01 March 2011

ANALYSIS: The tile market

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The UK tile market is suffering thanks to the recession and an influx of cheap imports. Could independent bathroom and kitchen retailers be making more of premium tile products?

The recession became even more real for the UK tile industry when one of the oldest, and few remaining British tile manufacturers went into administration last June - Pilkington's.

This blow underlined a woeful period in the tiling industry, "2010 was an undoubtedly difficult year," says Lesley Day, executive officer, the Tile Association. "We lost Pilkington's but the positives for those companies still left is that its departure has left some pretty big gaps to fill."

The demise of Pilkingtons and the general decline of tile manufacturing in the UK can be blamed, in part, on a steady increase of cheaper imports predominantly from the Far East. Cheap imports flooding the market is not a problem that's unique to the tiling industry. The KBB industry, like many others in the UK, is very aware of the serious consequences the effect cheap international imports can have on the market. And in terms of the UK in general, this issue has altered manufacturing throughout a variety of industries.

The latest report on the floorcoverings market, which includes the tile sector, published by AMA Research suggests that imported products remain a key aspect of the market with penetration levels currently estimated to be in excess of 70% by value  - and even higher in volume terms.  

According to other reports, the UK tile industry is now around 25% smaller than it was three years ago and while traders faced some of their toughest challenges throughout 2010, the rise of VAT to 20% and continued doubts over job security threatening consumer spending, 2011 looks set to be even tougher.

So, with the prospect of another difficult year looming, what can the tile industry do to survive? And what does this mean in relation to bathroom and kitchen retailers?

Although the downturn has created huge stumbling blocks for traders, as a result of the recession the tile industry finds itself at an interesting turning point with potential growth opportunities for those tile distributors and retailers that are surviving. This, in turn, can have a positive effect on related industries.

With cheap products saturating the tile market, the remaining manufacturers and distributors appear to be focusing their attentions on premium quality, high-end designer tiles rather than trying to compete with price points that are out of reach for UK based dealers.

This creates an obvious connection between high-end, premium tile manufacturers and suppliers and bathroom and kitchen retailers looking for high specification, high value products. This, of course, also reminds retailers that this could, and should, be part of their complete sales package.

"If they're not already doing so, I suspect that tile specialists and distributors will try and break into the bathroom and kitchen retail sector more because there is a natural synergy between bathrooms, kitchens and tiles," explains Day. "The need for one-stop shopping is becoming a reality and many retailers already do sell tiles as well but I think those that don't should certainly look into it as a way to increase profitability."
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As a bathroom and kitchen specialist the benefits of dealing in high-end premium tiles are clear. In a difficult market, retailers need to stand out from the crowd by offering their customers something different and not the standard square white tile they can get anywhere at a considerably cheaper price. More than ever, consumers are looking for more from retailers. They are willing to spend more money, if they get a guaranteed service, and that's what they expect from kitchen and bathroom specialists.

"People want a point of difference," says Steve Whitehurst, sales and marketing director, Craven Dunnill. "If a consumer is looking for the same, standard tiles that every other home has then that's where the multiples come in, but if they're looking for something completely different; innovative designs and styles that allow them to give their bathroom their own individual style, then they'll want to go to their local independent specialist for tiles as they do for other bathroom products."

"Design is more important than price with high-end tiles," explains Nick Laudrum, sales director at ESL ceramics and stone. "There is also less competition in this market so it is easier to stand out."

Although the UK tile market has experienced difficult trading conditions throughout the recession, the flip side is that, actually, designer tiles have never been so popular.

Significant growth in wet room installations has created a natural need for stylish tiles. It has also encouraged the underfloor heating revolution, a sector of the market that is also enjoying substantial growth even in an economic climate as tough as this one.

"It's certainly been a difficult couple of years and we're not expecting a market increase until 2012," says James Mead, product manager for adhesive manufacturer Weber. "However, there is good news namely in the public's perception and understanding of tiles. The growing demand and awareness of wet rooms and heated floors mean the demand has not been as affected as other industries."

Like the bathroom industry, the tile industry is led by design and as a result the premium end of the market is brimming with quality tiles in a variety of styles, shapes, sizes and finishes to suit a wide range of installations.

In terms of technology, the tile industry is very advanced. Digital printing has revolutionised the industry and created endless design possibilities. The latest innovation, launched at Cersaie in 2009, is thin tiles available in 3 or 4mm options rather than the more conventional 7 or 8mm tiles.

"This innovation is so exciting, and is set to revolutionise the industry, but it's still in the very early stages in terms of understanding the installation capabilities of these ultra thin tiles," explains Day. "They are so thin which makes them very lightweight, so one person could easily pick up a 1m x 2m tile. You could even, potentially, use them as a shower screen."

Although manufacturing of this revolutionary thin tile is currently in progress, the industry is still fine tuning all aspects and there is clearly still a way to go before they join the mainstream and become a standard tile option.  
"Innovations in the tile industry have to be practical. Certainly, the style and innovation is there, it's just got to be made more accessible," says Steve Whitehurst, Craven Dunnill. "It's all very well making large tiles but fitters have to be able to handle them and fit them properly.

"There's so many exciting finishes, designs and materials available in the tile industry and we need independent specialists to get behind them to help consumers realise that there is more than white square tiles." 

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