Tile stats 2018: Climbing & Competing

Tuesday, July 30, 2019 By Ryane DeFalco from Floor Covering Weekly

Ceramic and porcelain floor and wall tile saw solid growth in 2018. In fact, after luxury vinyl tile (LVT), it was the only category gaining notable market share. According to Catalina Research, dollar sales of the tile category are estimated to have increased by 7.3 percent from the previous year. Tile totaled an estimated 3.9 billion dollars in 2018, while stone’s dollar value tallied in at 1.5 billion dollars.

In 2018, tile made up 14.4 percent of all flooring dollar sales as well as square footage sales. And, according to Catalina, ceramic and porcelain tile sales growth outpaced the overall U.S. floor coverings industry in 2018.

“The macro-economic picture continued to improve with unemployment hitting record lows,” Raj Shah, president of MSI, said of the 2018 tile market. “Ultimately we saw growth for the category and continue to believe the consumer will accelerate the sale of tile and stone.”

Due to its low cost and endless design options, tile is a key category for the industry. In previous years, tile saw upward trajectory from the expansion of visuals available due to digital printing. In 2018, consumers were given more design freedom than ever before.

“With more products and customization options available to the commercial and residential segments, the tile and stone categories saw positive growth in 2018,” said Gianni Mattioli, executive vice president of Dal-Tile. He explained that digital printing has given consumers the opportunity to have high-end visuals in their homes at a competitive price point. “Through digital printing we can combine the benefits of tile with the beauty of other products, such as wood, marble, stone, masonry and concrete.”

Expanding Possibilities
Tile also benefited from innovation and technological advancements. “Technology is constantly transforming the tile industry,” Mattioli explained. “From improved printing techniques to innovative sizing and installation methods, the industry saw major advances that helped further interest and consumption,” he said.

Today, tile is also able to be utilized in more space including up the walls and outdoors, adding to the square-foot sale. In fact, several tile manufactures such as Daltile, MSI and Crossville have entered the countertop market with larger formats. “Technology has also allowed us to increase the sizes of our offerings,” Mattioli added.

Tile can also be installed outside  the home because it is durable and can stand up to extreme temperatures. Porcelain pavers, offered by companies such as MSI, take the performance and visuals of tile from indoor spaces to the outdoors. Companies are also providing tile collections that coordinate indoors — on the floor and up the wall — with outdoors, increasing the total square footage of installations.

According to Mattioli, wall coverings presented a unique opportunity for tile to grow in 2018. He told FCW that wall tile doesn’t have the same competitive landscape that floor tile does, offering an opportunity for incremental business.

And MSI’s Shah agreed. “The opportunity is the wall,” he declared.

Collin Magnuson, Shaw category manager tile and stone, echoed this sentiment and urged retailers to keep wall coverings in mind. “Tile and stone products are an incredibly unique market; no other category can be placed in as many locations. Tile and stone moving beyond the floor is a key market segment that continues to gain a lot of traction,” he said.

Moving Ahead
Mara Heras, vice president of marketing, Emser Tile, expects to see similar numbers for the tile market in the coming year. “2019 volume/dollar growth for the industry likely resembles 2018,” Heras offered. “All the main factors from 2018 continue into 2019. Affordability and labor will remain the same challenges, while it does appear that mortgage rates will remain favorable for the year helping buyers. In general, we are very happy with the outlook for 2019.”

Mattioli added, “We expect growth to be similar to 2018,” saying there are opportunities, however, for further growth. “Tile is innovating all the time. Digital applications, larger sizes, 3D structures and large porcelain slabs are only some of the innovations tile has promoted during the last few years.”

One factor that could impact growth in 2019 is increasing competition from other categories, namely LVT. Manufacturers of LVT continue to expand their offerings, which include visuals similar to stone and hardwood, but at lower price points. Tile’s gains in 2018, in fact, were second to the impressive growth of the vinyl segment.

“It’s incumbent upon all of the manufacturers and distributors to make tile increasingly more affordable and accessible especially relative to other flooring types,” Shah declared. “The industry will need to find a way to close the gap in installation costs between ceramic tile and other flooring products.”

Tariffs placed on Chinese imports are another factor impacting tile. “Never has the industry been tested with such large-scale factors as Section 301 tariffs.” Shah warned. “Any price increases overall will be inflationary to the customer and have an effect on ultimate demand. This is especially true as there are certain types of ceramic tile that are only produced in China at this time so we are effectively taking money out of consumers’ pockets.”

“The hope is that much of this will settle in the third quarter. We will then see investment decisions being made again which will result in growth of the industry,” Shah continued. “Outside of the trade war issues, we do believe there is strong growth available for tile and stone. In addition, the US remains one of the lowest per capita users of ceramic tile.”

Tile imports & exports
Tile was the only flooring category of 2018 to increase in both imports and exports. However, tile exports outperformed imports, which were slow-moving compared to previous years.

After dropping significantly in 2017, exports of tile increased in both dollars and square footage for 2018. In fact, this is the first year since 2015 that tile exports have seen an increase from the previous year. While exports for the overall floor covering industry decreased this year, tile was one of only two categories that increased in exports value (the other being hardwood).

According to Catalina Research, ceramic tile exports increased by double digit-growth in 2018. Many believe this is due to the continued advancements in tile design and performance capabilities, which resonate not just with U.S. consumers, but with consumers all around the world.

Imports, on the other hand, did not fare as favorably. Catalina Research detailed that while imports saw growth in the second half of 2018, this did not translate into sales as many companies imported simply to beat the Chinese tariffs. And while product was imported, the demand was not reflected by customers. “Imports are not only important to our business, but the whole industry and economy in general,” said Raj Shah, president of MSI. “With increases in tariffs — which will cause significant inflation — we will see a reduction in demand.”

But Gianni Mattioli, executive vice president of Dal-Tile, added that in light of the Chinese tariffs, there is an opportunity to promote domestically-made tiles. He also noted that tile imports come from several other countries where tariffs are not a factor such as Italy, Spain, Turkey, India and more.

Mara Heras, Emser Tile vice president of marketing, does not see the tariffs making a significant impact on the company’s profits. Said Heras, “With wide ranging global capacity, the tariffs will drive a shift in production geographically, but should not pose a growth obstacle as the talk and threat of tariffs has been something out there for years.”

Stone Stats
In 2018, stone flooring earned a total of 1.5 billion dollars. The category increased by 4.6 percent in dollar sales for 2018, accounting for 5.6 percent of all floor covering sales.

While stone flooring did increase this year, growth in dollars was almost identical to the growth of the previous year. This could be due to the popularity of other flooring products which are made to look like natural stone.

But industry experts said it is stone’s authenticity that could be the very factor to increase its market share. The natural characteristics of stone make the product unique, and that exclusivity could be exactly what consumers search for.

“Natural stone has proven time and time again that it is a one-of-a-kind material in terms of visual appearance,” said Gianni Mattioli, executive vice president of Dal-Tile. “For those looking to make a unique statement, stone is always a luxurious material to incorporate into a design. It also maintains its stability and value over time.”

Stone flooring did increase square foot sales in 2018, resulting in an estimated 1.5 percent of all floor covering square footage. This could be due to the popularity of large format slabs. Similarly, stone is more commonly being used as a countertop covering. And as time goes on, Mattioli sees only more growth when it comes to innovation in the stone market.

“Stone tile is experiencing innovations regarding how the material is finished,” Mattioli told FCW. “There are new methods and techniques to create different textures, finishes and shapes, creating unique visuals that have not been seen in the market before.”

The full report with corresponding graphs can be found in FCW’s digital 2018 Statistical Report issue.