From Furniture Style Magazine: A Great Article About Area Rugs

This is from Furniture Style magazine, a great trade resouce for furniture retailers that also has many excellent articles on home styles and fashions.   I have not yet asked for permission to reprint this article by Nancy Robinson, but I will do this shortly and hopefully they will let me keep it up!

Retailers explain why area rugs are hot sellers
Nancy Robinson

No lifestyle merchant’s product lineup is complete today without a healthy offering of area rugs, the single most important accessory in furniture stores from the standpoint of both consumer demand and sales volume. In fact, it’s common for area rugs to generate more dollars than any other category, except furniture. Retailers who have successfully developed the rug business say those who underestimate its volume potential are missing out on a robust market that’s been in a major growth mode.

“The biggest driver is the amount of new hardwood flooring going into homes in the last 10 years, as opposed to wall-to-wall carpet,” explained Bob Price, Vice President of Merchandising for Art Van Furniture. “Hardwood flooring has continued to increase and is probably the biggest single reason for the increased need for area rugs.”

Bob Batt, Vice President of Nebraska Furniture Mart, also attributes much of the category’s growth to improvements in design, coloring, manufacturing methods and even price points, all of which have conspired to transform a somewhat traditional and stodgy market.  “Fifteen years ago, the business was still somewhat crude,” Batt noted. “In the last 10 years, the changes due to innovation have been total and huge.”

For these reasons, as well as the product’s pivotal role in room design, the rug category is key at Nebraska Furniture Mart. In fact, “it isn’t just one of the best accessory categories—it is the best,” Batt said.

“Area rugs are much more important components to decorating a room than a lot of people give them credit for,” Price noted. “Think about all the things rugs can do. They add design, they add color and in larger sizes, they can even become the focal point in a room.”

Because of this, the need for coordination with other home furnishings categories at the front end is of paramount importance. Unlike many other accessories that can be bought independently, area rugs must work well with the furniture that’s being shown from the standpoint of color, style, size and price point.

“As the merchandise manager, one of my roles is to make sure we’re buying related merchandise, so that when it gets on the floor, it looks like we have one point of view,” Price explained. “When we put in a new furniture item—a new sofa, a new bedroom or a new dining room—we actually plan a specific rug to that group so they work in style and color.”

To that end, Art Van’s rug buyer is included in buying meetings to view furniture drawings and fabric swatches, etc. “That way, it’s all coordinated before we buy rather than scrambling around trying to find something to put with the furniture when it comes in,” Price said. “Four critical components have to be right: color, pattern, style and size. When those components are in balance across the entire assortment, that’s when merchandise turns.”

IKEA takes a similar approach to buying and merchandising rugs, which is a key reason for the category’s success, according to IKEA Textiles Sales Leader Patti Crawford. “Our rugs are totally coordinated and developed to the furniture offer we have in our stores, so you can complete your room’s whole look in one stop,” she said, adding that the pricing structure is such that that it’s possible to get both a rug and a sofa “at IKEA for the same price as just a sofa at other retailers.”

Indeed, rug buyers emphasize that in addition to complementary design and color stories, it’s essential to hit the right price points. As the buyer for a major East Coast furniture discounter explained it, retailers have to find the right ratio between the price of the rug and the furniture. It’s been his experience that consumers aren’t of a mindset to pay more for the rug than the furniture in the room.

And that is a change from the previous generation of rug buyers, many of whom viewed rugs as major investments. “With exceptions, the days of the $8,000, $10,000 and $12,000 rug purchases are not around anymore,” observed Nebraska Furniture Mart’s Batt. “People today don’t buy rugs to hand down to their children. I’ve had rugs for 25 years, but that’s not what my daughter wants. Her generation wants contemporary fashion, but without spending much. We call it ‘urban disposable.’ These are very hot, very contemporary looks with a short shelf life. The hardest thing an older buyer has to learn is how to market to consumers younger than 30.”

So, what are the magic price points when marketing to these consumers? While prices vary according to size, of course, the volume price points are well below $1,000 in most middle-market stores.

At Art Van, the sales graph takes the shape of the typical bell curve. As the size and price of the rug gets bigger, the demand for the rug gets smaller. The vast majority of business is done in sizes 5 feet by 8 feet and 6 feet by 9 feet. The volume price points: $399 to $499 for rugs measuring 5 feet by 8 feet and 6 feet by 9 feet; and $699 to $899 for rugs measuring 8 feet by 11 feet and 9 feet by 12 feet.

“As with furniture, I don’t think people are buying these products as investments to last 40 years,” Price concluded. “That’s one of the biggest differences we’ve seen as younger buyers come into the market.