Rug vendors anticipate second-half boost in '01
By Cecile B. Corral -- Home Textiles Today, 1/15/2001 11:29:00 AM
The dawn of the new year — and more importantly, the arrival of a new administration in the White House — are two big reasons why rug manufacturers are filled with a renewed hope for steadier sales increases in rug sales for 2001 and beyond.
However, rug manufacturers are bracing themselves for the next six months, "which is about how long it will take, maybe a little longer, to see a real impact taking effect on people like us," said Jim Bridges, business manager for LaGrange, GA-based Milliken Carpets & Broadloom.
"The second half of the year and beyond we expect will be terrific because by then we'll have the election behind us, oil prices will hopefully have stabilized and the lower interest rates will have taken effect," he added.
So what does that all mean for the rug industry?
It's simple math, said Michael Harounian, a partner at Ebisons Harounian Imports in New York.
"[President-elect George W.] Bush has made certain promises to cut back on our taxes, which means that if you and I can have more money in our pockets we will be able to spend more," Harounian said. "All that will help boost our slowing economy and give us a good 2001, 2002 and 2003. Sure, the first six months will be rough, but things will soon improve."
At the retail level, some rug makers think the discounters will be hardest hit at this year's onset because of the nature of the consumers who shop at those stores.
"It's the same old thing that always happens when the economy begins to slow," said Paul Kershaw, vp and business manager for Greensboro, NC-based Burlington House Floor Accents. "When the consumer is a little more cautious, it's reflected at retail. And normally in those conditions, the low-end stores start tailing off because [their customers] are the ones with the least amount of disposable income."
Not necessarily, argued Pat Moyer, spokesman for Mohawk Rug and Textiles, which sells its product to many discounters. Moyer's philosophy is that it's not so much his company's main customers but more the mid-tier retailers who are poised to take a harder blow until the economy takes its anticipated turnaround.
"The middle is what's disappearing," Moyer said. "But the lower end and the higher end continue to grow."
Yet Mohawk is taking measures with its new line of rugs to aggressively cover all bases at retail. Responding to what it says its customers want for 2001, Mohawk this year is introducing at the Atlanta Rug Show "finer rugs with higher price points," namely their new Velvet and Symphony collections ($299 to $399 for a 5 by 8 and $199 to $299 for a 5 by 8, respectively).
"This product is more fashion-forward," Moyer said. "Historically, we have been a $99 to $199 household. Now we are raising our price points. But even so, $399 is still considered low end. The economy is a concern, but we think we'll weather the storm by offering these new prices."
828 International in Greenville, SC, is approaching this new year with an attitude similar to Mohawk's.
"The trend this year will be to produce a higher quality at a lower price," said John Shepherd, ceo. "Prices are definitely going to play a role this year. The key is a great, new look but at a competitive price."
At Atlanta, 828 International will introduce for the first time a line of handmade rugs that feature an upscale look but are priced at $399, still within reach of a lower- to middle-income customer.
"In a slowing economy, people will certainly put off buying a new car, but not purchasing a new rug because it's an affordable way to redecorate your home," Moyer explained. "Even in a recession, people want to make their homes warm and cozy. We actually do a very good business when the economy slows down."
But not all rug manufacturers expect to spend much time worrying about the economy's ups and downs, thanks to the nature of their upper-crust clientele base, they said.
At Trans-Ocean, which recently formed a marketing alliance with Stanton Carpet Corp., president Charles Peck is confident because he believes retailers will axe promotional product first, not special order items like the ones his company produces.
"In a tough economy like the one we are facing, stores don't cancel special orders — they cancel the promotional ones," Peck said. "So much of our product is drop-and-ship and special order that we don't expect to suffer. Our product is still going to be out there because it's not promotional. People who have money are still going to have it during a slow economy."
In the case of Claire Murray, the same holds true.
"This new [White House] administration won't affect my handmade rug business," said Murray, ceo and principal of her company. "For us it depends more upon our designs. Our stores are all in very high-end areas where people have a lot of discretionary income."
The only area of Claire Murray that might be affected, she said, is her wholesale business, which sells her products to "thousands" of upper-end retailers, including catalogs.
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