• Cecile Corral

Rug Suppliers Found Plush 2004

New York — In 2004, price hikes for raw materials, heightened direct-importing activity by retailers and retail price-point cutbacks represented the most challenging hurdles that area and accent rug players had to face.

And yet, they managed it. By sacrificing margins, seeking new avenues of business and further developing their products, the industry accrued a 5.3 percent increase in retail sales, bringing the total to $5.9 billion over 2003's $5.6 billion.

At retail, suppliers' hard work paid off, not only driving up traffic and sales but setting the table for growth this year as well.

Expo Design Center, based in Atlanta, had a “great year,” in 2004 according to Jeanne Love, soft flooring product merchant. The company restructured that department “to create more excitement” for shoppers.

Menomonee Falls, Wis.-based Kohl's saw continued growth in its area rug business, as well as growth in its scatter sizes, particularly kitchen rugs, said Gary Nickolie, area rug buyer.

While Portland, Ore.-based Fred Meyer “had a very decent year” in 2004 in area rugs and is moving forward with its broad offerings, from flokati to leather, noted Jacque Lemay, rug buyer.

San Francisco-based Restoration Hardware built up the rug offerings for its catalog and Internet divisions in 2004.

But not all the reviews of 2004 were rosy. Dalton, Ga.-based Shaw Living's Jeff Meadows, division vice president, said he believed that profitability at the manufacturing level was “severely hurt by raw material price increases.”

Nodding to that was Mike Riley, executive vice president, sales and marketing, Dalton, Ga.-based Sphinx. “We (ate) the margins on price increases for raw materials,” Riley said.

Meadows and Wade Maples, president of Scottsboro, Ala.-based Maples Industries, noted that suppliers of raw materials and synthetic fibers raised their prices several times during 2004, which caused some damage to their respective rug businesses.

In the case of Maples Ind., which is tied with Shaw at second place of the top suppliers, the company reported flat sales — $150 million — for the category last year.

“Nylon prices in 2004 increased six times, growing each time by 4 or 5 percent, all the way to 8 percent, and polypropylene increased five times, also at the same (percentage) rate,” Meadows said. He added that soaring gasoline prices, “which increased by about 20 percent last year,” were another factor in this mix.

Shaw Living reported a 3 percent decline in rug sales in 2004 to $150 million. “The best way to offset these issues is to pursue new business,” Meadows added. “Generating new business is very important (in this kind of business environment).”

Sugar Valley, Ga.-based Mohawk Home, the top rug supplier, last year reported flat sales for the category, blaming declining price points.

Couristan, based in Fort Lee, N.J., typically a supplier of higher-end product, added more competitively priced product, including indoor/outdoor synthetic rugs, to its offerings and also relied on tufted rugs to help ring sales.

Distribution Channels
2004 Total: $5.9 Billion, up 5.3%

in $millions 2004 % 2004 $
*Other includes interior designers and military exchanges.
Home textiles specialty chains 5% $295
Single unit specialty stores 1 59
Department stores 5 295
Mid-price chains 5 295
Discount department stores 23 1,357
Off-price chains 5 295
Variety/closeout 3 177
Direct-to-consumer 7 413
Warehouse clubs 2 118
Carpet/floorcovering stores 9 531
Home improvement centers 9 531
Furniture stores 17 1,003
Gift/home accent stores 7 413
Other* 2 118

Tufted vs. Non-tufted

Tufted: 60% Non-tufted: 40%

Cecile CorralCecile Corral | Senior Product Editor, Home & Textiles Today

Cecile B. Corral has been a product editor with Home Textiles Today since late 2000. She covers the area and accent rug, kitchen textiles, table linens, beach towels, decorative bath and decorative pillow categories, as well as some retail subjects.

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