Issue Date: 2017 OCTOBER, Posted On: 10/12/2017

10122017 Retailers: Rug Sales Trending Higher in Q3-4
By Carol Tisch

Retailers weigh in on the third and fourth quarter of 2017. From top left: Gerry Yost, Avalon Flooring, Phil Koufidakis, Baker Bros., Teri Whittaker, R.C.Willey, Sam Presnell, The Rug Gallery, Bill Martin, Rugs Direct, and David Snedeker, Nebraska Furniture Mart.

SPECIAL REPORT -- For some flooring retailers, 2017 has been a roller-coaster ride of wild swings and unpredictability for their rug business. But in the end, it is looking to shake out as quite a good year for sales, with better than expected results experienced across the board.
In this exclusive report, RugNews.com speaks with brick and mortar retailers from a range of channels and a leader in the e-commerce space about performance in Q3 and projections for the fourth quarter to close out 2017.

"This has been a crazy year," said Sam Presnell, owner of The Rug Gallery in Cincinnati. "In February and March we took a big beating on our projections."

"In the last 6 months we have exceeded our goals." --Sam Presnell, The Rug Gallery

"However," he continued, "In the last six months we have exceeded our goals. We are still off on the year but we are narrowing the gap. I believe the year will end up better than projections."

Presnell said his "gut feeling" is that traffic has been up thanks to better quality goods, which have fueled sales. "I am very pleased at this point and see a bright future for us going into next year."

Other bellwether retailers also reported above average results for the third quarter, with the expectation of a strong fourth quarter.

"The fourth quarter will be a fight for disposable income." --David Snedeker, Nebraska Furniture Mart

At Nebraska Furniture Mart, with three stores, rug sales have been robust all year -- up high single digits --and trending toward a strong finish. That's according to Dave Snedeker, division merchandise manager-flooring, who noted that the machine-made category continues to take share and is having a huge year in 2017 sales.

The one caveat for NFM is that margins have slipped from last year. Snedeker blames that on a higher cost to aggressively advertise the category.  "As you know we advertise our categories very heavily and this year will be no exception. We face greater advertising from market competitors and need to make sure our voice is heard in all the clutter.
"I believe the fourth quarter will be tight business-wise and people will be working very hard to make their store stand out. We plan to stand out. This fourth quarter will be a fight for disposable income and we have to make our stories heard to get our share."

"Rugs continue to be steady. It will continue to be a growth category." --Phil Koufidakis, Baker Bros.

At Baker Bros., with multiple locations in the Phoenix metro market, year-to-date rug sales are up double digits. That's no surprise at Baker Bros, a full-service flooring dealer that emphasizes
the importance of the rug category. "Rugs continue to be steady and across the board in terms of what is selling," said owner/president Phil Koufidakis. "It will continue to be a growth category, but as always it is not without its challenges."

   "Customers are starting to purchase better rugs. We hope to finish the fourth quarter strong." --Gerry Yost, Avalon Flooring    

The unevenness of 2017 was felt at Avalon Flooring, which reported a solid July and August followed by a disappointing September. All in all, however, it has been a good year for one of the Mid Atlantic's premier retailers. "One thing we are seeing that is a pleasant surprise is that the customers are starting to purchase better rugs and not just looking for the cheapest price," said Gerry Yost, director - area rugs and window treatments. "Like everyone else, I would like to see a bigger increase in rugs sales but based on the current retail climate, I think we are doing well. We hope to finish the fourth quarter strong and we do have a big promotion planned for late fall to get a jump on the holidays."

  "I expect the fourth quarter to be even better than Q3." --Teri Whitaker, R.C. Willey       

R.C. Willey Home Furnishings, which has 14 locations in four Western states, has several promotions planned for the fourth quarter to boost rugs, including a 20% discount if the customer buys anything else in the store priced $799 or higher, as well as a 15 percent discount off any area rug. "My overall business is doing well," said Teri Whitaker, area rug buyer. "My business was up about three percent for the third quarter, and I expect the fourth quarter to be even better."


"The third quarter was strong. Sales were up over 2016 in all 3 months." --Bill Martin, Rugs Direct


E-commerce sales also continue to climb, with rugs more frequently searched and purchased than many other home furnishings products in the online retail space. "The third quarter was strong -- sales were ahead of 2016 in all three months," Bill Martin, executive vice president - chief merchandising officer for Rugs Direct, told RugNews.com. "We anticipate the fourth quarter remaining just as strong."
In contrast to e-commerce, where rugs have become fast-fashion rather than investment purchases, the consensus among brick and mortar flooring dealers is that rug sales have not grown in tandem with hard surfaces.

Although hard surfaces continue to increase as an overall percentage of the flooring industry, the expected add-on rug buy has not yet materialized. Research conducted a few years ago suggested that within 72 hours of purchasing a hardwood floor, the consumer was in the market for an area rugs. However, dealers like Avalon's Gerry Yost are not seeing that just yet, or "at least not as much as I'd hoped," he said. "Customers are reluctant to cover their new floors right away, so it delays the rug purchase."  

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