By Andrea Lillo
While the recovery is slow from the economic downturn, the rug category is experiencing signs of improvement. Consumers are more open to higher-priced goods, manufacturers headed to the Atlanta International Area Rug Market this month said, and when retailers want product, they want it immediately.
Business is better than last year, but there is still a way to go, companies added. A month of “incredibly strong” sales may be followed by a not-so-good one, said Joe Barkley, executive vice president, Kaleen, which he believed was the result of consumers reacting to bad news. “Whatever recovery we have, the momentum is then taken away,” he said. A run of positive news such as interest rates remaining low and people heading back to work will help aid the bounce back, he said. “We need less bad news.”
Not surprisingly, consumers continue to respond to lower-priced goods at retail. But some manufacturers note that the higher end is gaining ground, which they believe signals a rebound.
This is the case at Safavieh, where higher-end special orders and custom designs have gotten stronger. “People who have money, they don’t want to buy the same old thing,” said Arash Yaraghi, principal. “They want something fresh and new.”
Wendy Reiss, key account manager of sales and marketing, Kas Rugs, agreed. “There has been some interest again in higher price points or better-quality goods,” she said.
But the lower price points still dominate. “That’s where the volume is at,” said Steve Mazarakis, vice president, rug division, Linon Home Decor Products. In Atlanta, the company will show its expanded Westervelt polypropylene line, at $199 for a 5-by-8, a price point he is trying to hit in wool as well. And the lower price points work for furniture stores — “thirsty for product” — as a $600 rug wouldn’t work with a $399 sofa, he added.
Safavieh has also gotten a positive reaction to the lower price points it introduced at the last Atlanta market, Yaraghi said.
While retailers have been very cautious, and still are so, they have become more open to changing assortments quickly to find what works.
“Retailers are diversifying their style, price points, and product mix,” said Seth King, vice president, sales and marketing, Surya. “We used to get a lot of ‘Well, we don’t do that ...’ and now retailers are aggressively changing their assortment to accommodate the challenging environment.”
The $199 to $599 price point range is where Surya is seeing growth, King added. “This is where we see our customers investing in their inventory.”
And retailers also don’t want to wait for product anymore. “When customers order, they want product right away and don’t want back orders,” King said.
Safavieh has speeded special orders up by adding new weaving facilities in Tibet and Nepal, Yaraghi said, resulting in halving the production time. A 10-by-14 that used to take six to seven months to produce is now at about three months, for example.
Reiss added, “It is still very important to pay attention to the operations and customer service piece.” She also saw some retailers raise their average ticket prices to see how consumers react. “It is nice to see.”