Floor covering dealers have long questioned Lumber Liquidators’ practices, in particular how it could sell laminate flooring for 89 cents per square foot (sometimes lower) and offer 15-year warranties (and oftentimes longer) — a “value” proposition that simply didn’t add up to them.
There is a saying in some circles of the flooring industry that you cannot take price out of product without consequence. And so, when “60 Minutes” reported — based on independent tests — that virtually all of the Chinese laminate products that Lumber Liquidators sold contained high levels of formaldehyde, few flooring executives were surprised.
The largest material component in laminate flooring is the brown core board, and companies can buy less expensive core boards by having higher formaldehyde levels in the core board. Formaldehyde is present in the glues used to bind the wood particles together. The cheaper you can make the product (i.e., adding more formaldehyde), the cheaper you can sell it. In Lumber Liquidators’ case, tests showed it was not in compliance with California Air Resources Board (CARB) standards.
The fallout continues to widen for Lumber Liquidators, with class-action lawsuits and possible Congressional investigations following in the weeks after the “60 Minutes” piece. On March 13, The National Association of the Remodeling Industry, which represents 6,500 small-to mid-sized home improvement companies, said it would encourage its members to refrain from purchasing Lumber Liquidators’ products.
HBSDealer asked some prominent flooring retailers to weigh in on the Lumber Liquidators situation, and how the implications impact the overall industry.
Darren Braunstein, VP sales and marketing, Worldwide Wholesale, Edison, New Jersey
“The report was certainly damaging to Lumber Liquidators and potentially the laminate and engineered wood category as a whole. It is impossible to know what the repercussions will be. There is no doubt that some consumers will be thinking twice about purchasing a new laminate floor in the near future.
“Consumers are already questioning more about what products contain formaldehyde and what products are made in China. Consumers will be wary of any flooring product coming out of China. However, the issue is not necessarily what country the product was made in, but whether it is third-party certified and in compliance with CARB standards. Carton labeling and backup third-party CARB certification must be readily available at the consumer’s request.”
Eric Mondragon, Hard surface buyer, flooring division R.C. Willey, Salt Lake City
“Anytime there is a product category named where there are health implications to be concerned with, it starts the frenzy of false accusations. The damage has been done, and only time will tell how much.
“Unfortunately, all Chinese laminates will come into question. In the days following the report, we already had customers calling and questioning the products they are purchasing or had previously purchased. There is nothing the reputable Chinese importers can do, due to the fact that the products that Lumber Liquidators were importing were all labeled as CARB compliant. Now the customers do not believe the compliance letters that are provided by any of the manufacturers.”
Sean O’Rourke, VP sales for hard surfaces, Avalon Flooring, Cherry Hill, New Jersey
“I don’t think it is a category issue. I think consumers have taken it to be a ‘flooring made in China issue,’ which was not what the story was about, but enough consumers seem to have taken it this way as evidenced by questions and requests we have gotten over the last few weeks.
“Customers in the current buying cycle are probably going to be wary of all Chinese-made laminate, but this concern will lessen as time passes (unless there is another story of a similar situation). I don’t think we should go out and start putting ‘CARB 2’ compliant stickers on samples, but educate your salespeople on how to address customer concerns and have the documentation to back it up.”
Carlton Billingsley, Owner, Floors & More, Benton, Arkansas
“The ‘60 Minutes’ report brings a black eye for the laminate category due to implications that laminate is not a product that complies with governing bodies of indoor air quality. This is going to cause many discussions in regards to product, origin of manufacturer, and compliance with air regulations that could bring additional tariffs, compliance requirements and stringent standards to ensure all laminate in the U.S. plays by the same rules.
“This will level the playing field for domestic manufacturers, distributors who comply by sourcing imported laminate, and local retailers who make sure laminate is in compliance.”
Eric Langan, President, Carpetland USA, Davenport, Iowa
“Before this report, I doubt many, if any, consumers knew that the use of formaldehyde was part of the manufacturing process in laminate floors. Quite a few consumers were wary of Chinese imports prior to this report. This report will only further fuel those concerns. Reputable Chinese importers will face an uphill battle to gain the confidence of U.S. consumers and will have to be selective with whom they partner with.”
Back of the yard, front of mind
Consumers are buying more (and bigger) things again, but their homes are too cramped to store them. As a result, more homeowners are turning to outdoor sheds to store lawn equipment, bicycles, tools and more.
What’s also true is that clutter negatively affects our brains and our ability to focus and process information. That’s where sheds come in. They’re small enough to fit in the backyard and versatile for a variety of uses. That’s why their popularity is growing beyond storage to include such uses as gardening centers, outdoor workshops, offices and man caves.
This information was developed from “Shed Industry Trends in the U.S.,” first-of-its-kind proprietary research about the U.S. outdoor storage shed market. Our trends study consisted of shed industry secondary research and primary research sponsored by LP Building Products and conducted with U.S. consumers in 2014 by the strategy and insights experts at research firm hfa.
Of the 2.39% of U.S. households that purchase or build a storage shed annually (2.9 million sheds), 56% of those households spend more than $500, and 39% spend more than $1,000 on a shed. The average shed size is 10 ft. by 12 ft. Shed sales growth from 2008 to 2013 suggests that sales could reach $800 million annually by 2018.
Shed purchases by consumers are almost evenly split in two categories. The American Housing Survey reports that the shed buyer market is broken out by do-it-yourself (DIY) at 53% and do-it-for-me (DIFM) at 47%. This breakout shows that sales growth potential exists for both big-box retailers (with an emphasis on DIY) and shed dealers (predominantly DIFM).
Current shed-product distribution does not address demand generated by DIY sales and marketing efforts. There are also limited SKUs available at retailers to address DIY needs.
Some additional consumer insights gained from the LP trends research include:
- An increasing number of baby boomers are looking to downsize their homes, so they’ll have less space to store accumulated possessions.
- The propensity of U.S. households to “clean up and organize” is evident by the proliferation of organization-oriented businesses and the emergence of reality TV shows that feed a national obsession to declutter.
- Outdoor buildings reflect the changing tastes and styles of their owners, and homeowners are increasingly showing off the things that set them apart from the rest, either aesthetically or functionally.
- U.S. consumers strive to make their homes a sanctuary from outside stress and stimulation caused by the onslaught of “stuff.”
- Men tend to gravitate toward shed toughness and durability, while women tend to be drawn to design and style.
- The South and West need storage products because they lack basements, while cold weather is a driver for storage in the Northeast and Midwest.
To support retailers and dealers in their efforts to help consumers better envision shed uses, LP’s research findings played a role in the launch of the LP Outdoor Building Solutions (OBS) website LPShed.com.
Leigh Smith is associate segment marketing manager for LP Building Products. Her email is [email protected].
Sheds are being put more new uses, from gardening centers to man caves.
The Product Road Show
From Orlando to Dallas to Las Vegas, HBSDealer editors have been following the business where it takes us on the coop and distributor buying show circuit.
From thousands of stories, here is the skinny on seven.
- For the second straight convention, Ace Hardware had an aisle of mini-celebrities, successful contestants on the “Shark Tank” reality TV show. Wheeler-dealer Lori Greiner couldn’t make it, but her stable of inventors drew a crowd.
- Salesmen at Grabber Construction Products were introducing themselves to True Value dealers at their Reunion in Dallas. A big part of the story is the non-slip LOK Drive head.
- What’s old is new again. The team at Dial displayed a trending Pinterest topic — the combination of classic 20 Mule Team Borax, with Fels-Naptha and Arm & Hammer washing soda, produces a homemade laundry soap for frugal living.
- Vintage sodas are making a strong showing at all of the buying shows. Shown here at the Orgill event in Orlando, brands such as Route 66, Nesbitt’s Orange and even Choc-Ola are rocking the shelves.
- Oftentimes, a familiar product will take on a new relationship. Here at the Orgill show, Snapper was introduced as a vendor partner.
- Merchandising matters. A Wellington mutlipurpose rope display optimizes an endcap at the True Value Reunion. The combination of new products, new programs and merchandising techniques is getting close attention as a holistic trend across the entire trade show circuit.
- Ace thinks it has a winner with its Home Plus entry-price-point brand. It’s moving on to more products, and moving into the impulse area.