When considering a history of home accessories, area rugs would be found in the earliest pages. But recent improvements in power-looming and hand-tufting are bringing this time-tested category onto a new page of style and color possibilities.

Consumers, driven by fashion and value, are shopping for alternatives to the heirloom hand-knotted rug. “There's been a greater category created in that mid-range,” said Dale Sweary, senior vice president of Feizy Rugs in Dallas.

Looking back on the past year, “the rug business in general has held its own as compared with furniture,” said Bruce Hric, president and CEO of Capel Rugs in Troy, N.C.

But, he added, the climate has been challenging. “I consider us to be in an economic correction. Housing and building were all burning red-hot for a couple of years. The challenge for the retail side is to get the customer into the store and keep the dollars flowing.”

Sales for area rugs overall were $5.2 billion in 2005 and expected to grow a modest 3% in 2006 to $5.4 billion, according to Home Accents Today's exclusive 2006 Universe Study. Sales for 2007 were projected to rise to $5.5 billion.

Alex Peykar, president of Nourison, based in Saddle Brook, N.J., said for manufacturers, the challenge is to help retailers succeed in an environment of modest gains. “Our efforts need to be concentrated in ensuring their profitability,” he said.

“Fortunately we're in a marketplace that is still the strongest market in the world,” he said. Yet, 2007 “was a tough year. We expect '08 to be still as difficult as this year. We had set goals for ourselves to have double-digit increases — that did not happen.” Given the news and economy, however, he added, “we've had a better year than what you hear in the news by far.”

Handmade natural-fiber rugs are still far and away preferred by customers. But the rise of quality in hand-tufted rugs is offering consumers a more affordable alternative to knotted rugs.

“Our best-selling rugs tend to be tufted,” said Lou Webster, director of product development and design for Capel Rugs. “From a design standpoint, this construction can contain most any color you wish because you're not locked into certain creel colors (as with machine-made rugs). There is a lot of flexibility for design, too. Depending on the fiber content and finishing, a higher-end tufted rug can compete style-wise with some hand-knots. With price points becoming more sensitive for consumers, tufted rugs offer terrific style at a good price.”

Hand-tufted rugs offer looks and materials similar to hand-knotted rugs, but the production process is different — and the price points substantially lower. Reza Momeni, principal of Momeni in Carlsdadt, N.J., said, for example, a 6x9 mid-priced hand-knotted area rug costs an average of $1,500 retail. A hand-tufted rug, on the other hand, costs about $700.

Peykar said that while the market for traditionally styled rugs will not wane, transitionals and more casual designs are gaining popularity. One of Nourison's strong suits has been helping to take the industry to a more fashion-conscious level, adding fresh colors and styles to the marketplace. This, he said, overrides even construction among consumer preferences. “What they go for is fashion and design,” he said. “Color dictates what sells.”

Sweary said color is also a significant driver in the traditionals and transitionals that are Feizy's most popular sellers. “You have to be on the edge with color and design, but not over the edge. That's a fine line,” he said.

“Trends are showing consumers are looking for softer looks with subtle shading,” said Michael Riley, president of Oriental Weavers USA in Dalton, Ga. “Traditional designs are moving toward open fields and modern colorways. In recent months, Riley said, the company has “launched several new lines such as Amherst, Luxor, Samarkand and extensions to our ever-popular Ariana collection that are right on target with what's happening in the marketplace.”

Webster said among machine-made products, technological improvements are increasing quality. “In the past three years, we've seen quality improve from 1 million points per square meter to 1.2 million, and now 1.5 million,” she said. “Obviously, this opens the doors for more complex designs. Colors, too have improved. In the past, a five-color creel was typical; now we're seeing eight-color creels as standard.”

The Andy Warhol Home Collection, part of Oriental Weaver's Sphinx line, is best known for machine-woven rugs, from scatters to “mansion size,” and it also does unusual shapes such as octagons and rounds, Riley said. “We're also an innovator of color. Sphinx uses up to 55 colors in machine-made patterns and are unlimited in the use of color with our handcrafted lines.”

Manufacturers have taken this quality boost and run with it in new directions. “The outdoor segment is probably the hottest segment out there right now,” said Capel's Hric of poolside and patio rugs. “People are seeing that as a part of the home they really haven't spent large dollars on before.”

New supply markets are emerging, too. “In terms of the colors themselves, it is important to mention that European mills are becoming more sensitive to U.S. color preferences,” Webster said. “Today we see more fashion-forward combinations like brick, olive and mocha, where before we might have been limited to ruby, emerald and navy. It is definitely an area to watch.”

With winter markets opening this month, new rugs are at the ready. Sweary noted Feizy's plans to introduce several new power loom pieces “that will bring on much more fashion-forwardness to that particular segment.” The company has also expanded into the bath and spa arena and plans several additions to those lines this season.

Webster said Capel will introduce Artscapes, a watercolor-inspired design in an all-wool Indo-Nepal type weave; Chintz Garden, a decorative floral in a wool micro-loop construction; and Varuna Zieglar, a hand-tufted piece in all-wool. “Also, we will introduce two new colors in our Tibetan Treasures collection,” she said. “These rugs are hand-knotted in 100% New Zealand wool. New for our Tropicale collection are two new colors, sand and cocoa. This is a poly-acrylic loop hook construction with bold leaf styling.”

While Nourison is planning more wall-to-wall products, this year, Peykar said, there will also be an assortment of new area rugs. The company, which is an industry leader in inventory, will be keeping its nearly 1 million stored rugs at the ready and encouraging their retailers to use this backup to their advantage, to choose best sellers in their markets and to order them one at a time rather than have to stock them. He said this helps retailers keep an edge with consumers. For them, he said, choosing a rug for a specific room “is like seeing a pretty dress – can I get it in my size?”

Offering a range of sizes is a key focus at Oriental Weavers. “We have increased inventory so as to maintain 96% or better service levels at all times,” Riley said.

Some consumers and retailers are also asking for green products, and rug makers have several products to offer. “Natural fibers are going to drive your business,” Hric said. “It ties back to this whole environmental push – all of that is getting more airtime and gaining popularity.”

Capel offers Ragtime, a wool-blend rug that incorporates recycled yarns from the company's Troy facility. Earthright, another eco-friendly rug, is cotton chenille made from organically grown cotton.

Sweary said “green is important for anyone today. With some of the dyes used, it's really difficult to say your products are truly green.” But he said Feizy offers a few products that are 100% green, including a wool rug on a cotton base that contains no dyes – the white, golden brown, dark brown and black hues comes from carding wool from different sheep. “You're still pretty limited; there are only so many colors of sheep,” he said.

Where green as a concept is going is unclear, Peykar said. “The whole meaning of green is being twisted in directions, which, if it continues, makes it meaningless,” he said. In an industry based on wool, cotton and natural fibers, rugs made from recycled plastic fiber, for example, seem to get around the true meaning of green. “I am a little disappointed,” he said.

Riley said that while naturals are more popular thanks to the green trend, “consumers are also looking for livability. Polypropylene is perfect for today's active households. Families want style that complements their lives.”

Momeni said rugs “are considered eco-friendly because they last for a long time, some as long as a hundred years. Handmade rugs are the most eco-friendly product in the home.”

Alex Peykar

Lou Webster

Bruce Hric

Dale Sweary