Prices under competition
By 2019, Interconnection Consulting expects an annual sales growth of 3 %, which is only one percent higher than the volume growth and which corresponds to the expected inflation in the Eurozone. However, the reason for this is not the growing market presence of Asian manufacturers as a tour of this year’s leading trade fair of floor coverings, Domotex in Hannover, already disclosed. The UK, Benelux and Germany serve as European test markets for Asian producers. It is, therefore, no coincidence that the average prices have barely risen in the past years in those countries due to increased competition, or, as in the case of Germany, have actually declined. While sales rose by 1.4 percent in Germany, the turnover increased only by 0.7 %. In addition to the Asian suppliers who are entering the European market, Eastern European producers accounted for intensified price competition in Europe as their production costs were cheaper than in Western Europe. However, price differences between the producers are also arising mainly due to the large range of products and the basis of qualitative differences. By using scaling effects Western European manufacturers try to remain competitive.
Growth in France far from optimism
Last year, all the surveyed countries (Germany, Austria, Switzerland, Italy, Spain, France, the Benelux, Denmark, Sweden, Great Britain, Poland ), except for France, noted a growth both in quantity as well as value in the market for wooden and parquet floors. Nevertheless, Interconnection expects France to experience growth rates of 1.8 % in quantity from 2016 to 2019. The highest growth rates recorded in the past year were in the UK ( + 4.8% in value ), Poland (+ 4.5 % in value) and Denmark (+ 4.3%). Even Italy, after years of decline, achieved positive growth figures again for the first time last year and increased its sales by 0.7 %.
Multilayered wooden floors are the first choice
As far as wooden floors are concerned, a distinction between hardwood floors and multilayer floors can be made. Multilayer parquet floors have a 83.9 % market share in volume and are thus customers’ first choice (the market share has even increased slightly last year). Three-layer parquet floors make up a market share of approximately 70 % in volume and thus constitute the majority of floors in demand. This is not without reason: a multilayered wooden floor is dimensionally stable. The expansion and contraction of the wood is not affected by changing humidity.
The price of most multilayered wooden floors has hardly changed in recent years. The cost of the most popular variant in the studied countries averaged 28.4 Euros per m2, making it cheaper than hardwood floors (31,8 € ). Especially in the parquet floor industry prices have fallen by around one Euro per m2 due to strong competition since 2010. The market share of the solid wood variant constituted 13.5 % last year. Solid wood flooring is characterized by a significantly higher wear layer (22mm) compared to multilayer hardwood flooring (about 4 mm) and can therefore be polished more often. The oak is one of the most popular wood flooring types (70%) followed by beech and ash wood as well as tropical wood types, but all of the mentioned wood types show only a single-digit market share.
Origin of the parquets matters
By providing certificates such as the Forest Stewardship Council ( FSC ), producers of wooden flooring are increasingly trying to meet their customer’s growing demand for sustainability and resource conservation. Interconnection Consulting predicts that due to the costs related to laying wooden floors, part of the clientele of the wooden floor segment is going to withdraw. “Price-sensitive buyers will turn to resilient floor coverings (vinyl, LVT, etc.) as well as laminate flooring” explains Jan Hudak, author of the study. Nevertheless, Interconnection Consulting expects a trend for real wooden floors to become customized and exclusive. By 2019, this product group is expected to grow annually by 7% in value.
Market concentration continues to rise
In addition to some “Local Heroes” with a very strong presence in the markets of a specific country, there are companies such as the Bauwerk Boen Group, Kährs, Hamberger, Weitzer Parkett, Tarkett or Barlinek, which are very often dominant in several markets. The 100 largest parquet manufacturers in the 11 studied countries made up a combined market share of 65.9 % in 2015 according to the sold quantity, representing an increase of 0.5 % compared to 2014 in terms of market concentration.
From the forest to your home
As far as the distribution of hardwood and parquet floors is concerned, mainly indirect sales dominate constituting a volume of 95.6% of total sales. Only 4.4% of the floors are distributed directly by manufacturers, and to be more specific – smaller manufacturers with a local production who adapt their products to specific customer requirements and are mainly active in the high-end area. Currently a small part is already sold online, however there is still an upward growth potential according to market analyst Jan Hudák. A view of the indirect sales shows that in Europe around 72.5% is distributed through wholesalers now. A closer look at the distribution channels reveals that a significant part of the market is made up by the wood trade (e.g. the wood land), while in some countries it accounts for even more than 50% of the market. If we were to consider the distribution channels that go directly to the end customer, 1/3 of the market would go to craftsmen (flooring installers, wood flooring contractors, decorators, carpenters / joiners) and around 20% to DIY. Specialist stores, chain stores, furniture shops and home decorators also play a vital role.