Rug sales can't be swept under

Discount Store News, June 21, 1999 by Molly Prior

Rug vendors and retailers are smiling. A solid economy, a surge in new homes and the trend toward frequent home redecoration have created a retail environment teeming with growth and profit for the rug industry. But circumstance alone isn't the only force behind the growth in rug sales in the United States. For its part, the industry has taken great strides in improving the technology used to produce rugs.

Once considered import products, rugs are now gaining popularity as a domestic product. And new technology that facilitates texture manipulation and has an increased capacity for fibers and colors has allowed vendors to create a variety of textures, colors and patterns at various price points, making it economical for discount stores to appeal to a wider range of customers. The innovations also allow for easier and faster design adjustments, which helps retailers respond quickly to the changing demands of the public.

According to vendors, texture and design--more than color--attract the public's attention. Consumers respond positively to tufted, berber, and woven carved textures. Homemaker Rugs invigorated braided rugs by using popular lifestyle fabrics such as chenille and fleece and by adding color. Lifestyle rugs in simple colors and tones enjoy a steady popularity.

Debbie Powell, vp of marketing for Homemaker Rugs, credits the technology for stretching consumer dollars. "You can buy a nice-looking Oriental-pattern rug for $100 rather than $1000." Powell added that because a floor covering item is often the least expensive item in home decor, customers are more willing to throw it in along with the rest of their purchases.

One major floor coverings retailer said that rugs are profitable to retailers because they usually result in a double sale. In discount stores, the rugs are often displayed toward the back of the home decor section, increasing the chance that customers will pick up another item or two on their way to the floor coverings.

Once the customers arrive in the floor coverings section, they will most likely see rugs displayed in three ways: hanging; folded or rolled on a gondola; or in a box displaying a picture of the product. Patterned rugs catch the customers' eyes when hanging or folded in half so that the pattern is visible. Customers will find the gondola shelves lined with scatter rugs in various sizes. The larger rugs, approximately 6 ft. by 9 ft., are tightly rolled and wrapped in a plastic covering. Often, their tag displays a color picture of the product.

Several vendors offer merchandising support to retailers. Orian Rugs offers its customers an entire display and merchandising package. The rug vendor individually designs display fixtures for clients. The company also tailors hang tags. Based on information gleaned from consumer surveys, Orian includes a picture of the product, care instructions and the price on the tag. The retailers then have the option of including more information about the product. Other vendors provide additional support, such as advertising, free samples and markdowns.

Discount retailers individually develop rug displays by using a planogram. ShopKo displays its rugs using a clean main aisle drive philosophy, said ShopKo vp John Alvord. Currently, ShopKo stores allocate 120 ft. to floor coverings. Its floor coverings retail from $7.99 scatter rugs up to $129.99 room-size rugs. When possible, the rugs are displayed adjacent to RTA. According to Alvord, by displaying the rugs close to RTA, the store decreases a consumer's potential "sticker shock." After surveying the price of the surrounding furniture, customers are more willing to spend money on an area rug to decorate their home. Alvord said ShopKo plans to give rugs a higher profile and is looking to carve out more space for the section to allow for greater variety. "The customer is much more discerning about style," he said.

Kmart's floor care section carries a variety of rug collections all marketed on the hang tag as "Home Essentials." The collections mirror popular fashion colors and designs. A wild black-and-white zebra rug falls under the Artwork Collection. A room-size zebra rug, 6 ft. by 9 ft., retails for $49.99. Kmart's Traditional Collection rugs are decorated with a plaid border and fruit or Oriental patterns. The Natural Collection consists of natural beige colors. The rugs are displayed on hanging fixtures, gondolas and center-aisle displays. The store's floor coverings retail from approximately $5 scatter rugs to $100 area rugs.

Vendors and retailers agree the rug business continues to grow at a healthy pace. Technological innovations have allowed retailers to provide different quality levels and price points. The next step for retailers, according to vendors, is to provide consumers with a merchandise display that includes RTA.