Rug sales gain despite difficult economy
June 17, 2002,
For a year that was replete with retail bankruptcies, particularly in the specialty and independent retail channels, and a considerable slowdown in consumer traffic, the area and accent rug industry fared modestly well in 2001 with $4.5 billion in sales — a 2.3 percent gain in sales over 2000.
Paul D'Huyvetter, senior vp, Oriental Weavers of America, Dalton, GA, is hopeful that this year's results represent a sign of better things to come in the future.
"This year we felt a slowdown of the economy, and Sept. 11 affected business," D'Huyvetter said. "But the home furnishings business is still decent, so I'm still anticipating growth for 2002."
But forecasting a more tempered outlook for this year was Arnie Stevens, vp, Maples Rugs, Scottsboro, AL. "2002 will represent a big challenge for the economy," he said.
Discount department stores continued to capture the lion's share of the $4.5 industry with a 45 percent share, or $2.02 billion — a 7 percent increase over last year.
Home improvement centers also kept climbing steadily, to 18 percent, or $810 million — a 1 percent gain in share over last year, which made perfect sense to Patrick Moyer, vp of marketing, Mohawk Home, Sugar Valley, GA.
Department stores experienced the greatest increase in competition, mainly due to the willingness of discount stores and home improvement centers to give better placement, greater breadth of product and more competitive pricing. Department stores represented 5 percent of total market share, or $225 million.
In the type/style category, tufting steadily became more important in the rug industry. This year it grew by three points to 78 percent, or $3.5 billion of the business vs. non-tufted goods, which accounted for $990 million.
Mohawk's Moyer said that what helped the category grow was the proliferation of printed rugs, which continue to be popular with consumers.
"The tufted category's growth also includes the substantial growth we've seen in printed rugs," Moyer explained. "A lot of color can be added to tufted printed rugs."
A hot topic in the industry is the role of importing, but the ratio — 92 percent domestic manufacturing vs. 8 percent importing — still indicates potential for growth.
Georgia Tufters, Calhoun, GA, traditionally a domestic manufacturer, has recently started importing more product, albeit "a small amount for accent rugs, because it allows us opportunities to differentiate from other folks and produce goods we can't necessarily produce here," said David Record, vp and national sales manager.
Mohawk has begun ramping up its importing efforts "because it's necessary if you want to stay competitive," Moyer noted.
Greenville, SC-based 828 International, an import house, has noticed "a tremendous amount of competition in imported rugs, not just goods from Iran but also China, which is becoming a major supplier of rugs to the United States," John Shepherd, ceo, told HTT.
As importing increased, it made sense that handmade rugs also gained some momentum — being that almost all hand-made rugs are imported from China, India and the Middle East.
"It's about cost," Kathy Hom, sales manager, Chandler Four Corners, Manchester, VT, told HTT. "Machinemade rugs are less expensive to produce overseas [for American suppliers] than handmades. Anything handmade is price-prohibitive here in the United States."
Machinemade rugs fell one point to 92 percent of the industry, or $4.1 billion, and handmades rose by one point, to $360 million.
Meanwhile, rug suppliers are experiencing sales for more sizes than ever, from as small as 2' x 3', which accounts for 7 percent, or $315 million of total business, to as large as 8' x 12' and bigger, which accounts for 17 percent, or $765 million. The most popular sizes are everywhere in between — 3' x 5', 27 percent, or $1.2 billion; 5' x 8', 26 percent, or $1.17 billion; and 6' x 9', 12 percent, or $540 million.
For Saddle Brook, NJ-based Nourison, 2' x 3' rugs "represent primarily that the accent rug has gone from being a basic utility item in the kitchen or bath to a decorative item throughout the home," Ed Vairo, director of creative marketing, told HTT.