Balancing Act – The Marketplace in 2007
January 1st, 2007

January-February 2007

By Zoe Voight

To succeed in the 2007 marketplace, tile dealers will need to balance a slump in home sales with stronger commercial and remodeling opportunities.

With the U.S. economy slowing down, particularly in housing, many in the tile and stone industry might be justifiably concerned. After all, housing starts, new building permits and new home sales figures are all down. Existing home sales are down, as are new home prices. Yet, despite all the bad news in the housing market, most in the tile and stone industry are cautiously optimistic.

Donato Pompo of Ceramic Tile and Stone Consultants, says, “Yes, the distributors and some installers are saying business has slowed down, particularly as it relates to new housing, but sales are still healthy, demand is relatively high overall, and there are still great opportunities now and in the future for the ceramic tile and stone industries.”

Mixed numbers

With figures dropping across all sectors of the housing market it seems counter-intuitive that tile and stone sales figures would be positive. Yet, there is good news coming from many consultants and industry leaders. It’s possible that less-than stellar numbers can still be good.

According to the Tile Council of North America (TCNA), for the past ten years, tile consumption has outpaced the US economy. In April 2006, TCNA expected that tile consumption for 2005 would be 7% higher than 2004. Eric Astrachan, the Council’s Executive Director, recently reported that the total consumption for 2005 was 3,266,900,000 (3.267 billion) square feet. “This was only a 3.5% increase over 2004 consumption.” Even though 2005 did not meet expectations, Astrachan says, “So far 2006 is looking good with year-end consumption (based on 1st half data) projected to be 3.474 billion sq. ft. or 6.6% over 2005.”

How is growth possible in a housing slowdown? Astrachan points out that many TCNA members don’t sell to the new home market. “For example, Daltile sells across the board to the residential, commercial and renovation markets. Crossville is high-end and sells more commercial and remodeling. The smaller companies sell more to the remodeling market. Everyone is concerned, but many of our members say that they are just not that affected by new home sales.”

Donato Grosser, president of D. Grosser and Associates, an industry consulting company, says, “The market for tile is up right now, but we don’t know exactly how long it will last. The housing slow-down may yet have an impact.” Grosser says that when housing starts decline it takes a while for that to show up in the tile industry since tile is a finishing surface. As a result, he’s adjusting expectations to be happy with four to five percent growth.

Pompo, who is a coauthor of the Catalina Research Floor Coverings Industry Quarterly Update, agrees that despite some declining numbers, tile is strong. “Ceramic tile continues to be one of the floor covering industry’s strongest growing product sectors, as square foot sales increased by 5.3% in the first half of 2006, with the sales stronger in the second quarter.”

Others agree. Noah Chitty, Technical Services Director at StonePeak Ceramics, says, “From the manufacturing perspective, we haven’t seen a dip in sales. This is probably fueled by the remodeling trend. Even though we haven’t seen a downturn, we are paying attention.” He says, “Contractors will see it before manufacturers do because they are on the front line, directly scheduling jobs for the next year.”

Jim Dougherty of Florim USA says he expects the next year to be a positive one for the company. “With the slow down of the economy, it might not be as great as in the past. As a company, we will make adjustments with what we do to move forward.”

Commercial & Remodeling to the Rescue?

One place to make those adjustments is in the commercial marketplace. Dougherty calls commercial growth “robust.” Astrachan says, “People tell me that the commercial market has remained strong. This is definitely relevant to those who sell to commercial market. We continue to see good demand.”

Rob Henry, president of Henry Tile in Alabama, agrees that one market seems to balance another. “What we have found is that we don’t see a lot going on with residential sales right now. But we’re finding that commercial has taken up the slack so that we are not losing sales in tile. We’re seeing a strong growth in the commercial tile market.”

Dougherty says that a traditional way of looking at a housing market decline is to expect residential remodeling to pick up. Astrachan backs this up with numbers from NAHB: “Residential remodeling from 1995 to 2008 is projected by NAHB to increase. The first reason for that is that as the baby boom group continues to age, they are investing in their current home. The second reason is the expectation of when people remodel. Before the big drop-off in new home sales, there were many people buying new homes. All of those people who bought new homes a few years ago are now starting to remodel. Perhaps they decide to tile a backsplash after a year. Or replace a vinyl floor with tile after living in their home one to three years after moving in.”

Remodeling is a theme repeated by many in the industry. “There is a trend of people not traveling so much right now. They are spending more money on their homes and remodeling their kitchens and baths. These are big investments and so homeowners normally are going to put in tile and stone,” says Pompo.

Stone market growth

Jim Hieb of the Marble Institute of America (MIA) says that many stone industry professionals are looking to the remodeling segment of the industry to balance any slow downs in their region. “Of course, some areas of the country aren’t having a slow down at all. National trends may not have an effect in a niche market.”

According to the Catalina report, “Natural stone accounted for 5.7% of the U.S. floor coverings market on a dollar basis in 2005, and 32.5% of the combined stone and ceramic tile market category. Stone’s share of the total flooring market on a square foot basis was closer to 1.0%, which reflects the higher costs and profitability of stone for distributors and installers.”

“Natural stone is still growing in demand and at a much higher rate than ceramic tile,” says Pompo. “There is much more profit opportunity with natural stone as compared to ceramic tile, but there is more risk in that natural stone is not manufactured to a specification, but rather selected to meet quality requirements. The problem is that it is still very difficult for the consumer or the importer to determine quality of stone without performing ASTM testing which can be expensive. So with the great demand for stone there is a glut of product and the quality varies.”

Thomas J. Kotel of Mid-America Tile in Elk Grove Village, Illinois, agrees. “Natural stone is getting a lot of attention,” says Kotel. “There is the minimalist look which is more popular on the commercial side. For residences, a timeless, Tuscan, or Mediterranean look is popular either in stone or in stone-look porcelain or ceramic.”

Imports and U.S. consumption

Astrachan says, “Interestingly, imports are down slightly in the first half, dropping from 80.9% to 79.7% reflecting the trend of lower import sales to new home construction while domestic sales are up. Builders of spec and starter homes often use imported tile. But the slowdown has affected [TCNA] members less.”

The Catalina Report states that, “Import prices are edging up on average from $0.86 to $0.88 per square foot in the first half of 2006. Foreign-sourced ceramic tile represented 80.7% of total square footage of ceramic tile sales in the second quarter of 2006, which is down from 85.9% in the second quarter of 2005.

“The percentage of imported tile shrunk slightly, while prices rose slightly, suggesting that U.S. manufacturers have cut average prices despite rising material costs resulting in lower margins as they maneuver to gain market share by increasing their emphasis on lower priced goods.”

Pompo says that one reason for optimism is the potential for growth. In the United States, the per capita consumption of ceramic tile is 10.92 square feet. In Italy, that number is 35.2 square feet. In Spain, 80 sq ft. and in China it is 15.3 square feet, (with 1.3 billion population.) So there is still room for growth in the U.S. market.

If Americans begin to sell their homes less often, they will be more likely to invest in tile and stone since those products last longer than carpet. “There is room for growth in the US tile market. One way would be technology. That always results in a big increase in sales. Also, remodeling is still strong,” says Grosser. “Of course, we don’t know what will happen in the future. Remodeling won’t compensate if the housing market goes down too much. What we need is new technology.”

New Trends in tile

Quality is a marketable factor. Pompo points out that years ago, people would just put in a very functional tile floor. Now, that same job might include wainscoting, decorative liners, a baseboard, custom trim pieces plus wainscoting. Some of these tiles cost $25 a linear foot. People want custom, something that is unique and are willing to spend more for signature pieces. This is one reason for the increase in tile and stone sales. “Tile and stone is seen as prestigious and as an investment, so people will pay more for it,” says Pompo.

“There are many new tiles coming on the market,” says Grosser. Glass, metal and large format tiles are still growing in popularity. He adds, “Now there are wood and leather tiles coming on the market as importers try to satisfy the consumers’ insatiable desire for nouveau products. We are seeing the domestic tile manufacturer’s increasing market share and becoming more innovative in their product offerings.”

Christine Abbate of Novita Communications describes some of the current trends. “Italians always present a broad range of styles and trends at Cersaie each year.” She says that fabric patterns, animal prints, floral motifs, metallic and three-dimensional tiles were all garnering attention at the show. “Tiles that have slight surface-relief, large rectangular tiles, and Asian styles were also popular,” she says.

Abbate continues, “I have noticed that as the consumption expands for ceramic tile in the U.S. market, Americans are becoming more bold and experimental with their use of tiles. While solid, neutral colors remain favorites for the American market, the Italians have noted an increased demand and interest in decorative tiles that make more of a design statement.” Adds Abbate, “Also popular are mosaics and even mini mosaics – as tiles get both larger and smaller.” She has seen the interest in large format tile increase in both the residential and commercial applications.

With buyers and consumers still intrigued by all the new products and the commercial, and residential remodeling markets still strong, industry professionals have a generally optimistic outlook for 2007, and that’s good news for tile dealers everywhere.


Christine Abbate


Novita Communications.

Eric Astrachan

Executive Director

Tile Council of North America

Noah Chitty

Technical Services Director

StonePeak Ceramics

Jim Dougherty

VP Marketing

Florim USA

Donato Grosser

D. Grosser and Associates Consulting

Rob Henry


Henry Tile Co.

Jim Hieb

Special Projects Director

Marble Institute of America

Thomas J. Kotel

President Mid-America Tile

Donato Pompo

Ceramic Tile and Stone Consultants, LLC

Leave a Reply

You must be logged in to post a comment.

Foster and Clark Real Estate
CTDA - Online Education
CTDA - Membership