By Steven Feldman
PRINCETON, N.J.—Congoleum acknowledges that the retail climate for residential sales has been less than stellar over the past several months. But that doesn’t mean the resilient manufacturer is sitting on its heels.

At the company’s annual sales meeting held here last month, Roger Marcus, president and CEO, outlined the company’s strategy to weather the storm. “What we have to do as a company is give you product, designs and marketing programs that will maintain our volume despite this storm that will last through the first half of 2007, at least,” he said. “Our challenge is to develop every tool in our arsenal to keep your volume the same, if not grow, through this period.”

To that end, Marcus told his distributors they will have new products earlier than ever. “Most of the tools you are seeing today will be available by January at the latest,” he said. Among the tools to which Marcus was referring involves new products for property management and light commercial along with new designs in existing lines.

Property management is one area where Congoleum sees opportunity. According to Jim Kelly, manager, strategic accounts, there are about 17 million renter- occupied units in the United States. Statistics show there is a 25% annual turnover rate, and about 90% of those units replace flooring, meaning four million units replace floors annually. That is in addition to the 120,000 new apartment units built annually.

“Let’s assume a 150-squarefoot average per unit,” he said. “Those four million units account for 600 million square feet— or a $600 million annual opportunity.”

Kelly noted that the hottest visuals are natural wood looks. “Property management decision makers are looking for wood visuals because it makes resilient something not limited to kitchens and baths,” he said. “It is good for dining rooms and living rooms. And that extends the opportunity beyond that $600 million.”

In response to this, Congoleum is introducing Endurance Plank, a vinyl wood plank that replicates latest wood looks with realistic visuals (oaks, maples, cherrys and exotics in 4- and 6-inch widths), colors and textures. It also features a high-density wear surface, .08 mil. gauge construction and 12-year limited residential wear warranty.

“Endurance Plank was the most exciting product I saw,” said Art Layton, director of marketing, CMH, Wadesboro, N.C. “That’s because the wood business is growing so fast, but there are maintenance issues and questions about durability. This product will be a good alternative. I think Congoleum has hit a home run with the visuals.” He was particularly complimentary of the cherrys and gunstock.

Layton added that Endurance Plank lends itself to bathrooms and kitchens, where wood may not be a good choice. He also sees a huge opportunity in the multi- family segment as well as modular housing.

Commercial opportunity

Aside from multi-family, Congoleum sees opportunity in the commercial market, particularly the military housing, government building, college dorms, healthcare, assisted living and education segments.

“Healthcare and assisted living continue to grow in support of an aging population,” said Bob Fine, sales manager,commercial products. “Statistics show the average person should prepare for a 30-year retirement.”

Congoleum believes this market represents $75 million a year for resilient, of which it admits to having only a somewhat small share.

“The trend is toward a more homey look and less institutional feel,” Fine said. “Designers want to create more of a residential look.”

Hence, the re-introduction of Flor-Ever in the form of Flor- Ever Plus, which is a lot more than a fresh design offering. While the 20 mil product features seven new designs and 30 colorations in wood, stone and natural looks, Congoleum has made a number of enhancements. They include:

1. The addition of silver for antimicrobial product protection. “None of our competitors offer this,” Fine said. “Silver prevents the growth of bacteria, mold and mildew. Testing shows it kills off bacteria.”
2. Aluminum oxide has been added to enhance p e r f o r m a n c e characteristics.
3. The static load rating moves up to 175 psi to equal that of the competition.
4. Better margin opportunities for distributors.
5. Better merchandising.

This includes 9 x 12 strap sets, 3 x 6 stack decks, 12 x 18 sample binders, new literature, a new presentation piece and architect portfolios with advanced printing technology that replicates color, design and actual texture.

CMH’s Layton noted one of Flor-Ever’s biggest selling points is that it brings to the commercial market visuals that don’t look institutional. “There are a lot of Main Street or heavy residential applications that would demand a product like this,” he said. “Congoleum has needed products like this in their commercial lineup. It has some heft and beauty to it.”

Layton also likes the margins. “Anything we can bring to the commercial market is good for us.”

DuraCeramic update

According to Dennis Jarosz, senior vice president of marketing, no resilient product has grown as much or as fast over the past three years than this alternative to ceramic. Since its introduction in July 2003, DuraCeramic has grown month after month, said Erik Anderson, vice president of sales. Why? “It offers the look of ceramic without the added cost of an underfloor heating system,” he said. “Plus, it installs twice as fast as ceramic and is less likely to break.”

Anderson cited a few other reasons for DuraCeramic’s success. Among them are the installation clinics Congoleum stages regularly across North America and the launch of Options, which has broadened the product’s applications. “Dealers are installing it in bathrooms and on walls.”

New to the DuraCeramic family are two new patterns and 10 to 12 SKUs slated to hit the streets in March as well as a display program that will be ready for shipment in early January.

At the end of the day, Marcus admitted 2006 hasn’t been the best of years. “We’ve had to weather [a lot], and despite it all we’ll still be in the black this year. And to be in that position given all we’ve gone through is pretty darn good.”