AMA RESEARCH | FEATURE
Following the economic downturn, sales of contract floorcoverings reached a low point in 2011, with 2012/13 also difficult years for the sector. However, in 2014 and 2015, the contract market began to recover and growth in 2015 was estimated to have been around 4%, with the sector reaching an estimated value of around £950m, according to AMA Research. This stronger performance has been underpinned by a combination of factors, including a recovery in business investment - particularly office construction and the leisure sectors, and refurbishment/fit-out work.
The contract flooring market has changed significantly over the last decade in terms of both product usage and specification levels. Key to this change has been the move away from carpet to smooth floorcoverings with more integrated use of different types of flooring materials within a single installation. Design and aesthetics have also become increasingly important features in recent years, with contrasting colours and textures also used to provide differentiation between locations.
The vinyl sector has been at the forefront of this trend, particularly in the health and education sectors, but other floorcoverings have also capitalised on specification developments, with carpet tile manufacturers in particular increasingly introducing colours and textures and moving away from single colours/monotones. Modular floorcoverings have also become more prominent in recent years. Initially associated with carpet tiles and laminates, this trend has expanded to include vinyl tiles (particularly luxury vinyl tiles) and, more recently, linoleum tiles.
There has been little change to the contract floorcoverings product mix over the last five years, with carpet retaining the largest share at around 50%; followed by vinyl, wood and ceramic/natural stone tiles. However, taking a longer term perspective, carpet has seen some erosion of share and no longer dominates to the extent that it did 20 years ago, as specifiers are happy to be flexible in using different products in different locations. It is much more common now to see a range of different flooring products in applications as specifiers combine soft and hard flooring in the same installation.
Contract carpets have faced significant competition from smooth floorcoverings but enjoyed estimated growth of around 3% in 2015, underpinned by higher refurbishment and new build work in the private retail and offices sectors – both key markets for carpet. Vinyls account for close to a 20% share and have been at the forefront of product innovation, with the development of a wide range of sector-specific products. The market has also benefited from greater specification of slip-resistance and safety flooring in key end-use sectors; including health, education, entertainment and leisure.
Demand for wood flooring in the contract sector reached a low point in 2011, but the recent trend has been upwards with growth of 12% over the 2011-15 period. The sector continues to be affected by strong competition from other smooths, but wood flooring has benefited from the trend for the mixing of flooring types.
Floor tiles primarily include ceramic, porcelain and natural stone, and growth in 2014 and 2015 has been due to higher demand from sectors such as hotels, retail, leisure and offices. The trend for larger format floor tiles and increasing adoption of higher value porcelain tiles, particularly stone-effect designs, have all helped to underpin value growth.
Prospects for the contract floorcoverings market remain positive into the medium-term, with annual value increases of around 3% currently forecast to 2020. The forecast is based on the strengthening of the recovery for new build and refurbishment work in key commercial construction sectors (particularly offices and leisure), but tempered by forecasts of flat or lower demand from
TOMORROW’S CONTRACT FLOORS YEARBOOK 2016/17
some public sector end-users. However, AMA consider that the product mix in the contract sector is relatively stable and unlikely to change significantly due to the wide range of applications, the range of sector-specific products, and the propensity for the replacement of ‘like with like’.
Medium-term prospects for the contract carpet sector remain optimistic, but moderate, with current forecasts indicating 2-3% annual value growth to 2020. Competition from other floorcoverings will be a key factor determining carpet prospects. Carpet will benefit from a general trend for replacing “like with like”, but could also benefit from higher specification replacements, particularly for healthcare and education sector applications. Carpet tiles are likely to remain popular underpinned by their ease of installation and replacement characteristics.
Demand for vinyl in the contract sector is currently forecast to achieve annual growth rates of around 3-4% to 2020. The commercial sector in particular will be a key area of opportunity, with higher value products such as LVT and safety flooring set to take share in some non-food retail sectors. Tiles are taking a growing share of the contract vinyl sector, but the health sector will continue to provide good opportunities for specialist vinyl sheeting products into the medium-term.
Specification of floor tiles is likely to be underpinned by the ongoing demand for larger format tiles. In addition, the recent trend for using more decorative designs and random lay patterns for flooring should also boost value growth, particularly for sectors such as entertainment and leisure.
In terms of supply, all sectors of the contract floorcoverings market remain competitive, with ongoing pressures on prices and margins throughout the supply chain. Import penetration is high in many sectors, but the sector offers some good growth opportunities based on underlying growth in new build and refurbishment work in several key sectors, supported by rising specification standards driving added-value demand.
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