Issue Date: 2019 MAY, Posted On: 5/16/2019

05162019 Rugs First Half Report: Flooring Retailers See Reason for Optimism
By RugNews.com


SPECIAL REPORT -- Specialty flooring dealers are reporting slightly better than expected numbers for rug sales through the first four months of 2019, citing a robust economy as well as the ability of rug manufacturers to deliver on fashion and design.

Phil Koufidakis, president, Bakers Bros.

While the going is still tough in this increasingly online world for rug transactions, some flooring dealers are seeing better results than the year-ago period. Then again, the flooring retailers who typically do well are those that are fully invested in the category. That would include Baker Bros., which has seven locations in the Phoenix metro area, and prides itself on being the top dealer in the region for area rugs. "We are up about 8 percent in rug sales versuses last year for Q1," said Phil Koufidakis, president of Baker Bros., a full-line dealer. While Koufidakis said the growth of hard surfaces is somewhat contributing to the growth, for his business "rugs are a before during and after add-on sale. We are seeing a want-it-now mentality, so our inventory position really helps."


Gerry Yost, director area rugs and window treatments, Avalon Flooring

On the East Coast, Cherry Hill, N.J.-based Avalon Flooring, with 14 locations in three Mid-Atlantic states, has experienced a slight increase in sales in the year-to-date period. "The January market provided a much-needed boost to style and colors that have added excitement to our selections that fit into the new style trends that customers are seeing in print and TV," said Gerry Yost, director -- area rugs and window treatments.

Avalon is another full-line flooring dealer that sells an extensive amount of hard surface. Yost said the hard surface trend has helped rugs a little bit "but not to the extent we would like. The demands on our customer's time make them very hyper focused on selecting only what they came in for at that time."

Yost observed there are both good and bad forces impacting today's market for dealers like Avalon. "The bad is the race to the bottom on price points. The good is more customers are coming to retailers like us because they bought a bargain rug and now would like something better and need help choosing a rug that will complement their décor. Also, the rug manufacturers are really delivering on fashion and design. There are a lot of good-looking rugs that are new for 2019."


Sam Presnell, owner, The Rug Gallery

Due to the channel shift from brick-and-mortar stores to an e-commerce model -- a model that better suits the emerging consumer demographic -- everyone from manufacturers to retailers has had to devise new strategies to compete
and succeed in this new retail environment. Sam Presnell, owner of The Rug Gallery in Cincinnati has been trying to merge the online and physical worlds, albeit with limited success. He said his digital traffic "is off the wall" good but is not correlating to in-store traffic. As for real numbers, his sales were off 9% in the first quarter of 2019. "We had a good start in 2018 but fell off as the year progressed. I hope the opposite happens in 2019. We will see." Presnell said he is having difficulty with getting peak-earning customers between their 40s and 60s coming into the store.


Miriam Thompson, co-owner, The Rug Rack & Home Decor

Miriam Thompson, co-owner of The Rug Rack & Home Decor, in Chattanooga, Tenn., is reporting almost identical sales figures for 2019 vs. 2018 at this juncture, which she said is good news. "A few of our sales have come from new homeowners, but mostly those remodeling or redecorating. In my opinion the influencing factor in the rug market today is the lower price point synthetic rugs. A third to half of our sales in the first quarter are better goods in the hand knotted category to home owners who appreciate quality and the longevity that these products offer.  The seasoned or educated consumers appreciate selection, service, knowledge and experience that goes along with the shopping for this type product."


Margie O'Krent, rug buyer, O'Krent's Abbey Flooring

O'Krent's Abbey Flooring in San Antonio, Texas, has been around for more than 100 years and has a proud history in the rug business. But even so, business has become more difficult over the last handful of years with the explosion of online retailers. That's according to Margie O'Krent, rug buyer, who observed: "In order to deal with this consumer change, we have in turn focused increased efforts on custom rugs made from broadloom carpet in order to maintain margin and retain our hard surface customer's rug business. In doing so, we have been able to keep our area rug sales volume flat in a year over year comparison."


Steve Weisberg, president, Crest Flooring

Some dealers would be happy with flat sales year over year. Crest Flooring in Allentown, Pennsylvania, which operates a very large area rug department, has struggled to stay in the black when it comes to rugs. "I am surprised that with the growth of hard surfaces, that more rug sales aren't being made," said Steve Weisberg, president. "I still offer $100 rug coupons to those customers who buy hard surface, but with Wegmans, Ollie's, Depot, Lowes, etc., plus the Internet, selling rugs can be a challenge."

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