By Andrea Lillo
The hesitancy of consumers to buy home furnishings led to a five percent drop in the rug sales for 2008, which totaled $4.42 billion.
The economy has changed people’s shopping habits, and now consumers wait longer to purchase products and/or look for the cheapest price possible.
While some manufacturers cite areas such as outdoor/indoor rugs, the high-end market, and the interior design business as strengths in this economy, they have also responded to retailers’ call for lower-priced product to tempt consumers to buy.
“People are willing to do more shopping around for their decor purchases—even waiting for discount home stores to receive inventory on their favorite items—before starting their decorating projects,” said Doniella Arabia, Couristan’s director of public relations. “The economy has really put a halt on impulse buying, but when consumers are in the mood to splurge they feel more satisfied knowing they are getting a great deal.”
The indoor/outdoor category is one area that has been strong for many retailers, and Couristan’s line was no exception. Consistently among its top-sellers, “this category has shown little-to-no decline despite the current market conditions,” Arabia said. “These people are expanding the livable space of their homes by creating an outdoor oasis that offers all the luxuries of their favorite indoor spaces.”
Lynne Minchello, sales development and marketing manager, CMI, agreed. “Consumers are not able to spend the money on expensive vacations, but they still need some change and relaxation in their lives, so they are updating and creating inviting outdoor spaces,” she said. “A rug is the perfect way to tie an entire sitting area together for a reasonable price.”
For Chandra Rugs, the interior design business “has never been better” and is growing very nicely, said Michael Heath, sales manager. “People still have money and are tired of holding back,” he said. “While not necessarily building new homes, they are renovating and redecorating their current ones at a much higher percentage than in the past.” The home accessory business is also strong as people need “new accessories like rugs, wall art, and pillows to complete the new look in their homes,” he said. “They’re spending less and making more out of it.”
Feizy’s better-quality goods always held their own in this economy. “The high-end never lost momentum the way the low- and mid-range markets did, and we’ve definitely seen a resurgence in interest in our fine collections and higher-end home collection product,” said John Feizy, president and chief executive officer. “People recognize the value will not drop in fine products and should even appreciate in time.”
Initially, “the high-end was not affected by the economy, but eventually it caught up to it,” said Alex Peykar, principal, Nourison. “What you see now [at the high-end] is a slow improvement.” However, overall, “things are not great—the storm is harder than we thought.”
Peykar believes that the economy is recovering: “Things have bottomed out but are not rebounding as fast as we would like.” And the moderate to lower price points—which for Nourison is less than $499 retail for a 6-by-9—“are doing a little bit better.” Consumers are searching for value now, Peykar added, which doesn’t necessarily mean cutting price points. They are “quality conscious ... People still want good products.”
“It’s easy to say we’re focusing on price—everyone is doing that,” said Josh Roberts, vice president, sales and marketing, Jaipur. “It’s difficult to compete at that.” Jaipur’s approach is to speak to the design and material of the rug as well. “We’re adding value.”
At Capel, mid-price points, typically a growth area for the company, have been “hurting,” said Bud Young, vice president of marketing. Consumers that would normally spend at that level are now choosing less-expensive, more promotional items. One category that has seen a more than 20 percent increase in sales is the company’s original braided rugs, which Young attributed to its lower price points, the doubling of the category within the past two years, and its key catalog customers.
And as more consumers become comfortable with shopping online, Capel recently implemented a program so its dealers would not be cut out of the equation. Consumers can now go to Capel’s Web site, scan its rug collections, and click on one to buy. After inputting their ZIP code, they are led to the landing page of the Capel preferred dealer closest to them. “It allows consumers to buy online but transfers the consumer to the brick and mortar,” Young said. While it would be expensive and time-consuming for each of its dealers to have its own e-commerce site, Capel already manages 10,000 SKUs on its site, making it convenient for both the dealer and the consumer.
After a few months in operation, the early read is that the program works. “We’re selling to customers who many not have had access to the Capel brand before,” Young said, and this method resolves any conflict between the channels.
Other channels that are doing better than others, unsurprisingly, are the mass merchants and clubs. These types of retailers “have an advantage because they are known more for the value they offer customers than the higher level of services and/or quality that independent retailers offer,” said Seth King, vice president, sales and marketing, Surya.
“Most people are shopping to spend their money wisely instead of just buying because it was convenient at any price,” Heath said. “They need to search out the best products for the price in any category they are shopping for, just as consumers today are more apt to do.”
Feizy has responded to the call for lower-priced product with its Saphir machine-made collection. “The customer loves the textural interest we’ve created with this product and it is enhanced by weaving it in chenille, which is not typically used in the production of power-loomed rugs,” Steve Sorrow, vice president, design and product development, said. And demand led the company to double the size of the collection since it was introduced. “We’ve shown the consumer that a low price point doesn’t mean the product is boring or poorly constructed.”
Surya has developed a printed nylon program to hit a lower price point. “Retailers can take the color and style that Surya is known for and retail them at a much lower cost,” said King. “The construction is substantially different, but they can offer on-trend product for a lot less money.”
CMI has achieved lower price points by mixing different types of yarns together, said Minchello. “It provides the customer with exclusive products at lower prices points, but also creates an interesting texture to the rugs by mixing different yarns together.”
One such product from CMI mixes soft chenille polypropylene with a shiny BCF polypropylene for a rug that can be used indoors or out, she said.
At The Rug Market, one of its top sellers is its Ecconox, which has current fashion looks and colors, as well as value, said Mike Shabtai, president. And though the response for lower price points has been well received, the higher-end category still needs to stay at better qualities and price points as well.
In terms of design, “casual contemporary and relaxed traditional styles continue to be the predominant trend, especially as opposed to edgy contemporary and formal traditional styles,” said Sorrow. “While chocolate continues to be an important color, we are seeing it morph into charcoals and grays, with those tones increasing in dominance.”
And to help get those rugs sold, “retailers can drive business by selling services, not just product,” said Minchello. CMI, for example, offers them U.S.-made products, five-day shipping, drop shipping, customization options, and “top-notch customer service.”
In this economy, “one thing is certain: [retailers] can’t offer the same tired assortments of rugs or continue to merchandise their stores using the same old concepts,” Feizy said. “New product mixes and exciting merchandising techniques will create a renewed interest and enthusiasm not only for the customer, but even for staff members, renewing their passion for the product and increasing their drive to sell.”
The home accessory business is also strong as people need “new accessories like rugs, wall art, and pillows to complete the new look in their homes,” Heath said. “They’re spending less and making more out of it.”
Feizy never saw the drop in its better-quality goods. “The high-end never lost momentum the way the low- and mid-range markets did, and we’ve definitely seen a resurgence in interest in our fine collections and higher-end home collection product,” said John Feizy, president and chief executive officer. “People recognize the value will not drop in fine products and should even appreciate in time.”