New NFT Survey Sheds Light on State of the Carpet/Area Rug Market
If the comments of floor covering dealers/contractors who participated in National Floor Trends' 2002 Carpet and Area Rug Study are an apt indication, the future of the carpet/area rug segments is very clear. In a nutshell, the top three forces impacting the carpet-segment business are other flooring categories, eroding profit margins and consolidation among retailers and manufacturers.
The top issues impacting the specialty retailers' area rug business are increased competition from other flooring channels, the increasing number of big-box channels and eroding profit margins.
The biggest challenges for carpet/area rug manufacturers over the next two years are: installation services, cited by 56 percent of respondents; alternative hard-surface flooring, identified by 55 percent; product innovation, 36 percent; and ability to meet consumer demand, 25 percent (multiple responses allowed).
According to 44 percent of responding retailers, 2002 residential carpet sales will increase over 2001 due to a variety of reasons, including year-to-date sales volume (and future monthly projections); home sales, an improving economy, yearly sales increases, increased advertising; and new construction.
About an equal number of retailers (40 percent) see the carpet segment staying the same in 2002, compared to 2001, due to the following reasons: a slow economy, sales to date figures; the similarity of carpet products; and a shift to other flooring products. The remaining 16 percent of respondents foresee a drop in the residential carpet business in 2002 due to the economy and an increase in demand for hard surface/alternative products.
During almost every customer visit (according to 90.8 percent of study participants), carpet and area rugs are recommended (always/often) to customers. Consumer response to the carpet/area rug sale is very positive, according to 54.4 percent; and somewhat positive, say 38.7 percent. Consumers respond in a neutral manner 6.4 percent of the time. Customers perceive carpet selection/styling (61.8 percent) as the most important characteristic, followed by durability, 59.3 percent; quality, 55.2 percent; and price, 31.3 percent.
Dealers rate product quality (66.8 percent), product design and styling (50 percent) and customer request (45 percent) as the three top factors in deciding to sell/promote and particular brand/manufacturer of carpet. Rebates and incentives plans are definitely not important factors in deciding to sell a particular brand of carpet.
The top-selling brand of carpet by sales volume was Shaw, with 44 percent, followed by Mohawk at 28 percent. Key to Shaw's popularity were its carpets' price, style, quality, selection, and availability. For Mohawk, the dealers cited price and quality, sales representatives, and selection and availability as key reasons for its carpet products' popularity.
According to 60.4 percent of participants, selection/styling was the most important characteristic for area rug customers, followed by quality (49.3 percent), price (35.9 percent), durability (31.5 percent), and maintenance (17.8 percent). Dealers place the most emphasis on product design/styling when deciding to sell/promote a particular line of area rugs, followed by product quality and customer request. And rebate programs, incentive plans and ease of installation/maintenance are least influential in getting area rug products placed with dealers.
The top-selling brand of area rugs by sales volume was Shaw Rugs with 45 percent followed by Oriental Weavers of America at 15 percent. Selection, price and style were the main reasons dealers cited Shaw and Oriental Weavers of America. The second top-selling brand of area rugs was Shaw Rugs (20 percent), followed by Milliken and Oriental Weavers of America at 15 percent.
Separate cushion is sold for 76.2 percent of carpet sales with 18.9 percent direct glue-down, 4 percent carpet with attached cushion, and 0.9 percent double glue. Retailers said they always (79.7 percent) recommend carpet cushion/rug underlays for residential jobs. Carpet cushion and rug underlays in commercial settings are recommended much less than in residential: always, 18.9 percent; most of the time, 23.2 percent; sometimes, 39 percent; and rarely, 18.9 percent.
Retailers are specifying/selling carpet cushion with bonded/rebond/chip foam, 94 percent; fiber, 35 percent; rubber/latex, 34 percent; and polyurethane foam, 20 percent (multiple responses allowed). Floor covering dealers are seeing better-quality cushion being specified, particularly higher-density products with anti-microbials/odor-free characteristics.
Nearly 71 percent of respondents strongly agree that carpet cushion/rug underlays are an important part of the sale, and also a profitable part of the sale (strongly agree, 49.8 percent).
A snapshot of respondents' current floor covering sales by product category looks like this: carpet, 55 percent; area rugs, 3.6 percent; ceramic tile, 11.2 percent; hardwood floors, 7.1 percent; laminate floors, 7.4; sheet vinyl, 11.1; and vinyl tile, 4.6 percent. In 18 months, our panel projects sales by product category to be: carpet, 53.1 percent (down 1.9 percent); area rugs, 4 percent (up 0.4 percent); ceramic tile, 11.9 percent (up 0.7 percent); hardwood floors, 8 percent (up 0.9 percent); laminate floors, 8.4 percent (up 1 percent); sheet vinyl, 10.4 percent (down 0.7 percent); and vinyl tile, 4.2 percent (down 0.4 percent). For the commercial carpet market, 58 percent of responding retailers expect 2002 commercial carpet sales to stay level with 2001 figures due to the economy and a lack of new building.
Our carpet/area rug findings are based on responses from a representative cross-section of the dealer/contractor segment of NFT's subscriber base. The study was conducted by the market research staff of Business News Publishing Co., in conjunction with the NFT editorial staff. A sample of 2,000 active, qualified floor covering dealers/contractors was selected on an Nth name basis from the domestic circulation list of NFT subscribers. The study had a 15 percent response rate.
Editor's Note: National Floor Trends commissioned another in our ongoing series of market studies to help retailers/contractors enhance the success and profitability of their businesses. Identifying current product/sales trends and projecting the industry's future direction, is imperative to making strategic decisions that ensure growth and prosperity. The complete Carpet and Area Rug Study is available for $225 each or $195 each per multiple copies.
Topics covered include: percentage of floor space devoted to carpet/area rugs; frequency of recommending carpet/area rugs to customers; customer response to discussing carpet/area rugs; customer perception of carpet/area rug characteristics; factors retailers consider to sell/promote a brand/manufacturer of carpet and area rugs; store carpet sales per month; types of carpet sales; and top two carpet selling brands.
Additional topics addressed were: store area rug sales per month; top two selling brands of area rugs; current and projected (18 months) product mix; residential/commercial carpet sales; 2002 residential carpet sales; 2002 commercial carpet sales; issues impacting the carpet/area rug business; biggest challenges for carpet/area rug manufacturers; single most important issue facing the carpet/rug industry; carpet cushion specified/sold; frequency of recommending cushion/rug underlay; and carpet cushion as an important and profitable part of the sale.