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Area rugs: so far 2013 is fruitful

Volume 26/number 28 June 10/17, 2013

by Ken Ryan

We’ve previously experienced periods of progress in the area rugs market, often lasting a few weeks at a time, only to dwindle away as the sluggish economy turned ugly again.

But the fits and starts that marked the last five years in the U.S. flooring market have apparently been supplanted by brisker, more sustainable growth, according to industry manufacturers and retailers.

“There has definitely been an uptick in business in the first six months of 2013,” said Alex Peykar, principal of Nourison. “2013 has proven to be a much better year for the home furnishing industry as a whole, and floor coverings are benefiting from this trend.”

Peykar said sales have trended up every month on a consistent basis. “I would imagine the positive trend we are seeing is directly related to real estate home sales and overall residential improvements.”

Retailers agree. “So far, 2013 has been consistently positive,” said Sam Presnell, owner, The Rug Gallery in Cincinnati. “This is the first time in five to six years that the upturn has remained consistent throughout the first five months of the year. Not only have we met goals, we’re actually a little over goal so far for the year. I’ve spoken to some of my peers and they’re seeing the same.”

Economic signs

Screen Shot 2013-06-17 at 1.08.48 PMImports of carpets and rugs to the U.S. were up 4.6% in the first three months of 2013 compared with the same period in 2012, according to figures released by the U.S. Department of Commerce, Office of Textile & Apparel. Total shipments amounted to $419.14 million in the first quarter of 2013 compared to $400.83 million in the first quarter of 2012.

Indeed, after a long period of economic blight, characterized by the housing downturn and a weakened builder business, hopeful signs are emerging. Experts point to a booming stock market, rebounding housing market and improving consumer confidence—which has reached its highest level in nearly six years—as reasons to be optimistic.

Housing is directly related to the flooring business and many individuals in the area rugs sector foresee continued increases in home sales. However, others said the industry will not fully recover until hiring improves. The jobless rate ticked up one percentage point to 7.6% in May, but 175,000 jobs were created, slightly more than the previous month.

Pricing

Area rug prices have been climbing among middle- to higher-end goods in recent months. Presnell said sales that are trending up are being fueled mostly by quality-minded, high-end consumers and designers. “We are seeing multiple unit sales, which means entire homes are either being built and decorated or existing homes are being redecorated.”

Miriam Thompson, co-owner, The Rug Rack, Chattanooga, Tenn., reported her store’s sales are up 48% year-to-date as of June 1 compared with the period in 2012. “We can attribute those numbers to higher ticket invoices over increased traffic,” she explained.

According to Peykar, this is good news for the industry. “Generally speaking, we have noticed a trend for retailers to bring up the average price points and not push suppliers to continually reduce the prices of their products,” he said. “I believe they have finally realized that during good or bad times, they cannot necessarily sell more units by pushing the prices lower. Lower retails do not help the overall sales and bottom lines.”

Thompson said the majority of her customers are choosing to buy quality. “Our customers are educated consumers and understand that different rug constructions will have varying qualities; therefore you get what you pay for,” she said. “That being said, we do not sell many low-end products because our customer wants more than a couple of years out of her purchase.”

Providing a high level of expertise on the showroom floor is as important as ever for independent dealers like The Rug Rack, given the range in quality of products, according to Thompson.

“Hand-knotted rugs sales play a significant role in our business,” she said. “Under-standing the supply and demand of this product is causing us to evaluate at what point our customer will say, ‘That is just too much,’ and scale back to one quality level lower. The quality of domestic products of some companies has been pleasingly surprising, while others have sunk to a new low. The ‘pleasing’ products had great pricing while the ‘sunk level’ was, ‘Are you kidding me? What are they thinking?’

“We do realize people want the most for their money since there seems to be less of it. Those customers seem to appreciate the time we spend helping them find the quality pieces that fit their budgets.”

Screen Shot 2013-06-17 at 1.10.06 PMStyle, design trends

A “world market” aspect to the designs of area rugs has helped shape the rug industry in 2012 and 2013, with a movement toward bold colors. At the same time, neutral grays and taupes are in demand. And the use of unconventional fibers such as linen, jute or bamboo silk is adding depth and texture to an otherwise pale palette of gray, experts said.

“The hottest looks in today’s market are all about the blending of different cultures, continents and centuries,” said Kim Barta, brand manager, Shaw Living. “Global influences dominate while a nod to mid-century modern and ‘Palm Beach preppy’ are also very important.

“Ethnic patterns can mix easily with historically modern motifs through the use of common color palettes. Watercolor looks, transparency and softened edges are important techniques this season.”

The commitment to the environment is also reflected in area rug trends, according to marketers. Earthy colors, such as a variety of greens and browns, or nature-inspired patterns are popular. Natural fibers are favored, as are rugs that will last. Some new rugs are being made with hemp, which doesn’t require harmful herbicides to grow.

Thompson said, as a retailer, she has found it is important to be up on the color trends, “but that doesn’t necessarily mean a certain color will be big in our geographical location. Our biggest selling color for the first three months of the year was not a projected color. Wading carefully into certain trends is our approach.”

The trends Presnell sees are color related, more cool blues—“not really greens, I call it aqua with a blue cast,” he said; orange or tangerine, and a lot of silver/gray palates. “The other big trend I’m seeing is in lower-end, soft polyester rugs. They feel great and look amazing for a low price with a more contemporary look. Also, I haven’t seen much activity, but I hear dhurries are back, with a more saturated color visual in simple Moroccan-themed designs.”

Barta added, “This market is all about optimism and that is reflected in our use of vivid, yet sophisticated palettes. While the past few seasons have brought us vivacious color, we are predicting shades will get softer this season. Less saturated hues will result in a look that is more livable and has longevity. It is bright color that is in no way overwhelming; it is restful, relaxed and pretty.”

Margie O’Krent, rug buyer, O’Krent Abbey Flooring Center, San Antonio, Texas, said, “Grays are big with a capital ‘BIG’ and are showing from every manufacturer. Gray is being used as the new neutral, replacing tan/beige looks or bursts when combined with yellows, blacks, reds, etc. Also trending with the clothing fashion world, blues are back—in everything from the softer pastel blues to classic navy and indigo. In traditional rugs, blues are replacing the blacks.

“In order of importance to a consumer, the deciding factor in purchasing a rug is color, design and then price point.”

The outlook

Presnell echoed the sentiment of many in the area rugs world, stating that with new housing and remodeling markets up, “people who have been sitting on the sidelines, waiting to breathe and let go of a little money, are now going to feel it’s safe to spend, to move and to replace old tired-out looks.”

He added, “People here have been so conservative the last five to six years, I think they’re ready for a little excitement. I also see an interest in revisiting the 1970s and enjoying life, doing some things that give us joy and pleasure. After all, the election of 2012 has taken place and the sky did not fall.”