Perception versus reality — which will win?
Lissa Wyman, Rug editor -- Furniture Today, February 15, 2010
The rug industry got a psychological boost with successful markets in Atlanta and Las Vegas. A psychological boost is good. It clears the brain and loosens the wallet. But reality still lurks in the February and March days ahead.
Let's compare the perception of hope versus the reality of, um, reality.
Perception: Consumers bought rugs more steadily during the final three months of 2009. Sales were ahead of 2008.
Reality: The fourth quarter of 2008 stunk.
Perception: Rugs are an inexpensive way to brighten the home.
Reality: We've pushed down the price of rugs to commodity levels. You have to sell a LOT of $399 rugs to pay the rent.
Perception: Inventories have finally been whittled down to manageable levels.
Reality: It sold at a loss.
Perception: Retailers are ready to buy again.
Reality: They want maximum bang, minimum bucks and no risk. Retailers with the big pencils can name their own terms.
Perception: Consumers are bored with the recession. They want to start buying.
Reality: They want a new flat-screen TV and an i-Pad.
Perception: Unemployment is leveling off.
Reality: At 10%. And my benefits are running out.
Perception: People view their homes as safe havens.
Reality: Forty percent of homeowners are paying mortgages on houses that are worth less than the original cost.
Perception: The high end has held pretty well. The rich are always with us.
Reality: The average price of a hand-knotted rug has dropped to around $1,500 in a 5 by 8 size, compared to $2,500 three years ago.
Perception: Custom rug programs allow consumers and designers to participate in the creative process. The end result is a one-of-a-kind masterpiece.
Reality: Sampling and merchandising costs can be astronomical for the vendor. Retailers don't like to pay for fixtures.
Perception: The recession has weeded out the poorly run businesses. The strong have survived.
Reality: There are too few retailers. Too many vendors.
So with that clear-eyed analysis, which side wins — Perception or Reality?
Perception. Always. It's in our DNA. It's more fun to look on the bright side. And somehow, when we act on optimism, it becomes a self-fulfilling prophesy. I predict that 2010 will have many challenges, but will ultimately signal a recovery for the rug industry as well as the nation's economy.
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