Since 2008, when the recession really took hold of the country, “Flat is the new up” has become the hot catchphrase in business circles across the country. When it came to total sales of carpet and rugs in 2010, the saying could not have been more accurate as the year pretty much mirrored the previous 12 months and put an end to a three-year slide that saw total sales drop nearly 40% since their peak in 2006.
Carpet sales, which still represent 79% of soft surface volume were off by a miniscule $40 million from 2009, representing just a 0.5% drop. Meanwhile, sales of area rugs rose for the first time since 2006, climbing 2.1%. Unfortunately, these numbers do not tell the real “truth,” because actual unit volume decreased approximately 1.6%.
Sales figures were mainly bolstered by two price increases during the first half of 2010 as manufacturers continued to battle rising prices in raw materials and energy. While each raw material experienced its own price fluctuation a generalized average of the various sub- stances used point to an aggregate increase as much as 13%. Some items, such as nylon and latex jumped upwards of 30% over 2009’s prices.
Speaking of fiber, while nylon continues to be king, its share of the market has fallen to 53%, with polyester now accounting for almost one-fourth (22%) of the face fiber used. 2010 marked the first year that triexta registered on the list— with an 8% share—and marks the first time in decades a new fiber has been included.
Back to the price increases, manufacturers were quick to note the ones initiated on their end were not nearly enough to offset the hikes they experienced. Still, they were enough to bring sales to a relatively even keel when compared to 2009. Also helping out was a mild reawakening of the mid to upper end of the market. After sitting on the sidelines for the past few years, there were reports of consumers opening their purse strings and buying carpets priced above base-grade. While part of this is credited with the marketing done by mills to make consumers aware of the increased value engineered into the better products, the first half of the year also saw consumer confidence actually increase for four straight months.
But, as the year wore on and the government’s home- buyer’s tax credit expired, along with gas prices starting their climb to $4 a gallon, things came to a “stretching halt” as one executive told FCNews. The second half of 2010 did get relief thanks to the specified commercial sector, which started showing signs of life in the fourth quarter after it had fallen victim to the recession in the previous year.
Speaking of commercial, the move to modular tile continued as all segments showed gains over rolled goods, except for hospitality and areas where people “live,” such as the bedrooms of assisted living facilities. Broadloom remains king in these places but its overall market share continues to drop as architects and designers see the benefits in specifying modular tile. Broadloom in general accounts for upwards of 80% of all carpet sold, but in commercial, some say tile now makes up half of the dollars. This is partially due to it also being a more expensive product than broadloom.
Green continued to also be an important part of the carpet industry in 2010. While it is still mostly centered around commercial applications, a growing amount of recycled content, be it from post-consumer carpet to used plastic bottles to bio-based materials, is finding its way into residential products. And, those who follow the segment expect this trend to continue as manufacturers continue to invest in technology that allows them to incorporate higher percentages of recycled content in a way that is both cost effective and without sacrificing performance.
With some hard surfaces gaining a little steam in 2010, such as ceramic tile, and consumers searching for quick, easy and not so expensive ways to spruce up their homes, sales of area rugs were up for the first time in three years.
A number of factors can be attributed to the 2.1% gain in rug sales, but one of the main ones is a rise in imports. Government figures show a 19% jump over 2009. In the upper end, handmade category, which is dominated by wool rugs, India continues to be far and away the main country exporting to the U.S., with approximately three times the sales as second place China. In fact, India’s $250 million in sales roughly equals that of the next five countries—China, Iran, Pakistan, Turkey and Nepal—combined. Overall imports of wool products increased 9.6% in 2010.
-Matthew Spieler