On the Horizon
Thursday, January 16, 2025, from Floor Covering Weekly
By Sharyn Bernard
After a soft 2024, industry looks to bounce back in 2025.
With 2024 in the rearview mirror, industry executives are looking to reverse course in 2025.
“We are optimistic about 2025,” said Tim Baucom, president, Shaw Industries. “After several years of market contraction, we anticipate a modest recovery, with demand outpacing GDP growth.”
Executives expressed overall positivity about the coming year. “We see 2025 as a year of opportunity and continued growth,” said Rotem Eylor, CEO and founder of Republic Floor.
And there is a certain enthusiasm for the new year. “We are very excited about 2025,” said Jimmy Tuley, president, residential business, Mannington Mills. “I don’t think there will be a major market lift, but I do think the decline has stopped. With that said, we are creating excitement and focus with some beautiful new products in our LVT and nylon carpet categories. We will be early and are excited about a spring selling season.”
Deciding Factors
Still, there are several factors that could impact the business, both positively and negatively. One of the most crucial is the economy — along with related issues such as inflation, interest/mortgage rates and housing affordability and availability.
“There is a large pent-up demand for flooring, and if mortgage rates come down and inflation comes down, people will have money in their pockets to spend,” said Jeff Meadows, president, residential sales, Mohawk Industries.
If interest rates continue to come down, that should fuel the market. “We’re on a path [of falling rates] that started in September,” said Brian Carson, CEO of AHF Products. “There is going to be a point where interest rates will settle at a lower level. When it settles it will bring new people to the market, and it will bring some of those sideline sitters to move.”
Carson expects the first half of 2025 to be soft, with business picking up mid-year. “We clearly see improvement for the back half of the year.” What’s more, he predicts that the industry will see growth for four to five years. “I think it will be a long run.”
T.M. Nuckols, president of The Dixie Group (TDG), also believes the market will pick up in the second half of this year. “As we approach mid-year, hopefully the interest rate reductions will begin to make an impact at the consumer level, and we will see business conditions begin to show signs of life. Once we begin to see existing home sales increasing, I expect business conditions to improve for the residential replacement market. Once the industry builds a little momentum, I believe we will have a good long run of positive business conditions.”
Other factors that impacted 2024 have been resolved for 2025, and that should create a positive environment for the flooring business. The U.S. presidential election created a lot of uncertainty in 2024. “With the election finally behind us, there are reasons consumers can at least begin to know what the future looks like,” said James Lesslie, COO, Engineered Floors (EF).
Looming Issues
Of course, there are several issues that have the potential to disrupt and hinder the industry in 2025, including possible tariffs, labor shortages, ongoing housing issues and freight costs. In fact, Stuart Hirschhorn, director of research for Catalina Research Inc., said he does not expect 2025 to be a growth year.
“There seems to be little change in the floor covering market environment in early 2025 since mortgage rates actually increased by some 75 basis points after the Federal Reserve cut [rates] in September. The rise in interest rates will postpone any housing recovery. Commercial market sales also continue to slow along with non-residential building construction spending.” He said while the presidential election has passed, “the outcome of the election will affect tariff rates and therefore floor covering pricing. Government deficits will affect interest rates and tax policies will affect personal and business tax rates. As a result, Catalina sees 2025 floor covering sales will not be better than flat.”
These factors, plus housing affordability, also could impact the industry. “Housing affordability and economic uncertainty will remain key challenges, as will potential federal policy changes, including tariffs that could impact sourcing and pricing,” said Shaw’s Baucom. “Labor shortages, particularly in skilled installation and contracting, may continue to create bottlenecks. For the industry to grow, we need to address these structural issues while adapting to shifting consumer preferences for sustainable and personalized products.”
Proposed tariffs also could have an impact while simultaneously spurring more domestic manufacturing. “We’ve already made a decision as a country to use tariffs and duties to protect American industry and American interests,” Carson said, noting that AHF Products has 12 factories in the U.S. “I think it’s an enormous opportunity for AHF. We make almost everything we sell. We’re sitting in the catbird seat.”
Mohawk has continually invested in its domestic manufacturing facilities, Meadows said, noting the company has added between 400 to 500 million feet of capacity. “One of the reasons we have invested so heavily in domestic production is that if [proposed tariffs] happen, we will be in the best position to take advantage of it.”
Offered Eylor of Republic, “In 2025, the industry will face rising shipping costs and ongoing supply chain challenges as global freight rates continue to fluctuate, driven by factors like potential port disruptions and evolving carrier alliances.”
Industry executives are hedging their bets to be proactive regarding potential disruptions. “We still believe that uncertainty will continue into the foreseeable future, and we encourage our partners to have a balanced product mix in their portfolio,” said Thomas Baert, president and co-founder, CFL Flooring.
In anticipation of a strong 2025 — at least in the second half — suppliers are putting products, processes and programs in place to ensure they are prepared for an improved business environment.
“Our expectations for 2025 are optimistic, and that optimism is based on some of the activities that we undertook in 2024 from a preparation standpoint,” said Russ Rogg, president, Metroflor. “We are continuing to focus on our Déjà New program, and it’s expected that we will be placing about 5,000 additional architectural folders in the marketplace during the first half of the year. Additionally, our new WPC products, Authentics, Silhouette and French Quarter, are beginning to build steam. If we see a modest uptick in remodeling activity, I believe we’re poised for a solid year.”
The company also is working on new products to keep the supply chain moving, Rogg added. “We’re focusing on delivering new products, keeping our price structure as competitive as possible, minimizing supply chain disruptions through inventory programs and we intend to launch a new website in 2025 that should help drive consumers to our retail partners.”
Shaw has focused on processes to prepare for a changing environment, Baucom said. “We’ve spent the last two years making bold, forward-thinking decisions to modernize our operations, expand capacity and develop innovative products,” he explained. “Our investments in facilities like Aiken and Plant RP position us to respond quickly to customer needs while maintaining a competitive edge in our core product categories like carpet and LVT. We’re also strengthening partnerships across the supply chain with our customers, focusing on creating value through tailored solutions, streamlined offerings and customer-centric strategies.”
Innovation will be critical. “Meaningful innovation is our continued focus,” said Mannington’s Tuley. “So less on things like core technology and backing materials and more on things that visually enhance the beauty and surface performance of our products. Our early launches are very exciting and we can’t wait to hit Surfaces and the spring selling season. We have also made some internal infrastructure improvements that will allow us to more reliably communicate and service our customers. It is a big step forward.”
CFL’s Baert said focusing on quality is crucial. “Quality will always be our number one focus. That’s why we have been working to develop a cost-effective product that can support our partners, allowing them to offer a competitive product while still being strong. We believe that value-added products are what consumers really want and can meet the expectations of performance and durability.”
Republic is focusing on logistics and systems in 2025, among other things, Eylor said. “We are focused on strengthening our logistics and supply chain capabilities to meet the demands of 2025. We are expanding our fleet with additional trucks and enhancing our distribution network to ensure faster and more reliable deliveries.” The company has 16 distribution centers across Europe and is, “refining our logistics tools to optimize routes, improve inventory management and reduce lead times.”
In addition, “we are investing in advanced digital systems that provide greater supply chain visibility, enabling us to anticipate and address potential disruptions. These upgrades allow us to deliver consistent, efficient service to our partners and customers, ensuring that we remain prepared for the challenges of 2025 and beyond.”
AHF has been investing in capacity and plants in advance of a rebound, Carson said. “We are getting product into the market,” he said, noting that following the company’s acquisition of Crossville Tile last year, the company immediately invested $8 million to expand capacity. The company is expanding capacity and product launches across all its brands, and has invested more than $40 million in plants and operations. “When consumers go to showrooms, they don’t want to see designs from 2019. They want new styles, and we have leaned into that with products and merchandising. We thought these investments would be important for the back half of 2024, so we are in position to rock and roll.”
EF also is continuing to innovate and increase its domestic footprint. “We have the capacity to handle any upturn in business that will come our way,” Lesslie said. “We will continue to innovate products on carpet and with new digital LVT products.”
Southwind Floors is launching new products as well as new technologies to better serve its customers. “We’re helping our customers prepare for 2025 by continuing our ‘Southwind Way’ promise of putting our dealers first in everything,” said Drew Hash, president and CEO. For example, the company has added inventory visibility to its newly rebuilt website as well as a Roomvo visualizer.
TDG is focusing on higher end products for growth. “Our overall strategy will continue to be developing and creating the most beautiful flooring products in the industry,” Nuckols said. “We will continue investing in the high-end nylon segment with a focus on product differentiation. This is a segment where our high-end brands have delivered strong numbers in the difficult market conditions we have seen over the last two and a half years.”
“We have shown very strong growth numbers over the past two years, and there is room to grow much more in the coming years.”
— T.M. Nuckols, The Dixie Group
“We are poised for growth across the board in resilient, carpet, wood and laminate. Even if the market doesn’t grow, we expect to gain share.”
— Drew Hash, Southwind Building Products
“We’re focusing on making decisions closer to the customer, enabling more locally relevant solutions that address the unique needs of different markets. By empowering our teams to act with agility and tailoring our offerings to specific geographies, we’re helping our customers create stronger connections with their local communities and end users.”
— Tim Baucom, Shaw Industries
“We must continue to find ways to capture the
consumer’s imagination and inspire them when they decide to purchase flooring. By continuing to introduce products that are visually exciting and give the consumer more bang for their buck, we can more effectively compete for their discretionary dollars against other industries.”
— James Lesslie, Engineered Floors
“The demand for sustainable, high-performance products will drive innovation across the industry. Companies that invest in green initiatives, operational efficiency and cutting-edge product development will lead the market.”
— Rotem Eylor, Republic Floor
“As we move into 2025, there is less uncertainty. Inflation is under control; the election is behind us. The economy is going to have a soft landing. There are reasons to be optimistic about the future of the industry.”
— Brian Carson, AHF Products
“I’m an optimistic person by nature. I think the second half of 2025 will be better and I strongly believe 2026 and 2027 will be some of the better years in the flooring business.”
— Jeff Meadows, Mohawk Industries
“We have heard loud and clear from our customers that they need reliable, repeatable service they can count on to run their businesses. We have invested in our systems and stories to be simple and serviceable at the point of sale. We also have broadened our partnerships with technology providers that are helping our independent retailers create better tools and systems to win in the marketplace.”
— Jimmy Tuley, Mannington
“Geopolitical uncertainty and cost fluctuations are likely to continue. That means that we and our partners are preparing by ensuring that we have the right products, that we are striking a balance with different sources of supply, and we position ourselves to be ready to support our partners with enhanced stock programs in both Asia and the USA.”
— Thomas Baert, CFL Flooring