Rugs Struggled in 2012
May 2, 2013,
"Disposable income has been very challenged for a huge part of the North American population," noted Bill Kilbride, president, Sugar Valley, Ga.-based Mohawk Home, the country's second largest home textiles company.
"Many people were still shopping. But they were looking for the best possible value at the best possible price," he added. In many cases, he explained, that "translated to size" in the rug category.
For some of the major rug companies, like domestic manufacturers Mohawk and Maples, scatter rugs and smaller area rug varieties made of simpler synthetic constructions made it to the cash register most often last year.
John Maples, president of Scottsboro, Ala.-based Maples Rugs, outlined the three most popular types of products for his company.
"We saw increasing demand for printed rugs and [other] lower-priced fabrication rugs, increasing demand for lower price point rugs, and increasing demand for smaller sizes," he said.
"Basically the products we have that are the lower-price applications saw increased demand," Maples summed.
Unit levels remained "pretty constant," Kilbride said, as shoppers continued to buy rugs, albeit promotionally. But total value generated down total revenue.
"It's like the hamster in the wheel," he explained. "We still produce and ship product to meet demand, but when I'm shipping $50 items I have to run a lot faster than when I ship $100 items."
In hopes of breaking that cycle, Nourison took a different approach to the business last year, said Alex Peykar, principal of the Saddle Brook, N.J.-based family-run company.
"Instead of concentrating on just lower price points, we reversed our position and gradually introduced higher price points," he said. "Increasing average ticket was probably the most important change for us."
He said the company does address demands for lower price point products, "but the majority of our investment is on high ticket products."
This includes not only handmade qualities but also machine-mades. "While 95% of our industry's manmade use synthetic yarns, 95% of our machine-made rugs are wool and wool blends. We concentrate on natural fibers and more sophisticated constructions that are unique to our company," Peykar said.
The saving grace for Oriental Weavers USA in 2012 was its Sphinx division because it caters to furniture and independent home furnishings stores, catalogs and Internet retailers rather than the mass merchants.
"Our Sphinx business is a very large percentage of what we do, and we saw some nice growth there, especially among $199 to $299 products," said Jonathan Witt, vp. "It's a different customer than those buying rugs at some of the big-name, mass retailers. They haven't recovered yet, which is why sales for those segments are down."
Still, Sphinx has taken advantage of opportunities with its retail customer set for promotional events where occasionally rugs are priced to retail for as low as $29.
"We can run the gamut, from $29 for a promo to $1,299 for one of our best hand-mades." Witt added. "We have a lot of breadth of product, and it's because we have an advantage of low-cost production overseas. It opens a lot of doors for us to do large promos with large retailers, and that has been a driver because that is what a lot of people have done lately - in-and out promotions they can sell for below their normal retails."
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