Area rug sales at the higher end continue to be a bright spot. Clockwise, from top left, Amer's hand-knot Milano
collection rug (MIL4); Jaipur Living, Cambridge collection, CMB02; Couristan Halli collection, H653; and
HRI's Majestic Oushaks.
SPECIAL REPORT – Following two years of the unexpected, a constant refrain heard in the area rug industry was the “new normal” -- where old models of doing business went out the window and the unpredictable became the norm.
And 2022 proved no exception: just as the industry was returning to some semblance of “normal”, the brakes went on. And then sales unexpectedly shifted from area rugs flying off virtual and big box shelves to a slowdown in those channels. Though pandemic supply chain challenges had finally eased so that area rug importers could provide the inventory demanded by retailers, the war in Ukraine and inflationary pressures prompted a dramatic drop in not only consumer confidence but spending as well.
Many retailers and area rug executives expect a bumpy beginning to 2023, nonetheless, they anticipate that by the second half of the year, the market will stabilize. What's more, many continue to see growth on the high-end side of the business, including custom and broadloom, despite the slow down at e-commerce and big box retailers.
RugNews.com surveyed key rug executives from a range of companies -- from machine-made domestic manufacturers to hand-knot specialists – to track performance across the board in 2022 and look ahead to what is expected for 2023. Don't miss Part 2, where the coverage continues.
AMER
Amer Rugs, returned to High Point Market in 2022, showcasing its latest hand-knotted collections and high-quality machine mades. "We did very well overall as a company in 2022 and saw growth in spite of some economic challenges," Raj Choudhary, said. "But of course, 2021 was an exceptional after Covid when people were all home and wanted to redecorate their spaces for both work and family. There was nothing surprising about the trend of sales returning to normal.
Choudhary noted that the company performed "very well" on the retail-side of the business, with Amer adding some major accounts. Nonetheless "e-commerce remained the driving segment."
"Retail will perform well in 2023 -- better than 2022 -- as we see good momentum, especially with hand-knots where we see the most growth." -- Raj Choudhary, president, Amer
In 2022, despite rug buying slowing down overall, but Amer witnessed a pickup in its hand-knotted business. "Retail will perform well in 2023 -- better than 2022 -- as we see good momentum there, especially with hand-knots where we see the most growth. Price points will be more mid- to lower-range hand-knots – that is where the real potential is."
COURISTAN
"We did see significant gains in the first two quarters of 2022, which outperformed 2021, however, inflation and shipping costs truly hampered the fall season," said Larry Marhurter, senior vice president of marketing and advertising, adding that those cost increases are reducing profit margins. "The challenge is not compromising the quality of our products, which would damage our brand, but producing products at promotional price points while maintaining the integrity of our brand and product offering. Price points are lowering in such a manner online that the quality of our products can’t match those price points."
The New Jersey rug producer, a long-time go-to source for outdoor rugs, reports that promotional price points under $199 for a 6x9 through e-commerce and big box operations continue to drive sales, particularly in the company's outdoor category, which continues to grow in volume. Digitally printed rugs and rugs crafted of fibers such polyester are also strong selling points, Marhurter added.
"For 2023, promotional price points within e-commerce and big box operations will continue to be strong. However, we feel better quality goods will prosper in the specialty brick-and-mortar storefronts." -- Larry Marhurter, senior vice president, Couristan
Couristan has really concentrated on creating programs and products that cater to each key distribution segment within the company's business model. "This means creating or designating products that hit key price points within these distribution segments and isolating those products for only these key segments," he explained, adding that such an approach has made for reduced competition between segments such as e-commerce versus brick and mortar.
"For 2023, promotional price points within e-commerce and big box operations will continue to be strong. However, we feel better quality goods will prosper in the specialty brick-and-mortar storefronts. $299 for a 5x8 seems to be the threshold for big box and e-commerce, while higher-end wool or polypropylene products in abstract and traditional designs seem to work well within brick-and-mortar."
DYNAMIC RUGS
"Everyone is comparing 2022 numbers to 2019: they are looking at the last two years but adjusting expectations to 2019 levels," said Matthew Rouhanian, president of Dynamic Rugs. "Everybody had a fantastic two years; this year won't be as good, but it will be close."
Dynamic Rugs has always targeted better-quality machine-mades, and at retail $700 to $800 for an 8x11 remains its strongest price range. "Big box stores that can buy lots of rugs are pushing the market down on quality, because their customers want a lower price point. We see more development in the lower quality machine-mades than before because these big box stores are reacting to what their consumers want. We're trying to stay away from that segment."
Looking into 2023, Rouhanian expects sales to slow, partly because consumers, who have spent the Covid years improving their homes, are shifting their spending to other categories, such as entertainment and travel.
"Retailers are being cautious, if they had been ordering 20 containers of one quality, now they are ordering 15, and I am expecting that to continue to the fall of 2023. So, we have to be cautious but still moving forward and developing new product." -- Matthew Rouhanian, president, Dynamic Rugs
"Retailers are being cautious, if they had been ordering 20 containers of one quality, now they are ordering 15, and I am expecting that to continue to the fall of 2023. So, we have to be cautious but still moving forward and developing new product."
Among the top-selling looks at the company are rugs with plenty of textures and combinations of different yarns. "Consumers react to the texture. They see it and think there is more value to it. They like any combination of yarns with high and low texture."
Most of the new product Dynamic Rugs is developing uses a combination of different yarns and shrink yarns with yarns of varying thickness to create some structure for the rug and make it different. Also trending is shine, created by using polypropylene with accents of polyester or a combination of polypropylene and viscose or other fibers. Looking ahead, Rouhanian notes that now there is a lot of development in all price points from the low-end to medium- and higher-qualities, all made of 100 percent polyester because it is shiny. There is also a lot of development of PET, which also has a lot of shine.
“We are like everybody else, cautious of what we're developing. I expect 2023 to be similar to 2022. I don't see significant growth in the market-- it will probably be comparable to 2019 and we are doing better than 2019, so that is a positive.
HAROUNIAN RUGS INTERNATIONAL (HRI)
Harounian Rugs International, which focuses its business on mid- to high-end design firms, furniture stores, to-the-trade showrooms and specialty area rug retailers, continued to gain ground in those segments 2022. However, inflation and recessionary pressures impacted big box and e-commerce sales, said Lee Harounian. Still, he pointed out that rug vendors in higher-grade goods will do well.
“We did well in 2022 -- better than 2021 -- because the customers for high-end goods are there and haven’t gone away. The problem was for lower-end machine mades which saw sales weaken. But our high-end handmade performed well and our private labeling on the higher-end machine-made side helped us quite a lot as well."
“We did well in 2022 -- better than 2021 -- because the customers for high-end goods are there and haven’t gone away." --Lee Harounian, co-founder, HRI
Added Greg Jordt, executive VP sales and marketing, "Our positive growth trend continued throughout 2022," said Greg Jordt, executive VP sales and marketing, noting that the company’s transitional and contemporary collections all created in mid- to high-end fibers and constructions from India, Nepal and Pakistan continue to drive sales.
Heading into to 2023, Jordt said, "Design firms and to-the-trade showroom will remain a major part of our distribution. With our mid- to high-end constructions and price points, we are well positioned to continue to see growth in our sales in an unstable economy. Our past 60 years of experience is the true indicator that HRI will continue to perform well in all economic environments.”
JAIPUR LIVING
Jaipur Living, which has refocused its strategy over the past several years to focus on the designer market and now only participates in High Point Market, is hosting the grand opening of its new Atlanta headquarters and studio showroom this month.
"Our sales have exceeded 2019 numbers,” said Asha Chaudhary, CEO. “Like many businesses in the interior design space, we experienced strong growth in both 2020 and 2021 -- and welcomed the news that 2022 was no exception.”
The company’s sales have been driven by its wide assortment of product designs and styles, its commitment to high-quality product, and customer care, said Chaudhary, adding that the company’s decision to showcase only product that is in stock and ready to ship to customers helped drive sales throughout the pandemic.
“Like many businesses in the interior design space, we experienced strong growth in both 2020 and 2021 -- and welcomed the news that 2022 was no exception.” -- Asha Chaudhary, CEO, Jaipur Living
“During the pandemic, many found sanctuary while focusing design efforts inside the home,” Chaudhary said. “Now, as industry and the world have opened up, people remain passionate about creating spaces that offer respite. We’ve shifted our focus to look at how we can better serve both designers and their clients and have widened our aspirational product assortment.
“We have dedicated ourselves to creating luxury experiences for our clientele by highlighting exceptional craftsmanship, expertly curated designs, and championing the age-old art of the handcraft,” she continued, pointing out Jaipur Living’s emphasis on sustainable practices in its manufacturing process has resonated with its customers. “At Jaipur Living, we take care when choosing our materials—from their quality to their impact on the environment. We pride ourselves on using fibers that are regenerative and using natural materials in key collections.”
-- Continue reading State of the Industry Special Report -- Part 2