Carpet sales finally go up after four years of decline

Home Categories Carpet Carpet sales finally go up after four years of decline

Volume remains sluggish for sixth straight year

by Matthew Spieler

For those who like to look at the glass as half full, sales of carpet last year were up 2.2% over the previous year, marking the first time the category grew since 2006. Meanwhile, sales of area rugs posted gains for a second straight year, growing 2.9% in 2011, which follows a 2.1% increase in 2010. Additionally, like the rest of the industry, the commercial side of the business was the key driver in helping to boost sales.

Unfortunately, the reality of the situation is the boost in carpet sales, which make up approximately 79% of soft surface sales, is more a mirage rather than an increase in overall business activity. As proof, overall units declined 1.8%—the sixth consecutive year volume was down.

Though carpet sales were up, the year that was 2011 ended up pretty much a replica of 2010—which was mostly a repeat of 2009—though it took a different route to get there. But by the time the dust cleared, the category was staring at the familiar landscape of the last three years.

In 2005 and 2006, the industry hit its peak in both units and dollars, respectively, but between 2007 and 2009, the industry was experiencing double-digit drops in each, to the point where it knocked off nearly 40% from both high water marks.

As a number of carpet executives told FCNews, 2011 was a “year that could have been.” But with the housing market continuing to struggle and the commercial side of things bumpy, albeit up overall, it made for an uneventful year in terms of actual business.

Similar to recent years, suppliers were forced to institute

a couple of price increases as fiber makers and manufacturers had to once again contend with rising prices in raw materials. While the hikes in raw materials were not as dramatic as previous years when some elements jumped upwards of 50%, they were still enough to where it was a struggle for many companies to just break even in 2011. And, as manufacturers noted last year, the price increases they initiated helped make up for increases from the previous year—2009—meaning the adjustments did not fully offset 2010’s raises.

As noted, sales on the commercial side did pick up some, but this was more the result of modular tile being used more and more over broadloom. Designers and specifiers have fallen in love with carpet tile for a variety of reasons—from endless design possibilities to favorable environmental attributes, which is an important consideration in commercial jobs. Broadloom is still king when residential comes into play, accounting for more than 70% of all carpet sales, but strictly on the contract side, sales between tile and wall-to-wall were virtually even in 2011.

Residentially, it was pretty much the same as it had been the previous two years—a major struggle just to break even. With new housing still way below historic levels and consumers looking to get as much value as they can, sales remained mostly flat, though those who offered high end goods fared better as the luxury market overall started to come back. One only needs to look at the import of wool rugs, which increased 2.5% over 2010.

On the fiber side of things, nylon is still the most used yarn but its share continued to drop, coming in at 51% of the face fiber used in 2011. Just going back prior to when the recession started, nylon’s share was 63%. But high oil prices and tight capacity at the raw materials stage, combined with better manufacturing technologies, have made polyester the more desirable fiber in recent years and by the end of last year it had a market share of 24%. In addition, Mohawk’s triexta has been a boon for the mill to where

last year it was registering on the scale with a 9% share. Polypropylene also continues to struggle due to rising prices as well as polyester’s ability to be more flexible in terms of styles and constructions.

Finally, when it came to rugs, in addition to the high-end market coming back to life, the mass market (low-end) has also increased, leaving the middle of the market to get squeezed virtually out of existence. This is evident when looking at imports, this time of man-made rugs, which jumped 22% last year.

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