Rug prices low? We just have to sell a lot more
Lissa Wyman -- Furniture Today, May 21, 2013
Sometimes a casual observation in a High Point showroom tells me much more about what's going on in the business than all the formal talk.
An off-the-cuff moment in Showplace has been haunting me for a few weeks. I was with a large vendor and a large online retailer. We were talking about price points and how they have fallen in the past several years.
Nowadays, the average retail price for a 5 by 8 rug is about $299 to $399. Ten years ago, it was probably $599 to $699, and 15 years ago, it was about $799 to $899.
The recession played a part in the downward drift, but it's not entirely to blame. Competitive pressures combined with manufacturing efficiencies have played a big role in bringing prices down, down, down.
Great news for consumers. Bad news for anyone else in the distribution chain. With delivery and warehousing costs staying the same or rising, selling lower priced merchandise means lower profit margins.
Once prices fall, it's virtually impossible to boost them up again. The only reasonable approach to raising profits is to increase sales. That seems like a daunting task, but my High Point friends seem to be enjoying the challenge.
"We want to help retailers make rooms sexy, exciting and fun," said the vendor. "The message to consumers is to change rugs out on a regular basis. A rug should be treated like a fashion accessory that can change the look of a room."
The retailer agreed that rugs should be presented as fashion accessories. "Our website is geared to making rug buying easy and non-threatening for consumers. We don't want to SELL them, we want to help them buy."
I agree that rugs should be treated as accessories that are replaced on a regular basis. I also agree that rug buying should be fun, not nerve-wracking. But I think that convincing consumers that rugs are as sexy as high heeled sandals is going to be tough.
Forget about old people like me. People of my generation bought furniture and rugs three or four times in their lives, tops. Old people also have some crazy idea that rugs INCREASE in value. Wonder who told them that? Oh yeah. It was retailers.
The road to higher profits is paved with young people who (we hope) will change their rugs as often as they change their hair styles. It's also paved with young retailers because old guys are not going to buy into this easily.
Rug retailers have long tried to trade customers up to better quality products, which means higher profits. Now we want them to sell the heck out of inexpensive products and get customers to come back for more a couple times a year.
This is truly a paradigm shift for our industry, and it ain't gonna be easy. But it will be interesting.