14100 Mon, 03/24/2008 - 3:36pm
By Jennifer Quail
It’s a jungle out there, no doubt about it. Executives in the business of buying and selling floor coverings are talking about working harder than ever to both bring in new business and keep that which they already have.
At the winter markets this year, vendors said they had no choice but to be optimistic, noting the only surefire way to fail in such economic times is to decide your business is doomed.
Ray Myers, co-owner of Myers Carpet, said while his stores hadn’t had a “banner year,” business had been good considering the economic climate. “Hard surface has actually been growing,” Myers said. “But our niche is the high end and that really hasn’t been affected.”
Many concurred, saying it is the midlevel product and companies that tend to hurt the most when purse strings are tightened, with business falling to the more opening-price-point product and staying relatively steady at the high end of the market, where economic fluctuations are a more a conversation piece than a part of everyday life. That idea is solidified by numbers from HFN’s own research, which has shown flooring and other specialty stores, as well as mass merchants and club stores, consistently taking market share from department stores in the handmade and machine-made area rug business for several years running.
The major factors for this business are not changing quickly. Oil is still an issue, filling containers is not as easy as it used to be, stocking inventory is a responsibility increasingly falling to the vendor and the cost of labor overseas is on the rise. That said, these issues did not arise overnight and individual companies have been slowly transitioning into a new way of doing business for some time.
For example, Mike Reilly, president of Sphinx, said his company now maintains a substantially larger inventory than it did just five years ago, but added, “It’s been evolving this way for several years.”
On the rise, as well, is the number of companies with roots in floor covering branching out into other home furnishings categories, creating destinations within their own showrooms. Safavieh and Abbyson moving into furniture; Sphinx delving into broadloom and underlay; and Surya branching out into throws, pillows and wall art are just a few examples, but several more companies have mentioned in recent months that expansion is on the horizon for them as well. The move serves the profitable dual purpose of simplifying the life of the buyer and opening up your own business to additional, cross-category sales.
But the buyers and sellers in this industry are not the only ones to recognize the changes happening on the business front. The markets that cater to them are changing as well, adapting to the way their tenants now do business and attempting to bring all things together for them, simplifying at least one aspect of their daily operations.
Despite grumblings regarding their travel-to-trade-show schedules, many vendors involved in Las Vegas Market have expressed excitement over the scheduled summer opening of Building C, and not simply those who have taken space in the newest building. Tenants in buildings A and B are anxious for the fanfare and anticipated enthusiasm among buying attendees, pointing to the celebrations that have marked the openings of the first two buildings.
And AmericasMart is growing as well, with a new building, complete with a professional test kitchen, scheduled to open in time for the January 2009 markets. The idea at the Atlanta complex is to become one-stop shopping on the East Coast and, more specific to the floor covering business, they are courting more furniture companies and combining the markets for area rugs and home furnishings, an update area rug residents are reportedly pleased to see.
One area that continues to show positive numbers is the accent rug category, and executives in the business have credited the relatively low cost of the items for keeping their products within the realm of an impulse buy. One thing to note here, though, is the business is becoming more and more one of fashion. Companies have said, while novelty is still king here, consumers have begun demanding a more sophisticated product, one that follows on the heels of the ready-to-wear market in terms of color and pattern. Executives said the seasonality of the business keeps their designers moving at warp speed to continually offer something new.