Carpet: State of the industry

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September 14/21; Volume 30/Number 7

Economic trends point to better days for mills

By Ken Ryan

The residential carpet market may not set any records in 2015 and will likely fare only slightly better than 2014 in terms of sales and volume, executives predict. Still, there are enough positive signs today—and on the horizon—that point to an improving landscape for soft surface.

Several factors influence the residential market, chief among them consumer confidence, new home construction and existing homes sales (which lead to remodeling projects). “During the first half of the year the construction of new homes and the sale of existing homes seemed to be moving in a positive direction and continued through July,” said T.M. Nuckols, senior director of product strategy for Invista. “Mortgage interest rates seem to also have an effect in the fact that low rates encourage home purchases. We think it will continue if consumer confidence doesn’t get spooked by the big fluctuations in the stock market over the past few weeks.”

Other executives believe this key economic data should translate into a more robust market for carpet going forward. “Single-family home construction has started to pick up in 2015 and the apartment business remains very brisk,” said Brad Christensen, director of product management, Shaw Floors. “The forecasts are also better for remodeling activity with many consumers indicating they expect to complete new home improvement projects in 2015.”

Another prominent industry figure said closings and sales are what drive the carpet category, especially single-family homes. An additional point of reference, he said, is geography. While some regions of the country are still challenged by a slowly recovering housing market, other areas are doing quite well, particularly Florida and Texas. The backlog in Texas for new home construction is at its highest in 10 years as builders struggle to assemble crews to meet the rising demand. The Dallas-Forth Worth market is up about 40% in 2015, according to Residential Strategies, which analyzes real estate markets in Texas. This year’s growth in new housing is double what it was during the worst of the recession.

While overall sales are relatively flat to slightly higher through the first three quarters of 2015, carpet mills report margins have improved as consumers choose better-priced goods. In fact, players like Karastan and Tuftex, which offer high-end, design differentiated carpet constructions that aren’t typically easy to manufacture, have done well in this marketplace.

But it is not just the larger mills that have come out with differentiated carpet designs and colors. Smaller mills such as Lexmark and Phenix have won plaudits for their collections as well.

Susan Curtis, vice president of marketing at Phenix, cited one specific hopeful sign. “Major consumer vendors have begun and will continue this fall selling season to advertise extensively on television and through digital outlets. This will increase awareness for residential carpet and we are optimistic that sales will be robust.”

Fiber report

The four basic fibers used in carpets today all have their individual strengths, offering varied levels of styling and performance at specific price points to appeal to consumers. Shaw’s Christensen said the availability of a wide variety of options allows consumers to find styles that meet their design needs within budget. “That is driving increased demand.”

Mike Sanderson, vice president of product marketing for Engineered Floors, noted it is becoming increasingly clear that one fiber doesn’t fit all needs. “It’s going to be a company’s ability to adapt, react and adjust that will separate one from everyone else. It’s being able to offer a comprehensive, yet affordable, collection to your customer while not sacrificing styling, performance or service.”

John Sheffield, vice president, North America, Godfrey Hirst USA, noted that performance in fibers seems to be more important now than in the past several years. “This might be driven by the retailers that are pushing back more on ‘soft-handle’ products where they are finding customer dissatisfaction from product failures. There seems to be a fine line between soft and too soft. Cleanability and performance seem to be factoring in more in the decision making process.”

In the residential segment, polyester continues to make inroads and now accounts for approximately 45% of the fiber market, followed by nylon at 29%. Overall (including residential and commercial), nylon is at 40% and polyester 35%. Executives agree that while nylon still has its advantages—it is still perceived as the quality fiber delivering durability and overall customer satisfaction—polyester has closed the gap considerably thanks to manufacturing advances.

Over the past several years, tufted products (of which PET occupies a large portion) has accounted for the largest share of demand. “This style seems to be popular because of moderate manufacturing costs as well as durability, easy installation and people just seem to like the look,” Nuckols said. “As a result of improvements in extrusion technology, PET is expanding into other construction types resulting in it being the largest fiber type in the market. Many have accepted it as a fiber that is good enough in various applications.”

Unparalleled progress

The rate of technological innovation has outpaced anything seen in the previous 10 to 20 years, executives said, and that is only expected to accelerate in the years ahead. The reason? Carpet mills are investing in new technology like never before.

Mohawk, for example, is building new fiber technology into its SmartStrand product to enhance its style and design while adding value. The company is developing natural dye fibers with space dye to mix and match for a multicolor look. Mohawk’s EverStrand uses Continuum, a patented process that takes premium PET from the highest-grade polymer, strengthens the fiber and removes dirt-attracting residue with a multi-step purification system.

Phenix’s ColorSense technology facilitates randomization of color, achieving an overall balance of tone. This in turn creates a richly multicolored foundation upon which to feature other finishes and elements of a room. Phenix sells ColorSense products in both SureSoftSD solution-dyed PET polyester and Stainmaster PetProtect solution-dyed nylon fibers.

Lexmark’s LCL (loop, cut, loop) technology creates almost three-dimensional looks that have wowed retailers. Products from the new Tailored by Lexmark line are created with tufting equipment that creates patterns with a higher level of definition than a standard cut-loop machine and varies the density in a single piece of carpet.

There is also the continued advancement of built-in stain protection technology as reflected in products like Stainmaster PetProtect, in addition to Engineered Floors’ Dream Weaver PureColor Polyester Fiber System and PureColor Nylon Fiber System. “These fiber systems all have built-in stain protection that doesn’t wash or wear off,” Sanderson said. “This is the type of confidence that today’s consumers are looking for, especially when it comes to their floors—something permanent that cannot only withstand the test of time, but also an active family.”

Christensen said combatting spills and stains are common pain points for consumers, which led Shaw to develop LifeGuard and its Life Happens collection. Carpet with LifeGuard is easier to maintain, dries faster after cleaning, is easier to install and retains its new appearance longer. This carpet protection system covers the entire product, from face fiber to backing.

Built to retain texture and resist soil accumulation, the PetProtect carpet collection from Shaw’s Tuftex brand prevents the absorption of what could be difficult pet stains. Manufactured with SuperiaSD, this solution-dyed nylon is also resistant to fading from aggressive cleaning or exposure to sunlight.

What’s next?

Nuckols sees growth potential in tufted wall-to-wall carpet, which he said would account for the largest share of carpet demand because of the moderate cost and consumer desire for broadloom products.

In addition, some industry experts report an interest in carpet tile for residential use for the very same reasons it is used in commercial applications, including durability and ease of maintenance. “Plus there is a unique fashion look that can be obtained by the use of carpet tiles,” Nuckols said. Invista currently offers the Stainmaster Signature Squares carpet tile collection.

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