany, where real wood is the trend. In France, the government is promoting ecological solutions in the installation of floor coverings with a new regulation RE2020. The trend for eco-materials will continue to gain momentum, especially in Western Europe, as the study shows.

Ceramic Tiles Still in the Lead

Ceramic tiles are the most popular floor covering throughout Europe with a sales share of 27%, followed by laminate with 23%, resilient floor coverings with 12% and textile floor coverings with 12%. The picture is not much different in terms of turnover. The share of ceramic tiles is around 23%, closely followed by resilient flooring (18%) and textile flooring with 17%, already followed by parquet/wood flooring with 13% but very good growth prospects. The most important European players are: Altro, Amorim, Beauflor, Forbo, Gerflor, Nora (Interface), Tarkett, Kaehrs, Windoeller.

The study examined the countries: UK, Spain, France, Italy, Belgium, Netherlands, Germany, Switzerland, Austria, Poland, Czech Republic, Slovakia, Hungary, Romania, Turkey, Russia.

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Germans Remain Loyal to Laminate & Parquet Flooring, but Textile Floor Coverings Are Under Threat

Those who use textile floor coverings in Germany very often flirt with other options. Overall, almost one in two (45.7%) expresses a willingness for a new floor covering to replace the textile covering. The situation is quite different with laminate & parquet flooring, as shown in a representative survey by Interconnection Consulting.

Willingness to Change Lowest for Ceramics & Tiles

In the Interconnection survey, 1,000 homeowners (flat and house) were questioned in Germany. According to the study, only about one in four is willing to change their laminate or parquet flooring. The lowest willingness to change is in the ceramic/tile segment with only about 20%.

Living Room Is Parquet Land

Depending on the use of the room, different floor coverings are increasingly used. With a share of 85.7%, ceramics or tiles are the most-used floor covering segment in Germany. This can be attributed to the fact that ceramics/tiles are used by far the most in the kitchen, bathroom and hallway. In the living room, parquet or wood flooring dominates with a share of about one third (31.1%). The willingness to change is also limited and is only around 20%. “The main reason for homeowners not to change their parquet is the high-quality material of their floor covering,” explains Dr. Frederik Lehner, Managing Director of Interconnection Consulting. Laminate is the most commonly used floor covering in the study, bedroom and children’s room. When it comes to the image of laminate flooring, it shows that modernity and sustainability can still form a contrasting pair in this day and age. For example, laminate is considered modern by those surveyed, but not particularly sustainable. Overall, over 60 percent of homeowners use laminate as a floor covering.

Brand Potential Is Not Being Exploited

The study shows that two completely contradictory groups of buyers dominate with a total share of over 50%. On the one hand, there are the discount hunters, who can be encouraged to buy with discounts and cheap prices, and on the other hand, the high-price buyers, who don’t want cheap prices at all, but are attracted by quality criteria (innovation, haptics, etc.) and a great shopping experience. Addressing the entire market is therefore impossible for many manufacturers. “Normally, brands that have a good product for high-price buyers are also strong in such markets, but that is not the case in this market. Brand awareness is extremely low and the potential of brands is hardly exploited,” explains Dr. Lehner. Thus, the brand buyer is the smallest buyer segment with 13.5%. If a purchase of floor coverings is pending, Germans mainly look for information on the manufacturers’ websites (52.3%). This is followed by offline media such as manufacturers’ brochures and retail brochures. But social media is also becoming increasingly important. Of those who use it, buyers perceive Facebook as the most important source of information. However, the number of users is still manageable at 11%.

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To New Heights with EU Resources

The market for elastic floor coverings in the CEE countries of Poland, the Czech Republic, Slovakia, and Hungary reached a volume of EUR 221.4 million in 2017, an impressive increase of 7.9% over the previous year. In the coming years, the pace of growth is expected to slow down slightly on account of the sinking dynamics in construction. Average annual growth to 2021 will be 5.1%, according to a study by Interconnection Consulting.

Overall, the market for elastic floor coverings is benefitting from good economic developments: domestic demand is up, unemployment down, and salaries are rising. “Many projects that are also financed by EU resources will continue to contribute to the growth in the sector,” explains Katarina Gajdova, author of the study. However, due to the strong economic developments of the Visegrad Group, EU funding will be falling off by roughly 21.5% beginning in 2020.

Health Sector a Driving Force

With a market share of 17.0%, the health/medical sector represents one of the driving forces of growth on account of its heavy investment activities. In Poland, EUR 3 billion will be invested in the sector between 2014 and 2020. Hungary’s hospital infrastructure will also be extensively renovated. “Large-scale hospitals with a capacity of nearly 3,000 beds are planned for completion by 2025,” explains Gajdova. In Slovakia, the Ministry of Health has already approved EUR 153 million for the renovation of 44 hospitals. The largest area of application for elastic floor coverings, however, remains residential construction, with a market share of 36.4%.

New Trends Expected

The largest product group is heterogeneous vinyl/PVC, with a share of 42.6% in volume. The material is not only less expensive than other flooring material such as hardwood, marble, and stone, but it is also one of the less expensive materials among elastic floor coverings. However, vinyl still has many advantages, such as durability, ease of maintenance, and versatility. LVTs (Luxury Vinyl Tiles) are the fastest-growing product group, with a current market share of 18.4%. But this might not always be the case. There are indications that SPC flooring will soon take over the position as fastest growing floor covering. The reasons are the simpler installation, lower investment costs, lower material and labor costs, better waterproofing, and greater stability. And, it is better for the environment. The top five companies have a market value of 54.8%. The top companies are Amtico, Atro, Beaulieu, Gerflor, Graboplast, Fatra, Forbo, IVC, Lentex, and Tarkett.

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Elastic Floor Coverings: Sometimes Dazzling, Sometimes Matt

Three markets, three different developments. Whereas the market for elastic floor coverings in Great Britain and Ireland is in a downwards spiral on account of the Brexit crises (2017: -1.5% in volume), and is stagnating in Italy (0.3% in volume), in Spain the growth curve is rising off the charts (+3.5% in volume). These trends are also largely expected to continue, according to a study by Interconnection Consulting.

Spain Marches On

According to the study, average annual growth in Spain to 2021 will be 6.2% in volume. The favored area of application for elastic floor coverings in Spain is residential buildings, with an average market share of 27.6%, followed by health/medical with 16.9%. The leading product group in Spain is LVTs (Luxury Vinyl Tiles), with a share of 38.2%. Katarina Gajdova, author of the study, explains the advantages of LVTs: “They have a wide array of design options, can recreate the appearance of stone or wood flooring, and, compared to these materials, LVTs do not come with extensive installation and maintenance costs.” LVTs are also the fastest growing product group in Spain (average forecast growth per year to 2021: 9.1%). The market share of the top five companies is 69.4% (top 10: 76.7%).

Slow Growth in Italy

The average annual growth in Italy to 2021 will be 1.5% in volume. The largest area of application for elastic floor coverings in Italy is health/medical, with an average market share of 24.4%, followed by residential buildings with 17.3%. The dominant product group is homogenous vinyl/PVC (23.1%). Homogenous vinyl consists of one single layer, which offers the vibrancy and depth of the selected color. One layer gives the floor covering rigidity and durability. Homogenous vinyl can thereby be employed in areas with high foot traffic, explains Gajdova. LVTs are in second place, with a market share of 22.6%. As in Spain, LVTs represent the largest-growing product group and are even set to become the highest-volume product group this year. The market share of the top five companies is 62.6% (top 10: 76.6%).

Long-Term Troubles Predicted for Great Britain

Growth in Great Britain and Ireland for the upcoming years will remain at 0.3%, a stagnation largely caused by the Brexit vote. The largest area of application is in residential buildings, with an average share of 36.4%, followed by health/medical with 17.0%. Here, too, LVTs are the leading product group, with 41.8%. The second-largest group is heterogeneous vinyl, with 19.8%. In this region as well, LVTs are the group with the highest growth prospects: 2.3% annually to 2021. The market share of the top five companies is 53.6% (top ten: 76.6%).

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Parquet and real-wood flooring industry is stabilizing despite strong headwinds

Despite fierce competition from other flooring types, parquet and real wood flooring in Europe will see a 1.1% increase in sales this year, according to a new study by Interconnection Consulting.

 

Prices are increasing

The parquet and real wood flooring industry is in a challenging market environment, which also drives producers to optimize their processes and develop new strategies for their products. The most important influences for the industry are the macroeconomic effects (e.g., Brexit), construction activity, the scarcity of high quality lumber, the strong competition of other types of soil, and the demand structure of floor coverings. “Especially the last two points push the parquet and real wood floors more and more into the premium segment”, explains Jan Hudak, author of the study. This effect is also visible in the fact that sales grow much faster than sales. In 2017, the percentage increase in sales was 2.2%, while sales only increased by 1.2%. This gap is due to the price increase in this segment, according to interconnection, in the next few years further.

 

Germany is running out of steam

The largest markets for parquet and wooden floors are Germany, France and Turkey. However, especially at Europe
s largest market in Germany, the alternative floor coverings show their claws. In 2017, sales fell by 0.15% despite the construction boom. Stagnation can only be expected in the next few years. The strongest growth rates in the European market are recorded in Poland with a sales increase of 3.1% and Benelux with 3.4%. Countries such as Slovakia (2.9%), Turkey (2.7%) and Denmark (2.4%) also report healthy sales growth. Slightly less strong will be the sales growth in 2018. Only Benelux (3.4%), Poland (2.7%) and Turkey (2.0%) reach the 2% mark this year.

 

Parquet dominates

By far the largest product group with a share of 85.4% are parquet floors. In second place are the solid wooden floors with 12.1%. Accordingly, veneer floors only hold a negligible share. For the parquet floors, the strongest product group is the three-layer parquet, with long planks (40%). This is followed by the three-layer parquet with wide planks (31.8%) and the two-ply parquet with 26%. The dominating wood is still the oak with a share of 82,6%. This is followed by tropical woods with 4.0%, nut and fruit woods with 3.6% and ash with 3.3%. In Europe there are more than 160 producers of parquet and real wood floors. The top ten companies control around 48% of the total market. Important companies on the European market are Boen, Baltic Wood, Unilin, Weitzer Parquet, Hamberger, Tarkett and Parador.

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Deutscher Holzfertigbau Verband

Interconnection provides us with the prefabricated house study a plausible and veritable data basis for the analysis of the actual situation in the prefabricated house market and beyond for the assessment of the future market development. We are happy to use this interpreted data for our lobbying and everyday work.

Thomas Schäfer (Managing Director, Deutscher Holzfertigbau-Verband)

ELK

The prefabricated housing study by Interconnection Consulting shows a real picture of the actual market situation and forms a valuable basis for our strategic decisions.

Gerhard Schuller (CFO ELK)

Epson

EPSON is satisfied with the Interconnection's way of communication with the market and with clients. EPSON is also appriciate the Interconnection's continuous work trying to aim the report to be at the higher level. As a result, EPSON rely on Interconnection data, for the market of POS Printers and Systems.

T.Murakami (Brand Management, Seiko Epson Corporation)

Gaulhofer

I appreciate on the forum "Impulsworkshop Vertriebsoptimierung" the practical relevance of Peter Berger linked with his practical examples. I also liked the sovereign presentation style. The most important benefit was for me, on the one hand refresh of methods and also the sales management tools that were shown. Ing. Dietmar Hammer (Head of Product Management Gaulhofer)

Kontron

The most important benefit of the Impulsworkshop "sales optimization" was in my view the procedure of the definition of strengths and the entire sales process. Mr. Berger is very competent and professional. Fabian Freund (Sales Manager, Kontron Austria)

Österreichs Personaldienstleister

The sales management tool ZAIS has become indispensable for many Austrian temporary staffing providers for fast and correct sales management decisions. A tailor-made online cockpit provides comprehensive monthly figures and data on temporary work and the labor market in Austria, while at the same time impressing with its overview and intuitive user guidance. Interconnection Consulting has consider individually to all user needs during development process and also convinces with fast response times during operation.

Dr. Gertraud Höltl (Generalsekretärin Österreichs Personal Dienstleister)

Saint Gobain

Long experience and deep understanding of the construciton industry markets make up the quality of the IC studies. Interconnection Consulting is a constant companion concerning the assessment of markets and helpful for decision-making.

Bernd Blümmers (Directeur General, Saint-Gobain Solar Systems, Central Europe, Aachen)

Salamander

Interconnection Consulting reports deliver a worthfull external perspective and are so a good contrast with regards to our internal market point of views.

Pedro Posada (CEO Salamander Industrial Products Spain)

Scandinavian Business Seating

The IC Report gives a very good overview of the Western European office furniture market, in a well-structured way. The data is helpful to better understand the market developments and drivers.

Beatrice Sotelo (Director Business Development , Scandinavian Business Seating)

Schneider Electric

Under a short time constraint, Interconnection was able to deliver an outstanding study that exceeded my expectation in terms of quality and market breadth. I highly recommend Interconnection to anyone in need of market research.

Jeff Canterberry (Director of Strategy and M&A, Schneider Electric)

Sodexo

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