Shopping rug discount

A sea surge is taking place in the discount rug business. While in the past mass retailers might have had a few rolled up area rugs available somewhere in housewares, today many are dedicating appreciable effort and space as the business has changed. The strongest contributing factors to this increase in rug sales come from improved technology, a commitment to better styling and overall consumer enthusiasm. Yet the tide that is helping all ships to rise has also boosted standards, so to keep things rolling retailers have to be more dedicated than ever before.

"At mass, the business has evolved from a less stylish, more basic and solid-color-driven category to a more stylish and design-driven assortment. Styles that were once only seen in department or specialty stores have now become available at lower price points through mass merchants. Technology also has played an important role in terms of what can be achieved and offered to the consumers," said Nicole Dowswell, a Kmart communications specialist.

To sell the more sophisticated features available in lower priced rugs today requires putting them out in front of customers. Retailers are increasingly dedicating space to hang product, signaling their commitment to the category. They have capitalized on a decade of lowering raw material prices and technological upgrading at mills that have translated into better products and lower prices to win consumers over to the discount store channel.

The timing was just right. As things got better on the manufacturing side, consumers began investing more heavily in their homes. In some cases, this meant adding new floors that begged for new rugs. In others, it just meant they had a new fashion impulse and began updating their homes as quickly as they updated their wardrobes.

But, while this has translated into more dollars for discounters, it has had a snowball effect. Today consumers are more demanding and have become better informed on home fashion tends. Consumers also have been willing to accept higher price points in the discount channel lately. Of course, to justify the higher price points and to give consumers a reason to shop a particular store, retailers have to be innovative in both product and presentation. A feedback loop has been established, and the leaders in the category are those that can continually raise and satisfy consumer expectations.

Vendors note that the development of the category has meant opportunities all around for those who can keep pace. Still, merchandising commitment does affect how well retailers can expect to do.

"We encourage retailers to hang rugs," said David Starr, national sales manager for Orian Rugs. "Sales are two to four times better in stores where they hang the rugs vs. where they just have rolled rugs in the gondola run."

The successful evolution of the rug business at the discount level has created new opportunities previously unimagined. For example, said Patrick Moyer, vp of marketing at Mohawk Rugs and Textiles, the long downward trend in carpet price points has recently taken an ironic twist. As price and quality have made discounters more acceptable as a rug source by consumers, confidence in the channel has permitted some retailers to boost price points beyond those they normally sell.

Wal-Mart recently has pushed price points on its products as high as $129 for a 5-by-8-ft. rug, Moyer said, and Target $199. With the prevalence of private label in the category, consumer acceptance of higher price points is particularly appreciated.

"The traditional discounters look better and have better quality rugs, and the price-point response is carrying the tag up," he said. That's particularly advantageous, considering how much private-label product exists in the discount store channel.

In rugs, regional discounters have taken the lead in terms of developing larger and more elaborate presentations.

Rick Ausick, senior vp, gmm of home at ShopKo, said that after concentrating initially on ready-to-assemble furniture as a segment where the retailer could be market dominant, ShopKo began developing new product presentations that would demonstrate to the customer that it was a destination.

"One of the places this happened is in the rug presentation," he said. Along with candles, rugs are an identified segment where ShopKo is putting more effort. The rug presentation now includes a 6-by-9-ft. hanging fixture to make the selection process more customer friendly. As it has in furniture, ShopKo also has emphasized product coordination, so consumers can more easily group and match rugs-paring, for example, a small area rug and runner by pattern for use in the entryway of a home.

Coordination has been a critical merchandising element at many leading retailers.

Bradlees currently is "reformatting" its rug business to eliminate slow segments and expand those that are trending up, said Rick Fyffe, dmm of home textiles. The new merchandising arrangement will emphasize coordination. "We're trying to do more with the coordination for small accent sizes matched up with the large room size, so customers can do their room, a hall and in front of the door in the same manner," he said.

Still, not everybody is anxious to boost price point nor can every retailer dedicate space to merchandise enormous hanging rugs.

At Bradlees, rather than hanging room-size rugs, stores mount hanging displays of smaller accent rugs. The coordination fact, however, makes this a more acceptable alternative than it would otherwise be. Fyffe said that Bradlees doesn't believe having the bigger rugs rolled hurts its sales.

As rug merchandising has become more sophisticated, various retailers have taken steps to bring the category more closely in line with its larger goals.

Ames hangs both room-size and other rugs in a presentation that is a department unto itself with multiple aisles of goods and, often, floor displays as well. The company remerchandised the department about three years ago, said Laurie Berger, dmm of domestics and housewares, and continually updates the selection, but Ames isn't looking to get into higher price points.

"Our top price is $99.99 everyday and under $60 on sale. We change the planogram about twice a year because we want to get the fashion in there, but price is important to us, more so than to our competitors. We're always looking for lower price points, and the technology is out there to get that. Our customer has a family income of between $25,000 and $35,000. I want a rug at $29.99," she said.

Kmart hasn't increased its highest price point, said Dowswell, but has expanded its selection in other contexts. "We have added additional mid-tier prices to our assortment, expanding the types and qualities of the product offered. There are some promotional categories within the floor covering department, but the determining factors in customer purchase is style and price range," she said.

While discounters have expanded their rug businesses successfully, it doesn't necessarily mean they can't be left behind later. If you visit Big Three stores, many don't have rugs hanging at all. Target seems to have the most consistent assortment and has room-size rugs on hanging racks, but hasn't updated its fixture package recently.

Of course, those factors can change, especially as Target and Kmart continue to improve their home goods operations. However, as Moyer points out, discounters can't afford to forget about the rug category if they want to enjoy success. He notes that Kohl's has been doing an excellent job in rugs.

Additionally, rugs are an area where off-pricers--apparel sellers who increasingly are becoming more interested in home product lines--may make inroads.

A Kohl's in Oceanside, N.Y., for example, had an impressive array of floor coverings available. Fixtures totaling 72 ft. in length over three aisles included easily accessible folded and hanging rugs. Eight feet was devoted to a fixture that hung rugs on arms that could be slid out for better product inspection, a relatively unique feature. Each rug had a label that gave the price point for the product, several coordinating items and the location of the rolled or folded product.

On the same pad, a Marshalls also offered rugs, although on a lesser scale, with 16 feet of a half aisle dedicated to the category.

As is the case with off-pricers like Marshalls, shopping the selection of rolled rugs required a sense of adventure, but it offered a bit of differentiation as well. Rather than the olefin products available in Kohl's and in the discounters, Marshalls offered a number of wool rugs with signage that declared "Handmade in the People's Republic of China." Although the tag may repel as many shoppers as it draws, given the political consideration, the price was right. A 55-by-80-inch wool rug sold for $199.99.