Area rugs state of the industry: Smaller sizing and nature-inspired visuals are value must-haves

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With industry experts calling 2010 the end of the economic lull for floor covering, area rugs count as one of the more fortunate categories. With soft surfaces commanding more than half of industry sales, rugs contributed to that number by providing a strong value proposition to buyers through pricing, visuals and licensing agreements. However, even with all the bright spots in the area, it is not yet out of the woods.

Materials pricing dictate success of sales

The rising cost of raw materials have put a pinch on all floor covering categories, area rugs not excluded. Rising prices of synthetic materials like polypropylene have forced mills to raise prices, potentially alienating buyers. However, successful mills began adjusting product mix at the beginning of the recession.

“Beginning in 2007, the marketplace began a major move toward value price points,” said David Adams, executive vice president, Dalyn Rug. “That shift seems to hold for most all rug categories—hand knotted, hand tufted, machine made. Those companies that could see the coming shift and adjust their product mix were able to take market share.”

More recently, pricing on natural rug fibers like wool have also begun to increase. “For a long while oil pricing rose faster than farming costs, and natural fibers began to have more parity with synthetics,” said David Forman, marketing director, Nourison. “Now, farming costs have also risen.” As the cost of wool rose, the mill developed new blends of natural and manmade fibers that all strive to mimic the natural qualities of wool in order to maintain its foothold.

However, executives at the Wools of New Zealand (WONZ) still find wool to be the fiber of greater value, due in part to the rising cost of polypropylene. “Wool becomes a more viable choice for first-time rug buyers,” said Elise Demboski, executive director, North America, WONZ. “Since consumers that purchase wool typically become repeat customers, this exposure translates into future purchases.”

Area rugs’ piece of the pie

As noted in FCNews’ Statistical Issue (FCNews, June 28), it is difficult to pinpoint an exact number in area rug sales due to the proliferation of smaller items like bath mats and scatter rugs. FCNews research pegs rug sales at 20.7% of soft surface sales for 2009, pulling in approximately $205 billion.

Of that number, executives vary in opinion on channel distribution. Sales through the specialty retail channel fluctuated between 15% and 44%, as did department stores and home centers at 25% and 15%, respectively. Outlets closest in numbers were seen in furniture stores, picking up around 5% of sales.

“The recession created difficulty with retailers updating their assortment and inventory of rugs,” said Alan Robertson, vice president of sales at Capel Rugs. “New distribution provided the best opportunities for increased market share while opening price points continued to erode.”

Green is more than a color— nature is in

The green movement holds a strong visual presence with a focus on natural colors and patterns. “Nature continues to be the dominant reference point for new palettes,” WONZ’s Demboski said. “Color has always been considered first when purchasing a rug and today’s consumer wants to be calmed and comforted by her interior environment.”

The same trend is true at Shaw as it continues using earth tones with a few brighter highlights. “Colors of the Earth inspire combinations and feed one’s need to connect with nature,” said Kim Barta, brand manager for Shaw Living. “Taupe has become a key neutral that updates brown while gray displays subtle tints of lilac, blue and green for added interest.”

Nourison has also found gray to be the popular hue for the season and has added its own natural twist with mineral accents, Forman reported. Luminescent yarns in silver, gold and copper are now woven into its collections.

Carrying on with the trend toward nature, floral and botanical motifs are popular patterns. “However, vibrant and bright accents are being used in a controlled manner to add a touch of zest and bring the palette to life,” Demboski said.

Woven Expressions from Shaw is an excellent example of this, according to Emily Morrow, director of color, style and design. “It is the perfect fusion of the ancient woven textile designs blended with today’s contemporary classics,” she said. “From traditional florals to trellises to fashion-inspired animal prints, and from dramatic rich colors to light ethereal neutrals, this collection is a truly inspired one.”

Buyer assurance through licensing

Licensing the names and brands of well- known designers and companies is one way to instill confidence in buyers, and area rugs are at the forefront as manufacturers work with some of the most popular names in fashion and home design to help recapture sales.

“The Woolrich brand has been trusted by generations of loyal customers since 1830,” said Rocky Casteel, vice president of Mohawk Home. “Creating outstanding value is a hallmark for both Woolrich and Mohawk Home, which means consumers are assured they have invested in timeless pieces that will last.”

Acclaimed brand names and designers that have built a solid reputation are those that assure success in the marketplace. At Nourison, its licensing partners must be time tested with a clear target market while showing resilience and staying power at the retail level, said Julie Rosenblum, brand manager. “We’ve held the Calvin Klein license for almost 10 years, which demonstrates his presence and staying power,” she explained. “His collections have an aesthetic that is very different from our brand but is still very complementary.”

Price points to size

This relatively small floor covering purchase has gotten smaller. Sizes of 5 x 8 seemed to be the best selling options for companies like Dalyn, according to Adams. “If a rug supplier’s main product positioning was at the $299 to $399 retail for a 5 x 8, the demand quickly shifted to about half the price point, or $149 to $199 retail.”

At Capel, rugs priced above $15 per foot outperformed other areas, though similar sizing garnered the most sales. “Because of the economic slowdown, the volume producer became the 6 x 9 size that could be retailed at $399 and below.”

Down the road

Looking ahead, prospects for the future are different from those of the past. Buyers are

much more price savvy, value-minded and expect their dollars to stretch further than the purchase high. Products must perform well and last beyond a typical life span. “There is far less impulse buying and a definite trend toward value-driven shopping at every socio- economic level,” Forman said. “Despite the amount of negative news, there seems to be more positive consumer sentiment this year and we hope to see this translate into better sales in the near future.”

For manufacturers like Wools of New Zealand, the future is now. “Consumers are starting to make their renovation wish lists and rugs are a high priority,” Demboski reported. “Rugs are an easy, affordable and impactful way to update décor.”

However, as the economy drags along the bottom and struggles to break the surface, area rug purchases are not always oat the top of that list. “Today, most consumer are simply postponing purchases than can be put off,” Barta said. “It certainly is easier and less costly to update a room by adding an area rug but it is also something that, in most cases, is not a necessity.”

-Emily Hooper

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