Rug vendors see higher price points and a growing Internet in future

By Tracy Bulla -- Home Accents Today, 2/1/2005

An optimistic mood marked the beginning of 2005 at the Atlanta International Area Rug Market. Busy showrooms, innovative merchandising programs and a trend toward rising price points all contributed to the positive overflow, stretching from vendors to manufacturers.

Contemporary/transitional designs continue their hold on the marketplace, offset by the beginnings of reinvented classic and traditional designs that will surge ahead in markets to come. Licensed rug collections created a strong presence, including several newcomers on the scene, showing that licensing is a healthy and viable segment of the area rug industry.

Over the past few years, lower price points have been in the spotlight, but it seems the trend may finally be reversing itself.

"The one thing we are hearing from retailers is that price degradation is creating problems for them," said Jonathan Witt, vice president of marketing for Sphinx by Oriental Weavers. "They are having to sell a lot more units to make the same profit." Witt noted some of the company's higher-priced offerings have sold well over the past six months. "A few years back, there was a lot of pressure to drop prices, but now people want to go back up in price — that's a good thing for the economy."

Edward Chu, president of Homefires, agreed. "I hear in the industry that high-end rugs are doing well this market. I think prices are turning around."

Much like in the lighting industry, where Chinese imports forced prices lower and lower and eventually bottomed out, rug vendors are focusing on overall design and quality as the way to attract business. Additionally, manufacturers are stepping up their efforts to reach end consumers, particularly via the Internet, and creating marketing tools to aid their retail customers with sales.

Putting the power of the Internet to the test, Milliken placed its January introductions for sale on a consumer Web site, wheedling down the designs based on consumer preferences. The initial 24 designs were culled down to 20, with the colorations whittled down to five.

At the very least, the Internet offers to both the rug manufacturer and retail store a cost-effective promotional tool for displaying more rugs than could ever fit in a store, making it ideally suited to the rug industry. "I have thousands of designs, but it's too expensive to merchandise," said Brian Denning, brand/market manager for area rugs at Miliken. "The Internet provides a medium that I can put them online."

The Internet provides a wealth of information regarding price points, styling, and so on that may or may not result in an online sale, but could send the Web-savvy consumer directly to the store to purchase. Most rug vendors use their own Web sites as an informational tool, referring consumers to stores or dealers in their area. Couristan recently launched a new Web site which relies on marketing research to connect with buyers and consumers. It includes decorating tips and design solutions for today's homes in an easy-to-read and understand format.

There is a certain amount of curiosity about how big a role the Internet can play and how much will actually translate to direct sales on the Web. "I think Web site sales and Internet companies are growing," said Bud Edie, vice president of marketing for Homefires, "but also sales are increasing among traditional brick-and-mortar stores that have added a Web site to their business."

Rug vendors are also focusing their energies on other marketing tools that will speed the selling process like in-store sales training, new and improved display racks that showcase multiple swatches in smaller and more compact spaces, consumer catalogues and other creative approaches like Karastan's Extreme Makeover program for retailers and Milliken's new Easy Change custom color system. Easy Change allows consumers at retail locations to recolor selected rugs online from a color palette of 140 selections.

Dan Westervelt of Westervelt Studio and a member of the Color Marketing Group, delivers lectures to the flooring industry on colors and how they affect the consumer by acting as a "trigger," spurring a purchase at retail that is essentially based on emotion. "We are adding a layer of concept to the process of selling, giving retailers factoids but making them aware on a concept level," Westervelt said. "You can understand color and product, but not that many people can see it on both sides."

While licenses come and go in all parts of the home accents industry, the rug sector is thriving on licenses at the moment. New collections this market such as the Bob Mackie Collection for Hellenic and the Primitive Legacy Collection for Delos (based on Primitive Twig wall art, featured in the Sundance catalog) debuted to glowing reactions. "Bob Mackie is a hit — a total home-run," said Steve Mazarakis, president of Hellenic. "Our focus was to get Bob Mackie galleries across the country which we now have."

Trans-Ocean, which introduced the licensed Lillian August and Winterthur Collections at the October International Home Furnishings Market in High Point, sought collections that would balance the licensed Liora Manne Collection with different style sensibilities, such as the Americana point of view portrayed in the Winterthur Collection. In April, the vendor will debut the licensed Kelly Hoppen collection.

Sphinx, which has introduced both the Andy Warhol and National Geographic Collections, is extremely positive about its first licensing ventures. "Warhol has been huge, huge," said Sphinx's Witt. "It has exceeded our expectations more than anyone could imagine. Our goal with licensing is that the rugs are beautiful and stand on their own, and the name is the icing itself."

Great designs and quality seem to be as much a factor in the success of a licensed program as the personality or brand across the board, no matter how well known. "You have to find the right license and know you can develop a great product," Witt said.

Trends at the rug show spotlighted highly textural designs, created through high-low definition and a continued focus on contemporary/transitional designs, such as blocks, squares, organic shapes and Mondrian-inspired designs. Ombre and subtle tonal variations added low-key depth to simpler designs. Primitive/tribal motifs and Art Deco influences also made statement-worthy appearances.

From a color perspective, plums and softened purples surfaced as trend-right, often paired with warm combinations of cinnamon, pumpkin, salmon, maize, mocha, sand and scarlet for a rich, lush yet subdued feel. Liora Manne says the key is to be harmonious, not sharp with color by using bright colors that have a neutral feel to them. Pale turquoise and washed teal teamed with an array of browns, accentuated with a hint of avocado or lime for newness. Especially in more classic designs, colors hint of a vintage or antiqued palette with plenty of depth yet subtly refreshing and not too overpowering.

Reinvented traditional and classic designs begin to surface in reaction to contemporary designs. Karastan's new Aria Collection translates damask patterns into patchwork with a much more casual flavor and a patinaed color palette. "Aria is a fresh take on classic design." said Anne Carley, marketing director. "Classic looks are still important, but there is a trend toward relaxing them. The inspiration can be classical, but the translation is updated with color and texture to make it new."

Large-size rugs are also the big news, literally, at several showrooms this market. Capel released a new stocking program for its Belmont Collection, featuring oversize rugs up to 14 × 21 feet. "It's been a huge success being able to show oversize rugs and ship in 2–3 days," said A.L. Len Capel Jr., noting these rugs appeal both to consumers in newly built homes with great rooms and such, but also to people living in older, historic homes like Victorian designs that tend to be large. Shaped rugs continue to be a big seller at market.

Ombre effects lend depth and sophistication to New Moon's Tattoo Rug, below, part of the Mirage Collection. eLink 562

Part of the Kathy Ireland Home Innovations Collection from Shaw, above, giant poppies illustrate this season's trend toward bold, overblown blossoms. eLink 559

Lush color creates richness without overwhelming in Trans-Ocean's organic design from Liora Manne. eLink 555

By Rugs America, trend-right blocks showcase one of the hottest color combinations around, varying shades of orange, red and purple. eLink 563

Citron green accents blue in a modern interpretation from KAS. eLink 558

A bold mix of blocks and circles add a flair for geometry to Momeni's bordered design. eLink 561

Shades of purple stand out in Milliken's updated traditional Pastiche Collection. eLink 503

Tribal and aboriginal motifs add a touch of whimsy to the licensed Primitive Legacy Collection from Delos. eLink 557

A Deco-inspired border highlights this bold pumpkin-hued design from the new licensed Bob Mackie Collection from Hellenic. eLink 560