Rug sales up despite difficult '01
By Cecile B. Corral -- Home Textiles Today, 1/14/2002 12:00:00 AM
NEW YORK —
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.
The findings are the result of an annual survey conducted by Home Textiles Today. For the seventh consecutive year, HTT's "The Facts: Accent & Area Rugs" offers suppliers a statistical analysis and trend forecast for this segment of the home textiles industry.
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 next year.
"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 foreseeing a more tempered outlook for next year was Arnie Stevens, vp, Maples Rugs, Scottsboro, AL: "2002 will represent a big challenge for the economy."
Of the $4.5 billion in sales generated, major national distribution channels were responsible for the most sales. Of these stores, most experienced slight increases of market share or at least maintained their share from 2000.
Discount department stores continued to capture the lion's share of the accent and area rug 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.
"Home Depot and Lowe's have broadened their offerings to range from a $49 5' x 8' through a $1,000 5' x 8'," he told HTT.
Stevens also touted home centers: "They continue to look to do more with home textiles, particularly in rugs. They've really supported the category."
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.
One channel that experienced major loss was the single-unit specialty store, which slipped 65.9 percent to $45 million, down from $132 million in 2000.
The closing of Montgomery Ward last year prompted a change this year in HTT's survey's distribution section — JCPenney was relocated from the department store channel category to the survey's new category, general merchandisers, along with Sears. Together, both Sears and JCPenney were one of this year's survey's biggest success stories. General merchandisers in 2001 snatched $360 million, or 8 percent of total sales.
As if that wasn't proof enough of general merchandisers' success in 2001, industry executives had much to say about the channel.
"We've done more business with JCPenney in the last year with the binder books they have, their 'It's All Inside JCPenney Custom Decorating' program," Larry Mahurter, director of advertising and sales, Couristan, Fort Lee, NJ, told HTT. "It's been very good for us."
Added Oriental Weavers' D'Huyvetter: "JCPenney just got into machine-mades again this year, so it's a bigger player for us this year, as was Sears."
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 inclusion 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. Typically, tufted rugs can have two to three colors, but printed rugs can have as many as 12 or more colors, giving the rugs better definition."
A hot topic in the industry is the role of importing. As competition grows fiercer, more and more rug suppliers are experimenting — and in some cases aggressively pursuing — importing efforts. But the ratio — 92 percent domestic manufacturing vs. 8 percent importing — still isn't spellbounding.
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. "It's become more important for everyone, including traditional domestic manufacturers like us. Asia — mainly India and China — is becoming the handmade rug capital of the world and Europe is the capital of imported, machine-made rugs."
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. "Now that we've sort of relaxed some restrictions on Pakistan, I expect them to export more to the United States, too. The Indians are also making a big push."
Proving this trend is the presence and participation of the United Nations Development Program and the Government of India together for the second consecutive market at the Atlanta International Area Rug Show in January.
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. "Machine-made rugs are less expensive to produce overseas [for American suppliers] than handmades. Anything handmade is price-prohibitive here in the United States. We have to import them if consumers want them."
Machine-made 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.
"We've had a lot more requests for larger rugs than ever before, as big as 9.6' x 13.6'," Couristan's Mahurter said.
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. "It's a fashion item that can change with the seasons and a piece you might buy a few of for throughout the house."
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