The residential carpet segment hit a soft spot in 2023, down an estimated 15% in dollars and square yards vs. 2022, according to industry estimates. The sobering reality is the cost of everyday goods buttressed by persistently high interest rates have dampened enthusiasm for residential carpet since late second quarter 2022, mill executives report.
“Foot traffic at retail has been very slow as consumers are directing their money toward gas and food,” said Jamie Welborn, senior vice president of residential carpet product development at Mohawk. “We are also competing for discretionary money with travel and entertainment again post-COVID-19. In addition, carpet also continues to lose house share to LVP and laminate. It is not as great a share loss as it was pre-pandemic, but it is still a factor.”
The residential carpet industry appears to be returning to a more familiar ebb and flow business cycle, which isn’t necessarily a bad thing. “I think it is important to keep in mind that the perfect storm for prosperity in this industry for all flooring and remodeling has passed,” said Geoff Siebold, national vice president of sales, premier brands, Stanton. “We can all enjoy success; it just might not look the same as it has in our recent past.”
There remain areas of prosperity for carpet—both at the low end and high end. Performing well is the opening price point of multi-family, which tends to thrive during poor economic times, as well as the very high end of retail where consumers are not as impacted by the economy.
Regarding the latter, the so-called “better-end” segment, which starts at roughly $15/sq. yd., has outpaced the rest of the market for years as consumers are willing to pay a premium for the aesthetic they desire. “Today’s consumer is purchasing carpet on a room-by-room basis, and they are willing to spend a little more for a product that really complements the hard surface floor running through the main living areas of her home,” said T.M. Nuckols, president of the residential division, The Dixie Group. “From a budget perspective, high-end carpet is the same price point as many hard surface products, so the consumer doesn’t really see it as spending more. And when they see the beautiful and differentiated styles available today, it’s an easy decision for them.”
In addition to pricing advantages, soft surface still has great benefits that hard surface cannot come close to providing, observers note. “Comfort underfoot, acoustical properties and styling with texture and depth are key attributes that continue to help sell soft surface,” said Jason Surratt, president, residential, Tarkett Home. “With smaller areas of the home being utilized for broadloom, better-end goods are an area in the market where we have seen growth.”
Impact of technology
Consumers who tend to buy carpet every decade or so probably would not recognize today’s broadloom, given how technology advancements have changed the game.
“Over the past few years new technology has ushered in a significant transformation in the carpet industry, driving advancements that have enhanced the quality and appeal of carpet in various ways including comfort, design through tufting technologies, durability, resistance, backing and eco-conscious initiatives,” said Herb Upton, vice president of residential soft surface for Shaw Floors. “These advancements have made carpet a more attractive and practical flooring choice for a wide range of applications, aligning with consumers’ evolving preferences for comfort, style and sustainability in their homes.”
For the last few years, the advancements in tufting technology have allowed product development teams to create beautiful and differentiated looks in carpet. “Colorpoint and tailored loop machines are used to create intricate and well-defined patterns while yarn combinations provide color play and luster effects to add visual interest, resulting in products that are as much a work of art as they are floor covering,” Nuckols explained. “There are more beautiful carpet options in the market today than ever before.”
Indeed, the technology to achieve better colorations, more durable and yet softer fibers and cleanability with well-defined looks has made carpet very appealing. Perhaps the most transformative advancement is with solution-dyed polyester, the fastest growing segment.
“The introduction of solution-dyed polyester has revolutionized the manufacture of carpet, color options, resiliency and affordability,” said Sean Souther, divisional VP, Southeast region, Southwind.
Noting that the SD category continues to grow year after year, Mike Sanderson, vice president of marketing for Engineered Floors, added, “Consumers are seeking carpet that is more high performing than ever, and solution-dyed carpet delivers with its resistance to stains and fading, in addition to its durability to hold up in high-traffic parts of the home. Solution-dyed polyester delivers the best of both worlds. When you consider styling innovation coupled with inherent attributes and benefits that meet the needs of the consumer, we expect solution dyed to continue its momentum in the coming years.”
Executives also note that being able to produce a polyester that is soft, durable and more affordable is especially important amid higher prices. “With inflationary pressures stagnating the market, delivering higher-end goods at an affordable price point is paramount,” Tarkett’s Surratt said. “Our Cloud 9, with its affordable luxury comfort position, fits this category beautifully.”
Outlook
Peering into the future mill executives say they are uncertain as to how the next six to 12 months will play out, with inflation being the wild card. “I think the next six months is going to be soft,” TDG’s Nuckols said. “As long as inflation numbers are high, interest rates will remain high and consumer spending on new homes and home remodels will remain weak. Maybe by 3Q or 4Q in 2024 we will see inflation ease, which could lead to the Federal Reserve lowering interest rates and improved market conditions. But, of course, 2024 is an election year, and election years typically are not very strong.”
Mohawk’s Welborn has a slightly different perspective, noting: “We have a lower comp we are going against as the slowdown started in August of 2022; No. 2, there is pent-up demand; and No. 3, inflation is not as bad as it was a year ago.”
Shaw’s Upton said he sees renewed interest in domestic production as some consumers prioritize buying products that are made locally or within their own country, and this sentiment extends to flooring choices, including carpet.
EF’s Sanderson, meanwhile, suggested the desire for more sustainable carpet will spur mills to respond accordingly. “As environmental consciousness continues to grow, there is a push for more sustainable flooring options,” he said. “Carpet manufacturers are responding by developing eco-friendly materials and production processes. This commitment to sustainability aligns with the values of many consumers and can be a bright spot for the industry.”
