Scatter Rug Makers Focus on Product
September 17, 2007,
Raw material prices are up. Gasoline prices continue to climb. The cost of living has increased.
And in some cases, as in the novelty imported styles, retail price points have even dipped.
If nothing else happened over the past year in the scatter rug category, the steadfastness on their retail tickets — despite rising costs — has kept major players on their toes in terms of creativity and persistence.
The past two market events in New York are proof of this. As major category suppliers attest, in the past year they have all significantly boosted their introduction count to offer a wider variety of styles, fiber contents, constructions and designs to offer retail partners fresh looks that can hopefully beg better price points.
The effort isn't always successful. In most cases, price points for new products are kept within the existing limits — $9.99, $12.99, $14.99, $19.99 and $24.99.
"There has not been any inflation in the rug business for a significant time," said Charlie Bowers, president, High Point, N.C.-based The Bacova Guild Ltd. — one of the main suppliers in the category, with a broad offering of domestic and imported tufted, woven and printed natural fiber and synthetic varieties serving all tiers of retail. "Our business has been prone to deflation rather to inflation. So what we have done is try to improve our efficiencies in order to absorb cost increases, since we've been unable to pass them on to the marketplace."
Pricing is indeed "a tricky thing" in this competitive environment, noted Arnold Stevens, vp, Scottsboro, Ala.-based Maples Industries, the fourth largest rug supplier with $150 million in sales in 2006 for its domestically-made textured and solid-colored synthetic offerings.
"It's extremely competitive right now in the rug business," he continued. "The fiber cost is still going up, driven by oil." Maples created new fiber blends this past market to refresh its assortment. Stevens said, "Everyone is showing more products, trying to make unique product and showing more new product to get that competitive edge."
Also in August, Bacova upped its offerings but in a different direction — with more environmentally "sustainable" rugs, many of them organic in construction and fiber. "We're not interested in cutting corners, or cutting quality," Bowers emphasized, "for the sake of price point competition. Instead, we are interested in giving consumers a product they can trust and enjoy once they take it home."
The middle price point bracket — $12.99 — is where Dalton, Ga.-based Shaw Living has found a new comfort level. Shaw — the second largest rug supplier with $231 million in sales in 2006 — found success in February with a new olefin collection, Next Generation, with the look and feel of a natural product. Based on the strong response, the company was happy to help it live up to its name, expanding it in August to 20 styles up from the original eight offerings.
"We expanded it because it put us right in the middle of a key price point," said Marilyn Hartman, product development manager, domestic tufted bath and scatter rugs. "We had a good range of basic and transitional patterns that filled a void. The colors are very organic. Even though it is a synthetic collection, we made the colors look more natural, and the patterns run a gamut from borders to soft contemporary."
The "estate rug" is a concept that Anderson, S.C.-based Orian Rugs is banking on to reposition its price point while still offering customers more make — these pieces stretch to a larger dimension, 31-by-45, to be able to sit across double doors of larger homes. They are set to retail for $49.50 for the 1.5-million point styles under the Shakespeare Collection, and $19.99 for the indoor/outdoor pieces.
The economy isn't helping scatter rug price points inch upward, a likely reason Sugar Valley, Ga.-based Mohawk Home is seeing its more functional product offerings — opening price-point, synthetic utility scatter rugs made domestically — lately picking up in sales.
"People can't afford to invest in fashion right now," explained Jim Quist, vp sales, Mohawk Home. "As the economy gets more difficult, they can't invest in fashion. They need a clean new rug for their washroom or laundry room, but they can only buy the basic product."
That's not to say the company is leaving fashion by the wayside, he urged. Natural looks in better synthetic fibers — polypropylene and poly-blends — and new constructions are also on the upswing, a trend that is encouraging Mohawk to pursue more imported fashion goods.
Quist said the company is seeing "renewed interest in our imports" and to respond to demand, Mohawk will soon be adding more cotton, chenillle, and blended imports "that we can't make here but can source from India and China," he said. "Our growth in the next six months will come in the functional utility side and on the fashion side with imports."
But will those imports carry higher price points?
Not necessarily, said Gary Shafran, vp, New York-based JLA Rugs. As competition proliferates in the scatter rug landscape, he said, prices for these novelty looks are becoming "more aggressive."
"Pricing for handmade accent and scatter rugs has come down, wholesale pricing. And the reason is there are aggressive companies like ours that have the proper infrastructure in place in China that allows us to be more competitive in pricing," Shafran explained.
That capacity comprises more than 400 staffers, based at JLA's two Chinese offices — in Hangzhou and Shanghai — and who are responsible for the company's overseas supply chain operation.
"Where there were only a few players in this category a year ago, there are now more, like us, and because of our large infrastructure in China we're able to offer great new designs and the same quality the market is accustomed to, but at much more aggressive price points," he noted.
Citing competitive reasons, Shafran said JLA does not disclose these reduced prices for its various constructions of handmade washable novelty accent rugs.
Good design, not pricing, should be the point of differentiation in the competitive arena, said Paula Paquette, vp, soft home, Saddle Brook, N.J.-based Nourison.
"I think people are using cost as a weapon more than design," said Paquette. "People use cost and many times they aren't necessarily coming up with better product."
Nourison has for several years been known as one of the leading suppliers of novelty handmade washable accent rugs.
Nine months ago when industry veteran Paquette joined the company, she took the design direction of this division to a new place, she said, while maintaining some of the more popular kitchen themes Nourison continues to refresh with updated colors and patterns.
"Everyone is looking for alternatives in constructions, fibers, fabrications — because the customer demands it. You have to keep up," she said. "And I think where we have kept the value is in our design. We look a lot to ready-to-wear and the colors there. We are trying to use creativity, pattern and design to keep driving sales, vs. price compression — because once you get into that, it is crazy."
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