Chart 1
The image of the floor covering industry is clear. The consumer's expectations are defined along with changes in the commercial and residential floor covering business in 2003 and 2004. Without a doubt, the future is bright for specialty floor covering retailers/contractors, distributors and manufacturers who understand the market.

Following are results from the National Floor Trends Market Trends Study completed prior to Surfaces 2003. The data derived from this and our product segment-specific studies should be used to identify current product/sales trends and their direction in the future.

The market trends study explored consumer perceptions of all types of floor coverings, manufacturer/distributor relationships and performance, investment, and business expansion. Our survey respondents view the residential and commercial segments with optimism for increased business and growth. The reasons for growth in the two sectors are similar: new home/commercial construction; area growth; improved economic conditions; low interest rates; increased customer demands; increases in market share; and a growing replacement market.

Ninety-nine percent of survey respondents personally specify, recommend or authorize the purchase of floor covering materials, equipment and/or supplies for their companies. These are definitely the decision-makers for their companies -- 85 percent authorize/make purchases; 64 percent recommend brands/suppliers to their customers; 57 percent specify brands/suppliers; and 51 percent recommend brands/suppliers to their companies.

Residential customer expectations. Survey participants ranked six product characteristics relative to how their residential customers perceived carpet, area rugs, ceramic tile, laminate floors, luxury vinyl tile, sheet vinyl, and wood. Each characteristic -- selection/styling, durability, price, maintenance, quality, and value -- were given a ranking of "high," "average" and "low" for each floor covering type (Chart 1).

For carpet and area rugs, selection/styling and quality were the two most important categories. Price reportedly was the least important characteristic in the carpet category. In ceramic, durability was cited as the key characteristic for the customer, followed by selection/styling. Durability and quality were perceived as the characteristics customers were concerned about most when buying laminate floors. Price and durability were mentioned as the top two characteristics for luxury vinyl tile customers. Sheet vinyl customers appear to be most interested in selection/styling followed by durability, price, maintenance, quality, and value. Quality, price and durability were considered to be most important for wood floor customers.



Chart 2
Maintenance was perceived as being least important to the area rug, ceramic, laminate floors, luxury vinyl tile, and wood floor customer. 2003 sales projections. Seventy-four percent of survey respondents expect an increase in total sales vs. 2002, while 23 percent are planning for sales similar to 2002 and only 3 percent expect a decrease from 2002 levels (Chart 2).

Chart 3
Those expecting 2003 growth projected a 16 percent increase on average.

Likewise, those participants expecting lower sales in 2003 expect a decrease of 12 percent (Chart 3). Future changes in the residential market. The study also asked retailers/contractors what changes they believe will occur, according to product segment, by the end of 2004. Seventy-two percent of our survey participants expect business in the ceramic tile segment to increase, 26 percent expect ceramic demand to remain the same and 2 percent are looking for a decrease (Chart 4).

More than two-thirds of respondents (68 percent) believe the residential wood business will increase, while 29 percent expect business to remain at current levels and 3 percent expect a decrease.

Chart 4
Further, 61 percent see growth in laminate floors, another 30 percent see sales remaining at current levels and 9 percent foresee a decrease. Residential carpet demand is projected to increase by 53 percent of respondents. Thirty-four percent see the category remaining at current levels and 13 percent expect a drop. Nearly half of these industry professionals (48 percent) expect area rugs to grow, while another 49 percent see no change in this segment. Thirty-nine percent of respondents expect stone sales to increase, while 60 percent expect current sales levels to continue through 2004.

In terms of luxury vinyl tile, about one-third (32 percent) of respondents anticipate growth, while the majority (59 percent) expect sales to continue at current levels. Less than one-third (29 percent) expect sheet vinyl to increase, while 49 percent see the segment remaining at current levels. Twenty-two percent of respondents expect a decrease in the category Looking at the commercial market, a good percentage of our survey respondents (55 percent) expect this segment to grow, while 41 percent say commercial will remain stable and 4 percent say commercial will weaken from current levels. Our survey group expects ceramic tile to experience the largest growth of all product categories by the end of 2004. Fifty-three per cent see the ceramic tile segment growing, while 45 percent believe it will remain the same. Only 2 percent expect a decrease in the commercial ceramic market (Chart 5).



Chart 5
In the commercial carpet category, 47 percent of respondents expect an increase, 4 percent a decrease and 49 percent think things will stay the same. Wood and laminate floors should show moderate increases. Forty-five percent project an increase in wood business, 5 percent expect a decrease and 50 percent say activity will stay the same. Laminate floors will see an increase, 42 percent of participants say. Eight percent foresee a decrease and 50 percent say things will stay the same in the laminate segment.

Business in the rubber, stone and vinyl segments is expected to remain relatively stable among most flooring professionals surveyed. Part 2 of our report detailing business management trends will appear in the May issue of NFT.

Editor's Note. National Floor Trends commissioned another in our ongoing series of market studies to help flooring retailers/contractors enhance the success and profitability of their businesses.

Identifying current product/sales trends and projecting the industry's future direction is imperative to making strategic decisions that ensure growth and prosperity. Our 2003 Market Trends Study findings are based on responses from a sample of 1,000 active qualified flooring dealers/contractors who were selected on an Nth name basis from the domestic circulation list of NFT subscribers. The participants represent a cross-section of dollar sales volumes for 2002 ranging from less than $500,000 (10 percent) to $5 million and more (18 percent).

A 25 percent response rate by specialty floor covering retailers/contractors to a recent Market Trends Survey provides the data of this study. The study was designed and conducted by the market research staff of Business News Publishing Co., in conjunction with the editorial staff of National Floor Trends.

The complete 2003 Market Trends Study is available for $295 each and $275 for multiple copies.