Download Growth despite market stagnation

PRESS FOLDER
ST. JOHANN MARCH 2009
GROWTH DESPITE MARKET STAGNATION
EGGER: Success through focused orientation
The flooring sector is facing a difficult market situation characterised by
great challenges: growth is stagnant in many Western European markets,
while the rapid growth rates formerly characteristic of Eastern Europe are
also weakening. Yet EGGER continues to grow and expand; it even expects
to increase it’s European market share to over 15 percent. It also expects to
expand production volume by approximately 30 percent, to 80 million m2, by
2010. All this has been made possible by the EGGER company business
strategy of concentrating on innovation, contemporary assortments and
clearly defined sales channels.
“The sector is facing new challenges“, says EGGER Retail Sales Manager
Matthias Danzl. Production capacity is growing on the one hand – mainly in
Western Europe – a few markets are showing increasing weakness. In addition,
export shares to North America and Asia are falling, due to the intervening
establishment of local suppliers, all of which is resulting in considerable
overcapacity, which can only increase with time. “Capacity in the laminated flooring
industry is about one fifth above current production; what’s more, it is going to get
worse”, Danzl comments, based on the latest sector data.
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DIFFICULT MARKET SITUATION WITH A FEW BRIGHT SPOTS
The credit crisis, particularly in Spain and England, has made a profound impact,
mainly affecting the housing market: in Spain, the current rate of 700,000 dwelling
units per year is expected to fall to approximately 400,000 per year in 2010. In
England, the laminated flooring market is currently 40 million m2, expected to fall
to 30 million m2 by 2010. In Germany, construction undertakings have reached a
historic low, one which nevertheless fails to reflect the market situation, according
to Danzl: “The market has, of course, since levelled off to 80 million m2, a volume
level which must be expected over the next few years.“
The situation in Eastern Europe is considerably more positive: although the rapidly
increasing growth experienced in several countries is slowing down, the laminated
flooring market is still growing by approximately six to ten percent per annum. In
Poland, for example, 10 percent growth per annum is expected by 2010, reaching
a final market volume of 40 million m2. Other Eastern European countries, such as
Bulgaria and Romania, are continuing to grow, albeit at somewhat lower rates.
“In total, we are seeing only a slight growth in volume in Western Europe, with an
average of three percent per annum until 2010. In Eastern Europe, we are
expecting an average of 9 percent growth over the same period“, summarises
EGGER Retail Sales manager Matthias Danzl.
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EXCITING FUTURE FOR SALES CHANNELS
In Germany, England and France, a large proportion of all laminated flooring is
sold through the building trade; in many other countries, the wholesale trade has
succeeded in strengthening or even expanding its position. “In Eastern Europe,
some wholesalers are even creating their own subsidiaries and creating their own
retail sales channels”, comments Matthias Danzl, citing one example. Construction
markets and discounters, on the other hand, often find themselves faced with a
situation in which sales campaigns and advertising no longer achieve the desired
effect, even at the lowest price levels.
In Germany, the floor cladding wholesale trade and the specialist trade have both
succeeded in reinforcing their position in the laminated flooring sector. This
development is attributable, not least of all, to the fact that the trade is now
concentrating more heavily on the long neglected floor cladding sector, and is
introducing innovative new product packages in collaboration with the industry.
THE LAMINATED FLOORING INDUSTRY’S SUCCESS FORMULA
The increasing popularity of laminates in the wholesale trade is due, not least of
all, to the innovative marketing tools placed in the hands of retail dealers by the
industry. There is a big demand, in particular, for good marketing solutions at the
points of sale, supporting retail dealers in terms of advisory and sales services:
“Displaying the products as 1:1 samples is important, but it’s just as important to
be able to show the customer how the same laminated flooring will look post
installation; the best way to do this is by means of electronic media, such as the
EGGER Flooring-Studio“, says Danzl.
The laminated flooring success story is based, in particular, on the rapid
development of quality: in terms of visual and tactile effect, laminated flooring can,
today, hardly be distinguished from solid wooden flooring; the multiplicity of decors
is constantly expanding, and the “feel” can be adapted to any material. Laminated
flooring is also an extremely reliable, durable product, with an excellent ecological
track record. “Ecology will become an increasingly important selling point over the
next few years“, says Matthias Danzl. “This trend is, in turn, supported by new
technologies. We are just beginning to feel the effects of promising new
developments in the field of direct printing.“
EGGER: SUCCESS THROUGH TARGETED STRATEGY
For EGGER, the above mentioned market environment led to very clear targeting
in relation to three important strategies:
 The creation of outstanding technological conditions was made possible by
investments at the Wismar and Brilon locations: melamine-coated laminated
flooring went into production at the Wismar location, while a new factory for the
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ST. JOHANN MARCH 2009
direct printing onto laminated flooring was placed in operation at Brilon, in the
fall of 2006.
 Concentration on products which could be manufactured and sold at attractive
price-performance ratios, while meeting certain volume requirements. “We
don’t want to be a niche industry, and we can’t afford to be; instead, we are
concentrating on trends and developments with corresponding growth
potential“, explains Danzl.
 A clear distinction between the sales channels relating to the various
assortments. EGGER is very strongly rooted in the wholesale and specialist
trade, which continues to account for more than half of the turnover. The other
half is earned in the single-stage trade. The market share of the DIY trade, by
comparison, is about 60 percent, on average.
EGGER is orientating its co-operation relationships with a view to the long-term, in
both the single-stage and multi-stage trades, as well as with regards to tradesmen
and architects: that is the basic condition for further growth. There is also strength
in innovation and readiness to take risks, to enter new territory and develop new
technologies. EGGER has clearly proven that it possesses the kind of courage
required to try new things. That is for example the placement in operation of the
direct printing installation in Brilon, where an efficient and modern high-rise storage
installation was built to enhance logistical procedures.
12 YEARS OF CONSTANT GROWTH
EGGER Floor Products started out in 1996 as a subsidiary of the wood-based
materials manufacturer, with two production lines in St. Johann in Tirol and Brilon
(North Rhine-Westphalia), and a comparatively modest three million m2 production
volume. It has since achieved a market share of over twelve percent.
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FACTBOX EGGER RETAIL PRODUCTS
 Total market characterised by poor
 EGGER focuses its activities on
growth
innovation, contemporary assortments
 Stagnation or slight contraction in
and clearly defined sales channels
Western European markets until 2010,  EGGER Retail Products are planning a
constant growth in Eastern Europe
market increase to more than 15
 Sales channels: wholesale and
percent in Europe
specialist trade strengthen their
 Wismar plant: Production of classical
position
melamine resin-coated laminated
 Success formula for laminated
flooring
floorings: strong qualitative
development, innovative marketing
tools, good life cycle assessment
For queries:
FRITZ EGGER GmbH & Co.
Wood Based Panels
Michaela Huber
Weiberndorf 20
6380 St. Johann in Tyrol
Austria
T +43 5 0600-10319
F +43 5 0600-90319
[email protected]
PLEON Publico
Dr. Wolfgang Immerschitt
Paracelsusstraße 4
5020 Salzburg
Austria
T +43 662 620 242-0
F +43 662 620 242-20
[email protected]
www.egger.com
PHOTOSEGGER Wood Materials, reproduction with naming of copyright holder free of charge
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