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Carpet: State of the industry—Higher-end, patterned products find a home as segment looks to rebound

September 3/10, 2018: Volume 34, Issue 6

By Ken Ryan

The higher-end residential carpet segment is growing in the low single digits in 2018, buoyed by a more robust economy that has given consumers the confidence to invest in better, higher-end goods.

While sales have risen an estimated 2% compared with the same period in 2017, unit volume is down roughly 4%-5%, executives say, as raw material increases continue. This has led to multiple price hikes in 2018.

What’s more, carpet’s comeback has been impeded by the hard surface onslaught that continues to take share away from soft goods. In many cases within residential, carpet is relegated to bedrooms or so-called “comfort” rooms. On the plus side, however, consumers are more discerning about the type of carpet they want in their homes and are more than willing to spend more for better goods.

Overall, carpet is trending similarly to 2017, when FCNewsresearch showed sales inched ahead 0.6% to $8.83 billion. Volume is a different story, however. In 2017, volume (which includes area rugs) was up 0.4% to 11.250 billion square feet. However, mill executives said carpet is under pressure at the unit level so far in 2018 and is likely to remain that way due to raw material and inflationary pressures.

Still, the overall sentiment is carpet is making inroads as it attempts to slow the hard surface tide. “There seems to be a crowd mentality like you would see at a 5-year-old’s soccer game with everyone crowding around vinyl right now,” said Tom Lape, president of Mohawk residential. “However, all things considered, carpet is having a decent year. Better goods are having a nice run. We feel good about carpet.”

It’s easy to see why optimism is on the upswing. Just as a rising tide lifts all boats, a stronger economy is benefiting all segments of flooring, including carpet. “More homes are going into the ground, and even though hard surface continues to get the share in builder, carpet is gaining as well on a room-to-room basis as opposed to entire homes,” Lape explained.

Although there is some shortage in existing homes to purchase, some executives point to a growing stock market, rising wages, low unemployment and lower corporate taxes as contributors to the mild resurgence seen in home improvement investment. “The unemployment rate is low, and earned income is on the rise—all of which tends to lead consumers to make larger, more substantial purchasing decisions,” said Chris Johnson, senior vice president of sales at Phenix Flooring. “Whether that is in the form of transitioning from a rental position into home ownership, selling and buying a new home, or renovating their current home, it means new floor covering materials—including carpet—will be required.”

Beyond an improving economy, what’s also driving business in 2018 is the fact companies can deliver both innovation and value. As Brian Warren, executive vice president of sales and marketing at Foss Floors, noted, “Consumers are smarter than ever before and have a wealth of information at their fingertips. An educated consumer has already determined the value proposition of the product she is looking for. You need to pack in as much differentiation through innovation as possible at a fair and equitable price.”

Tim Baucom, executive vice president of Shaw Industries’ residential business, believes consumer demands are primary drivers in the marketplace today. “Consumer expectations of their soft surface products are higher than ever, and for us to succeed we need to meet and exceed those demands,” he explained. “Today’s consumer is looking for a carpet that will be beautiful and stylish while also accommodating her active lifestyle. We recognize that manufacturers will need to continue innovating, combining beauty and durability to meet these high expectations of residential carpet.”

Carpet remains what some call a “bifurcated” market, with activity strong at both the low and high ends of the spectrum, and weak to non-existent in the middle. In both growth areas, newer technology is creating patterns and multi-color looks that are sparking demand. “New tufting technology has unlocked new design capabilities, so you’re seeing a lot of companies invest there,” said Jeff Dill, director of mill sales and specialty retail for Invista. “The result is an incredible array of new patterns that leverage unique fibers to create beautiful designs. No longer are consumers limited to a wide range of beige on beige. Now their choices are wide ranging and stunning.”

With residential carpet being purchased more on a room-by- room basis, consumers are also looking for styles and designs that complement the hard surfaces throughout their homes. Dill believes consumers are still investing in their homes, and as part of that investment they want the best products they can afford. “One of those products happens to be high-quality flooring, but carpet still provides the consumer with great value while also providing incredible comfort underfoot and a quieter home.”

Paul Cleary, CEO of Lexmark Carpet Mills, has noticed a trend: As less carpet is used in the home, consumers are turning to more patterns. “Carpet has become more design-driven, and even smaller dealers are using vignettes more to showcase the design attributes of carpet,” he noted.

Some flooring dealers have noticed a spike in their carpet sales this year. Perhaps that is wishful thinking or perhaps that is because of all the flooring products, carpet provides the most productive margin and, thus, independent dealers must protect the category. They also have to have the right product in stock.

“If dealers are going to be successful today, then they better be selling what the dogs are eating,” said Joe Young, soft surface category manager for Engineered Floors. “These days, the dogs are eating polyester. More specifically, solution-dyed polyester due to the inherent performance benefits and advantages in multicolor styling. Polyester continues to take market share from nylon and other fibers at a quick pace.”

However, there is still ample room for nylon, as noted by Matt Rosato, category director for Anderson Tuftex. “Our research shows nylon as the preferred fiber of our premium customers, and we see continued popularity of our patterns, textures and shag offerings. Although consumers are putting more hard surface throughout the home, they still want something soft, durable and well-crafted to complement it.”

Still innovating
The Dixie Group reports its residential business is up vs. 2017, with strength in specialty retail across its Dixie Home, Masland and Fabrica brands. “We are developing new yarn combinations to create unique and beautiful carpet styles with color play and luster effects,” said T.M. Nuckols, president, residential division, The Dixie Group. “From new multi-color cut piles to distinctive designs in loop and pattern constructions, we are transforming the consumer’s perception of how carpet can make her home more beautiful.”

Marquis used Surfaces 2018 as the platform to capitalize on its soft products introductions. World Class, an upper-end, soft, cut- pile residential carpet with a drawn-down profile, is the big story of 2018 for Marquis, according to Chet Graham, president. “Our dealer network is having huge success with World Class in their new home sales and remodeling projects. Our color lines have continued to stay in the natural palette, and have been a great complement to our SPC rustic hard surface products.”

In 2018, Invista has doubled down on its two leading sub-brands: Stainmaster PetProtect carpet and Stainmaster LiveWell carpet. “The healthier home is an emerging trend we believe is here to stay,” Dill said. “For our Stainmaster PetProtect carpet, we worked with our designers to expand our color offering once again, enabling our mill partners to continue creating new and unique designs.”

EF’s signature 2018 introduction also plays on the healthy home-oriented theme via its PureBac collection. EF combined its most up-to-date looks in its proprietary PureColor Soft polyester with an innovative backing. “The face of the carpet is protected by our solution-dyed technology, providing better stain, fade and bleach resistance than conventional piece-dyed products,” Young stated. “On the back, we take it a step further with our proprietary PureBac technology.”

Not to be outdone, Phenix’s Cleaner Home collection continues to perform very well with consumers who are looking for products that can assist in keeping a cleaner home and promote a healthier lifestyle. “We know homeowners want products that last longer and work harder, and that’s exactly what this carpet—protected by Microban antimicrobial technology—does by continuously fighting the growth of bacteria,” Johnson said.

Stanton Carpet made its foray into the Main Street market in 2018 with Stanton Street - Decorative Commercial, which features carpet tile and plank from Stanton (for the first time) as well as decorative commercial nylon broadloom in modern, edgy designs that allow for versatile layout options and various applications from residential to heavy commercial spaces. The product will ship this fall.

When Shaw created Bellera High Performance Carpet, it knew consumers wanted their soft surface products to stand up to heavy foot traffic—and the messes that come with it. “With Bellera, consumers no longer have to sacrifice beauty for that needed durability,” Baucom explained. “We are so confident in this collection that we can guarantee Bellera carpet will look as beautiful in five years as it did on day one of install. Bellera is a disruptor in the flooring industry because of its top-to-bottom innovation and has positively impacted Shaw’s bottom line.”

One trend that continues unabated is that soft flooring sells. Case in point is Mohawk’s SmartStrand, which continues to be an industry leader and innovator in luxurious soft. New offerings from SmartStrand, Karastan and Air.o Unified Soft Flooring stand out as Mohawk’s big three introductions in 2018.

“There has been a lot more consumer activation with Air.o,” Lape said, noting that a new series of Air.o products would be debuting later this year. “It would certainly appear that more retailers are getting comfortable selling and installing Air.o. Once they do two or three [of these] products they are hooked.”

At Foss, DuraKnit has been the breadwinner in 2018. These products feature unique construction characteristics that provide commercial-grade performance. “They will never unravel, zipper, fray or wrinkle and are great for anything that pets or people can throw at them,” Warren said. “They also are extremely inexpensive for the retailer—which translates into higher margin at retail.”