Bath Rug Suppliers Find Shortcuts to Offset Price Pressures
Cecile Corral -- Home Accents Today, June 14, 2012
NEW YORK - Bath rugs have not had the same success moving retail price points as other less discretionary businesses. Maybe if bath rugs were edible, the story might have been different.
While consumers are paying higher grocery prices for reduced product quantities in smaller packages, the same is not true for bath rugs - and some key category suppliers are baffled.
Long-standing price points of $9.99, $12.99, $14.99 and $19.99 remain stuck in those slots even though the cost of doing business went up last year and the year prior, due mainly to increases in raw materials.
To compensate for retailers' resistance to ante the ticket, suppliers have been forced to make product adjustments in size and construction and enhance the value equation to keep shoppers interested.
"The mentality, particularly in this economy, is not to raise prices," said Arnold Stevens, vp, Maples Rugs. "Now, it is funny because in food and other things, you look and see [suppliers] get the prices they want."
Maples has responded by enhancing its product development strategies, he said.
"For example, instead of downsizing the rug or talking quality out, we might advocate a change to the rug and that change would give great value to the customer and also the retailer," Stevens continued. "We look at those types of things. That is a way to try to expand your market without trying to do other things. With that said, through product development we are able to, in certain cases, keep value of the rug and importance of program."
Mohawk Home addressed raw material price increases last year through size and construction changes, said Bart Hill, general manager of bath and area rugs. "There have been a lot of size changes in the market."
Whereas a 21-by-34 was the lead size in bath rugs pre-recession, today the most popular sizes include the smaller yet like priced 20-by-34 and 20-by-32, suppliers said.
"We didn't get many retail increases, but we were able to make some small size reductions to hit the same retails," he explained.
Taking away from product to meet ticket price demands hasn't always worked.
Faze 3 Ltd. vp Joe Shafran noted that "when a product was de-specified to maintain a retail price point we did see a bigger fall off in those situations. It suggests that the consumer evaluated the value versus the price."
That's not to say the company has shied away from making changes in its own line.
"We have developed alternative products that provide a better value for our customers," Shafran said. "On the man-made side we continue to see growth in micro polyester bath rugs as customers recognize that its attributes offer benefits to their customers. With cotton pricing stabilizing there is movement in that area to build better, higher weight products to demonstrate value to customers. Cotton pricing should remain relatively stable, but with the experience we've had one is always a bit wary that speculation may arise again."
While Shaw Living's bath rug assortment focuses solely on synthetic fibers, the company, too, is cautious about its outlook for this year.
Asked about any issues impacting the business over the past year or expected this year, divisional vp Jeff Brown responded: "Just the competitive market and concern of consumer demand with a softening again in the economy."
That said, "soft with great value is still the play" in trends, as well as "more lower lusters with big hand," Brown added.
The boom in memory foam bath rugs offers proof that softness matters. A relative newcomer to the category, it perseveres into 2012.
Suppliers and retailers alike see the memory foam construction as a successful add-on business at better-bracket price points: $14.99 to $19.99 for a 17-by-24 size and $19.99 to $24.99 for a 20-by-34.
"Memory foam actually elevated retails in the market," Hill said. "These rugs sell at smaller sizes but higher prices - 25% to 30% more for an equivalent product - and that is because the customers really respond to the foam aspect, the cushioning. They respond to the difference and the innovation."
Memory foam rugs offer a thick, cushioned underfoot that justifies a higher. As a result, "almost every major retailer had a presence in memory foam," Hill said.
In 2011, Hill said the memory foam segment of the business went from "basically non-existent to about 10% of the market - a big jump."
But this year that growth may level off as new innovations move into the market, he warned.
"It's flattening out because most of the business is done promotionally or on an end-cap," Hill said. "So now, we think memory foam will make up about 8% of the market."
In dollars that translates to about $72 million out of the estimated $900 million bath rug industry in sales.
With the emergence of micro polyester in bath rugs as a new offering, nylon's dominance has somewhat decreased to 70% of the business from its peak at 80% a couple of years ago, suppliers said.
But the top category suppliers, all of whom employ nylon, are working to develop new innovations to reclaim the fiber's presence at the store level.
Mohawk Home, for example, is creating new programs that can compete more aggressively against memory foam and soft micro-poly products.
Maples continues its partnership with Invista and has developed a new collection dubbed TruSoft that hits a better retail with improved tactile qualities.
"This year, we think prices will be increasing with newness and better quality out in the marketplace," Stevens said. "Just selling the same thing at a higher price doesn't always work. But newness and adding value to a program can get a higher price - and that is what we are doing."
Bath rugs from Mohawk
Maples Rugs is trying to move bath rug retails up with differentiated constructions such as the TruSoft program seen here.