According to the findings of Home Accents Today’s product potential report for the rug market, sales for the category will increase over the next five years by 12.6%. Long before those numbers begin to rise, however, rug manufacturers are going to have to contend with the near-term economic and operational challenges presented by recessionary fall-out, retailer consolidation, dealer financial viability and what some are calling an “oversaturation” of the rug market.

Most rug manufacturers interviewed by Home Accents Today for this article said they are feeling it right now in the form of flat 2008 sales numbers -- some a little more, some a little less.

Lynne Minchello, sales development and marketing manager for Pawtucket, R.I.-based Colonial Mills, said the company’s sales for fall, traditionally their busiest time of year, increased slightly from summer and that things are holding steady for now.

“Consumers are always looking to improve their homes and decor, but in a sluggish economy, large purchases are not feasible,” Minchello said. “An area rug is a small purchase that can have an immediate ‘feel good’ impact in a home.”

Wendy Reiss, key account manager for KAS Rugs, voiced an opinion shared by several manufacturers -- that compared to last year, some areas at the company are up, while other areas need improvement.

“All in all, based on the economy and current housing market, we are satisfied with the year as a whole,” Reiss said.

For many of the rug manufacturers, it all translates into a strategy that plays up strengths, repairs weaknesses and takes them into some new territories.

Colonial Mills is turning its domestic advantage into a focus on lean manufacturing and quick turnaround to meet a growing consumer preference for U.S.-made products. “We have an average turnaround time of only five days and great quality control by maintaining these lean efficiencies and manufacturing in the U.S.,” ,” Minchello said. “We can also offer drop-shipping and no minimum order.”

Minchello also pointed to Colonial Mills’ in-house sales staff as a key company asset. “For years, we have employed in-house sales reps,” she said. “They have not represented other lines, so their focus and knowledge has been completely on CMI, and on giving our customers top-notch exclusive service.”

Minchello said as the company produces more rugs for outdoor use, one of the biggest challenges is helping customers understand that braid is a construction, not a style. “Yes, CMI offers traditional braided area rugs, but more than half of our line includes braided-texture rugs that can be used indoors or outdoors, and have innovative contoured rectangle designs,” she said. Renaissance, CMI’s new licensed rug collection with Sunbrella, is an example of a rectangle collection. Renaissance is available in five patterns and 12 colors and, according to Minchello, is the only 100% Sunbrella rug on the market

North Carolina-based Capel is putting its 92 years of retail and catalog experience to the test with programs such as incentives, contests and new products to motivate dealer sales personnel and the company’s new sales organization, according to Allen Robertson, Capel’s vice president of sales.

Capel is also quick to respond to changing consumer tastes and preferences. Across the company’s broad assortment of products, designs and price points, Robertson said he’s seeing customers gravitate to simpler designs with fewer colors.

“Classic designs continue to do well, and we are seeing a growing interest in transitional patterns,” he said. “We are also addressing the market’s interest for more value priced goods.” Capel has responded to a growing designer market by upgrading its showrooms and adding a new showroom in San Francisco. “We also offer the design trade 24/7 electronic ability to access product information.”

Improving electronic access for buyers has also been a major focus at Surya, where the product line has expanded to include coordinating pillows, throws, wall decor and lighting. President Satya Tiwari said he sees the company’s current technology upgrade as a long overdue improvement. “It is funny, we think of our company as forward-thinking and in tune with the world’s fast pace but we realized that our technology was really behind some of our competition,” Tiwari said.

Tiwari said the initial launch of the upgraded Web site will include the complete catalog and current inventory, presented in a way that facilitates the selection of rugs and coordinating accessories. The second phase will enable Surya’s customers to log in and check their account status, and place and track orders.

“The whole idea is to build a place where retailers and consumers can get an in-depth view of all of Surya’s capabilities and offerings, which is very hard to do in our print catalog,” Tiwari said. 

With regard to style and design, Surya will continue to use metallic fibers in 2009, combining shine and matte in tone-on-tone colors, for “a soft elegance.” Tiwari said the company also plans to bring out more nature-inspired and eco-friendly products.

“We will be using all-natural wool in our Eco Rug collection,” he said, “No dyes are used, but natural wool provides us with a beautiful palette of shades of ivory, gray and brown … and different shades of blues and cooler greens are entering the Surya palettes.”

Greens and blues have always been top sellers at Colonial Mills, but Minchello said neutrals and brighter colors are selling more as consumers use rugs in outdoor decorating.

Neutral color palettes with a metallic emphasis are also strong at Capel, and Robertson said classic menswear weaves, geometrics and oversize florals continue to be popular patterns.

“Current colors are being influenced heavily by brown, blue or grey -- these undertones are creating some moody, sophisticated shades,” he said. “And reds are mixing with orange for spicy, brick combinations. “

At KAS, Reiss said textured and casual, relaxed looks continue to do well for the company. “Also, poly-acrylic in either handmade or machine-made is becoming quite popular,” she said.

KAS also added a showroom in Las Vegas in 2008. “I think with five showrooms, we are set,” Reiss said. “We are, however, now doing the Carpet One and Flooring America shows, which we are happy to be involved in.” 

Surya is going to be offering several new retail display solutions for its customer in 2009, including a corner sample display that can hold any combination of rugs, pillows and throws. A second display, in the processed of being finalized, is a custom rug order rack.

“Consumers will be able to choose from more than 200 set designs and color them with a selection of 100 colors of wool and 15 colors of silk/viscose,” Tiwari explained. “The design work will be done in the retail store with a computer program where the customer can see color changes live on screen. The unique thing is that the consumer can choose the quality, how they want the rug made -- hand tufted, Tibetan hand-knotted, Indo hand-knotted or flatweave.   

Tiwari said it’s all part of his company’s plan to become a complete accessory source. “We will continue to develop our lineup to become more valuable to our existing retailers and find great ways for retailers to sell more product with a smaller investment,” he said.

As for economic recovery, most of the rug makers are hoping to see a positive turnaround in the market beginning around mid-year. Until then, quick delivery and aggressive marketing will be necessary just to maintain current sales volumes.