Biometric/Beige from Shaw Living’s ModernWorks Collection.

By Sarah Zimmerman
In anticipation of this summer’s Atlanta International Area Rug Market, FCNews spoke with manufacturers on the state of the industry, collecting and comparing segment success. With a less-than-desirable first half across the board, 2007 has shown declining digits in the sector.

Following industry suit in a barren housing market, typically increasing area rug numbers have been on the decline by low single digit percentages so far this year, a surprising shift from years past that was foreshadowed in 2006. In 2004, as hard surface flooring continued to grow in double-digits, rug sales jumped 9.7% making up 12.6% of total industry sales and taking in $2.797 billion in comparison to the previous year’s $2.550 billion. In 2005, rugs again held approximately 12.6% of total industry sales and increased by 9.1%—bringing in a total of $3.052 billion. Last year, however, only saw a 2.7% increase in sales in the rug segment—rolling out a disappointing $3.134 billion total.

So, where has it been, where is it going and why? Manufacturers provided FCNews insight into the overall slump that was the first half of 2007, and predictions for what to expect out of the second.

Though reasons varied slightly, the majority of the area rug category noted its downturn in sales during this year’s first half. Rob Beistline, market manager for Milliken Rugs, said, “The industry slowed this year,” which he explained can be attributed to consumers having to adjust to higher prices at the pumps and the effects these higher oil prices have on other consumer products, namely food.

Jim Curtin, vice president of sales for Shaw Living, examined the “slightly down year,” pinning the overall economy and slow housing starts as culprit. “This has been a slow retail year thus far due to the overall economy,” he said.

Tom Morris, national sales manager for 828 International also the blamed economy. “Housing needs to rebound, and consumer spending in the home furnishings area needs to improve.”

But, that doesn’t mean anyone is rolling up without a fight, as manufacturers are not only expecting a turn-around in the near future, they are implementing new strategies with new product to grow future business.

According to David Forman, marketing director for Nourison, preparing for growth during times when economic indicators have been less-than-stellar is not unfamiliar. “We’re preparing for an industry rebound with forward-thinking, long-term planning.”

Nourison’s Alex Peykar added, “What makes us successful is our response to our customers, not our reactions to the markets.”

Therefore, the company has launched a promotional campaign designed to communicate Nourison’s investment in the future and its commitment to style, service and value, sporting the tagline “One Source, Unlimited Possibilities...”

The mill also plans to kick off its “Live on Fashion” advertising campaign in September, and the company will re-launch its Web site including nearly every single Nourison product and a user-friendly dealer locater next month.

828’s Morris agreed area rugs will survive and prosper, forecasting a strong second half of the year. “It is difficult to predict, but I think the rug market will improve as the baby boomers look to move into retirement communities and the 30-somethings focus on moving into new houses.” He added this will generate new opportunities for sales growth, especially with continuous strength in hard surface. “Area rugs will be a natural extension of the flooring purchase.”

The mill plans for its new Chairman’s Collection, which is a hard twist tufted line, to be very strong this year. Morris also noted the company’s entire machine-made collections continue to be strong due to price-sensitive consumers.

Milliken is anticipating a gradual turn-around. Beistline said, “The second half will be better than the first, but I don’t see it busting loose until the second quarter of 2008.”

According to the company, casual styles are still going to be what’s hot come fall, as well as natural colors. However, he said rust will replace burgundy in the second half.

Shaw Living also noted the second half may improve, but it will be slight and gradual. Curtain agreed casual looks will take over style in the area rug segment, and colors will remain neutral, but new combinations will be introduced. “As of late, the trend has been to create color combinations that are unusual and play up today’s recent color choices. For instance, the brown and blue story, the green and brown story or the coral and brown story.” He also noted the overall natural palette will be moving cooler this fall using tinted neutrals, taupes, sophisticated grays and earth tones.