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THE GROWTH RATE OF WORLD FLOOR COVERINGS MARKET
“According to statistics, the world floor coverings consumption in 2006 was equal to 13.0 billion square meters. It is estimated that by 2011 this figure will be 15.5 billion sqm and the compound annual average growth rate of the world floor coverings consumption between 2006-2011 is expected to be 3.7%.”
During October 28-30, China Forestry Industry Association and China Wood International organized the 3rd China Wood Flooring Exp. & Imp. Conference & the 6th China Wood Markets Exp. & Imp. Conference. This conference which has been organized for six consecutive years since 2002, has been an efficient platform of communication and cooperation between China and the world.
The conference attracted many speakers from various parts of the world. One of them, Stuart Hirschhorn, president of Catalina Research Inc, presented expounding dynamics and strategies of the competitive world floor coverings market. Topics emphasized during the presentation were mainly about the world floor coverings market and growth, company strategies to increase world market share, distribution channels, product sourcing and end-use markets.
World floor coverings market and growth
According to statistics, the world floor coverings consumption in 2006 was equal to 13.0 billion square meters. Per capita consumption during the same year was almost 2 square meters. Compound annual average growth rate of the world floor coverings consumption between 2006-2011 is expected to be 3.7%. It is estimated that by 2011 this consumption figure will be 15.5 billion sqm. The value of non-installed floor coverings sales in 2006 was 115 billion dollars and the average value was 8.80 dollars per sqm.
Market by materials
The evaluation of the market by material shows us that in 2006 approximately 50.8% of the total market constituted of ceramic tiles/stone (6.6 billion sqm). The second largest share belongs to carpets&rugs with 28.9% (3.8 billion sqm). Other materials in order are resilient flooring (11.0%), laminate (5.8%) and wood (3.4%).
Markets and growth potential by region
Stuart Hirschhorn stated that the biggest share belongs to the Asia/Pasific region which dominates the market with 44.5% (5.76 bil. sqm). Between 2006-2011, there is an expected 5.5% compounded annual growth (CAGR) increase in this region. Following in second place is the United States/Canada with 22.1% which equals to 2.86 billion square meters and there is an expected 1% CAGR. Western Europe comes in third with 18.5% market share equaling to 2.40 billion sqm. Compound annual growth increase for this region is 2.0%. The last two regions are Latin America/Africa with 10% market share and Eastern Europe with a 5% share. The CAGR for these regions in order are 3.5% and 4%. These figures show that the most promising market is Asia/Pasific region with 5.5% CAGR.
Wood and laminate flooring in world markets
It is reported that in 2006 laminate flooring had a 5.8% market share in the world. Of this 5.8%, 15.7% market share belongs to Eastern Europe,14% to Western Europe and 4.2% to United States/Canada. Finally followed by Latin America/Africa with 3.6% and Asia/Pacific with 2.6%.
Whereas wood flooring had a 3.4% market share in the world. Of this 3.4%, 4.2% market share belongs to United States/Canada, 4.3% to Western Europe and 3.2% to Asia/Pacific. Finally followed by Eastern Europe with 2.9% and Latin America/Africa with 1.4%.
Company strategies to increase market share
One of the main topics of the conference was the market shares of the leading manufacturers. Hirschhorn listed the world’s nine leading manufacturers and pointed out their sales and share of total world sales in 2006. According to the list, Mohawk ranks first with 7 billion dollar sales. Their share in total world sales is 6.1%. Another one of the leading manufacturers is Shaw from the USA. They recorded an annual sales of 5.8 billion dollar in 2006 and their market share is 5%. The third place belongs to the French Tarkett with their 2.5 billion dollar sales (2.2% of total market share). Companies with total market share of less than 2% are listed as follows; Armstrong (1.8%), Beaulieu (1.3%), Marazzi (1.0%), Interface (0.8%), Balta (0.8%) and Mannington (0.7%).
Challenges and opportunities
There are many challenges that world floor covering manufacturers face. The slow down in growth in important markets like United States and Western Europe has challenged manufacturers. Changing currency valuations have also created negative effects on the market. Rising labor, transportation and energy costs plus the licensing fees has contributed to the matter greatly. Logging and environmental restrictions, reduced export subsidies and U.S import investigation are also presenting obstacles.
On the other hand, the market is subject to many opportunities. Today globalization, growth of middle and upper income populations, development of value-added product improvements, play a great role in increasing revenue. International brand marketing, strengthening distribution and sourcing, and building plants in strong growing markets has opened up new horizons.
Strategies to increase market share worldwide
Acquisitions is regarded as the quickest way to add product lines and develop a vertically-integrated floor covering infrastructure. One of the best ways in increasing market share worldwide is by investing in plant in growing consuming markets which will in return cut transportation costs, avoid currency fluctuations, and get closer to the customer. Adding value to product lines to push pricing upmarket and meeting the needs and preferences of the growing middle and upper income populations is another option. Using international brand and developing multi-channel cost effective distribution to meet the changing needs of the growing target market is also necessary to increase market share worldwide.