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You survived the COVID-19 pandemic recession if you are reading this blog.  However, now you must work as hard to manage the recovery.  You may be experiencing double-digit growth compared to 2020 and you may even be outpacing 2019 sales levels, however, you must have a strategy to survive the sharp increases in material, labor, and transportation costs.

In fact, U.S. floor coverings manufacturer sales could have increased by 17.5% in dollars and 13.8% in square feet in 2021.  These strong gains, however, have been offset by sharp increases in material labor, and transportation costs.  At the same time, the supply chain has broken down for many products, while customer expectations are on the rise.  Consumers are anxious to improve their dwellings due to changing lifestyles with more time at home for work, meals, and entertainment.  In addition, flooring suppliers must meet the preferences of the millennial generation who have entered the housing market in a big way.

  • Manufacturers must manage rising input costs. In the third quarter of 2021, the cost of spun yarn could have increased by 20.0%, plastic resin prices by 45.5%, and hardwood lumber prices by 61.2%. These gains impacted manufacturers’ bottom-line performance since carpet and rugs, luxury vinyl tile (LVT), and wood flooring-producers who rely heavily on these materials- experienced some of the sharpest sales gains in dollars in 2021.
  • Distributors also faced rising prices for imported flooring, while sourcing by country has shifted. Prices for foreign-sourced products could have increased by about 10.0% over the first nine months of 2021, while prices for U.S-made flooring increased about 9.0%. Sourcing has also shifted to non-Chinese countries to avoid ant-dumping and countervailing duties imposed on Chinese imports by the U.S. International Trade Commission, as well as the 301-tariffs imposed by the Trump administration.  Imports from Vietnam has led the gains in foreign-sourced product sales, and has more than doubled in 2021.  Meanwhile, current supply chain issues in China and Vietnam could result in stronger price increases in 2022
  • Retailers, however, have been able to pass through a significant portion of the rising costs to consumers. Specialty floor coverings retailers increased their prices by about 15.0% over the first nine months of 2021. The price increases, however, did not stop consumers from buying, since square foot sales could have increased by some 7.0%.  Rising square foot retail demand, however, resulted in a headache managing inventories due to a breakdown in the supply chains during the recovery.  Labor costs are also shooting upwards.  Retailer wages increased significantly in the third quarter of 2021 compared with the first half.
  • Consumers not only had to contend with double-digit price increases at the retail level, but also had to face rising installation costs. Rising installation cost increases were especially strong for ceramic and stone tile. In the third of 2021, hourly wages at ceramic and stone tile contractors increased by nearly 10.0%.  This compares to a decline in contractor hourly wage rates in 2020.
  • Meanwhile, manufacturers, distributors, and retailers must continue to invest in their online sales platforms to meet consumer expectations. Floor covering buyers became more comfortable searching online for flooring during the pandemic. Consumers can now see how the floor looks in their home using online visualizers, can order samples direct from the supplier, and even purchase flooring online for their do-it-yourself projects.  Home Depot, Lowe’s, Amazon, Wayfair, and other retailers have all invested in their online floor coverings sales capabilities.  This has changed the retail competitive environment.
  • Currently, headwinds are developing that could slow demand in 2022, including rising interest rates that could dampen housing demand next year.

So, get started on developing a strategy to survive the recovery.  Let Catalina know the type of data and information you need to develop your survival plan.  Contact Stuart Hirschhorn at Catalina Research, Inc. ( or 561-988-0853) to discuss your information needs.