NFT Carpet and Area Rug Market Study: Soft surface holding firm
October 1, 2006
The carpet and area rug segment continues to stand its ground as a dominant force in floor covering-but it is also a category on the move. New stain fighting technology, a more daring palette of colors and an invigorated approach to consumer marketing have helped keep the business rolling at a time when hard surface products are making broad strides. There are also strong indications that manufacturer warranties are a major selling point.
The results of National Floor Trends' new market study on the carpet and area rug segment come at a time when the category is being challenged by a number of factors. For one, there is an aggressive push underway to lure flooring consumers into hard surface areas. Also, the rising price of petro-chemicals is hitting the carpet business particularly hard. Apart from the increased transportation costs and higher prices for such raw materials as resin, fuel costs have caused a spike in the price of underlayer products. Taken in this context, the survey results are likely to be seen as highly encouraging to those involved in the soft surface side of flooring.
The market study indicates that many retailers and contractors continue to see carpet and area rugs as the backbone of their business; more than half reported that they devote at least 50% of their floor space to carpet and area rug displays or inventory. Asked how often they recommend carpet and/or area rugs to customers, 90% of the respondents said always or often. Their forecast for next year was also upbeat. Forty percent said they were anticipating an increase in the category while 43 percent said sales would stay about the same.
The survey for the first time also includes questions about the role warranties play in the sale of carpets and area rugs. The responses suggested that they play a big role, particularly for those trying to close a sale. Asked specifically about the role of warranties as a sales tool for associates, 89% of the respondents said they were either somewhat or very important. And how do consumers feel? Given the choice of high, medium or low, about half those in the poll said consumers place a high value on warranties; 43% placed the value at medium. Only 9% said it was low.
The carpet and area rug segment also stands apart from other types of flooring when it comes to determining category leadership. Areas like hardwood and resilient may be highly fragmented with no clear cut market leader but among carpet and area rug suppliers there are two clear leaders: Shaw and Mohawk. Still, that does not mean there is no room in the carpet business for other suppliers. In each area, 15 to 20 other brands names were offered as a No. 1 selling brand. The findings suggest that a number of companies have successfully carved out a small but viable niche in the market.
In the residential product area, 41% of the respondents identified Shaw as their top-selling brand while 32% said it was Mohawk. When the question zeroed in on the commercial market, Shaw still garnered the same 41% share, and Mohawk's was still the second leading brand, named by 25% of the respondents as their top commercial brand (in both the commercial and residential segments Beaulieu was named as the top-selling brand by 9%). In area rugs, Shaw was named by 42% of the participants while Mohawk was named as the top seller by 9% of those surveyed.
Still, when the question looked at issues impacting the business, the answers mirrored the concerns seen in other segments of flooring. The No. 1 concern in the carpet business is eroding profit margins, which was identified by 64% of the participants. Other bugaboos include increasing competition from other flooring channels (50%), the popularity of other flooring types and the growing influence of big box retailers (each identified by 44%)
While the survey looked at all soft surface products it is clear that area rugs account for only a small portion of the category's dollar volume. While nearly half (46%) of the respondents said their carpet sales were in excess of $500,000 a year, only one-fourth of those participating said they generated more than $25,000 from the sale of area rugs. Also, the median price of a carpet sales was pegged at $2,000 compared with $400 for an area rug.
Other finding in the survey included these:
- Only 5% of the respondents said they sell carpet via the internet while about 27% said they use the Net to place orders with suppliers. On average, they also allocate about 5% for their ad money for online advertising.
- Among those who do sell over the Internet there is no clear consensus on the profitability of their efforts. Asked if the profit was higher, lower or about the same as their in-store sales, each answer received about 33% of the responses.
- Newspaper and the ads in telephone books are by far the two most popular ways to advertise. Together they account for about 75% of the ad allocations.
- Quality, design and price ranked as the top three considerations for those in either the residential or commercial market. The No. 4 response, however, differed. In residential it was distributor service/support. In commercial it was ease of installation/maintenance.
- Another area where there was wide agreement involved the manner in which retailers dealt with the recent wave of price increases from manufacturers. Eighty-four percent said they passed the costs along to consumers.
Editor's Note: The findings included are a snapshot of the 2006 NFT Carpet and Area Rug Market Study report. The full survey is now available from the BNP Media Market Research Division for $250 and can be ordered by contacting Cory Maxwell at 248-244-6415.
The Carpet and Area Rug Market Study was produced using a sample of 2,000 active, qualified flooring covering dealers/contractors, selected on an Nth name bases from the domestic circulation of NFT subscribers. The survey was sent via U.S. mail earlier this year and generated 240 usable returns for a response rate of 13 percent.
The survey was commissioned by National Floor Trends as part of our ongoing series of market studies designed to help flooring retailers and contractors enhance their success and profitability. The study identifies current product and sales trends, and projects the industry's future direction. It also reports on the top attributes affecting brand purchase decisions and customer ratings of carpet and area rugs. The full study also includes verbatim comments related to several areas including reasons for carpet and area rugs popularity.
Other survey topics include: floor covering sales per month, per retailer; percentage of floor space devoted to the category; frequency by which dealers recommend carpet and area rugs; customer response; and the frequency of customer complaints; customer perceptions of carpet and area rugs; top selling brands; a ranking of various attributes that affect the decision to sell/promote a particular brand/manufacturer; issues that effect the future of the business; the biggest challenges facing dealers and manufacturers and expectations for the future of the category.