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Business, Retail

Q4 Outlook: Flooring Retailers Bullish on Custom Rugs, See Favorable Rug Trends Continuing

Custom fabricated rugs and programmed area rugs garner solid numbers for flooring retailers entering the fourth quarter of 2022.

RugNews.com Editors
a Loloi printed medallion style rug in tarracotta colorway
At Carpet Exchange, Loloi Rugs continue to lead the pack in color, design and top brands that resonate with its customers.
Shown, Loren printed rug featured in Carpet Exchange social media.

SPECIAL REPORT -- Despite persistent inflationary pressures and a slowdown in store traffic, flooring retailers continue to report solid area rug/custom rug numbers entering the critical fourth quarter.

Year-to-date most dealers reported that 2022 has exceeded 2021, which for many was a record year.

“In the first three quarters, area rug sales are up 16 percent over last year,” said Susan Hadinger, president of Naples, Florida-based Hadinger Flooring, which has the largest area rug showroom in Florida.

Its vast selection is one reason area rug sales have stayed strong at Hadinger Flooring, which carries over 8,000 area
rugs and offers customization options.

“We have seen a slowdown in traffic since June, but this is also our off season, so we consider the business back to normal ‘pre-COVID’ patterns. We keep a very fresh and varied stock of rugs and also have a lot of broadloom available for fabrication. I believe that selection is one of the things that drives people to our store.”

Double-digit increases were seen by other flooring retailers as well, including The Rug Gallery in Cincinnati. “Our last three quarters have been up about 15 percent above 2021,” said Sam Presnell, owner. “Our custom carpet fabricating has been key to our increases this year.”

Fabricated rugs continue to grow at Venetian Blinds Carpet One Floor & Home in Houston as well. “We have made investments in equipment and do the vast majority of the fabrication in-house,” said Gary Touchton, general manager. “We have made the necessary investments in serging machines and have tons of new high-style carpet options for our customers. I am surprised at the amount of onsite custom rug fabrications we are doing such as fitting the rug to the unique configuration of the room like cutting around fireplaces, bay windows etc.”

Area rugs, both produced by vendors and custom made in-house by dealers play an important role in Myers Carpet Company’s businesses in Dalton, Atlanta and Nashville -- all of which have large work rooms for binding and serging. “When compared to our first three quarters of 2022, we are currently seeing a 15 percent to 20 percent growth in our custom rug business over 2021,” said Rick Myers, co-owner. Looking ahead, he added, “The fourth quarter has traditionally been a time when customers improve their homes for friends and families. We are optimistically expecting more growth as business continues to return and the holidays are our busy season.”

Entering the fourth quarter, rug sales remain on solid footing at Marshall Carpet One & Rug Gallery, Mayfield Heights, Ohio, according to owner Matt Wein. “We have received many new rugs that we ordered months ago which has reinvigorated our sales team and designers,” he said, predicting that the final three months would be stronger than Q3 “due to the holiday season that traditionally have been our strongest months.”

Rug sales remain robust for at Marshall Carpet One & Rug Gallery, thanks to new rug introductions that have reinvigorated
the sales team and its designers.

The Carpet Exchange, with 19 locations in Colorado, experienced flat rug sales for the first three quarters; however that was in relation to record numbers set in 2021. As for the fourth quarter, owner Bruce Odette said he is very optimistic, noting that August was the first breakout month this year of double-digit growth. “Supply has improved drastically over a year ago which is allowing us to replenish our stock,” he said. “The ecommerce business has also continued to grow despite a very crowded space of competition.”

The Rug Rack’s Miriam Thompson, meanwhile, said that while the Q2 and Q3 weren’t that stellar, “we have seen a nice turnaround in our traffic. Our rug sales heading into the fourth quarter look very promising. The people shopping are serious about purchasing a rug. While not all are shopping for a hand-knotted piece, they are wanting quality rugs and are willing to spend the money. I can say the growth is up 30 percent from the other quarters. I do hope the rug manufacturers can hold the line on price increases for the rest of the year and most importantly next year.”

However, not everyone paints such a rosy picture. Despite earlier success, Presnell is not as optimistic about Q4. “Traffic is slowing and with interest rates increasing and political negative rhetoric I think our increases could be given back by the end of the year,” he said. “Supply has not been much of an issue, but price increases on everything are adding up and driving retail prices up.”

Presnell’s cautionary approach is shared by others including Sarmazian Bros. Flooring, Guelph, Ontario, Canada, which has a large presence in rugs. “Rug sales YTD compared to last year are pretty flat but have gradually declined over the past few years,” said Raffi Sarmazian, co-owner. “This could be attributed to pressure from online sales from Wayfair and retailers such as Costco, Walmart, IKEA, etc. who have lower priced rugs at low markups. Rugs are becoming a disposable accent piece rather than something that customers want to last for many years.”

To counter this trend, Sarmazian said they have been offering customers incentive discounts to purchase area rugs when consumers purchase other flooring. However, he conceded that “conversion rates are low. I’m also finding the average selling price is declining. On the other hand, the market for higher-end custom rugs is slowly growing.”

Odette has found that consumers are willing to pay a little more for certain rugs, but added, “several of our top SKU’s are no longer selling because of the price increases. Suppliers are continuing to backfill these popular price points as new product is introduced. Transitional, and traditional rugs continue to be our best sellers.”
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