Broadloom Carpet Report: A fourth-quarter boost of more than 10% in 2020 spurs optimism in the residential market heading into 2021 - March 2021
By Meg Scarbrough
In an unexpected twist in the story of residential broadloom, 2021 is looking up for carpet mills as the promise of a healthy housing economy and renewed interest in sound-absorbing surfaces among homebound consumers generate optimism and demand.
A year ago, few would have likely predicted such an optimistic outlook for flooring’s softest star, whose footprint in the home gets smaller year over year amid competition from hard surface challengers. According to Floor Focus estimates, carpet, like other flooring categories, had a disastrous second quarter in 2020, which was followed by a slightly less dismal-but not prosperous-third quarter, creating anxiety for manufacturers and retailers alike. But as retail replacement orders started pouring in at the tail end of the year, residential carpet saw a 10%-plus increase in sales to close out the year down just 5%-for perspective, the category ended the previous year (2019) down 7%-a remarkable finish given the previous months’ events. For broadloom manufacturers that operate in both residential and commercial sectors, residential activity outpaced commercial.
Says Christine Zampaglione, senior marketing director for Stanton, “Business is good. We had a rough few months in April, May and June,” but like others in the industry, she says that as the people sheltered in place, “the company saw an increased desire to refurbish, redesign and refresh. We see that continue through today. We’ve seen huge increases.”
Some manufacturers say while carpet will continue to lose share to hard surface, Covid may have slowed it slightly on the residential side, albeit temporarily, buoyed by sheltering in place and a shift in trends back toward soft surface as a source for sound mitigation. And, they say, plenty of opportunities remain.
For starters, the residential market is primed for activity. In February, the National Association of Home Builders announced that spending on residential improvements could continue to grow over the next two years, a good sign for manufacturers and retailers in the flooring business. (Multifamily is expected to remain weak this year due to constrained government eviction policies but will likely rebound in 2022, the association states.) With an anticipated third stimulus being discussed, homeowners could be motivated to continue home updates. And they are seeking to create more comfort and safety in their homes. Says T.M. Nuckols, vice president of residential at The Dixie Group, “Home has become their comfort area, their sanctuary, a safe place where they are not at risk. The need for comfort put carpet more in the consideration set, more so than maybe it was in the past.”
Additionally, while unit sales of broadloom have been down, revenues haven’t declined at the same pace. Santo Torcivia of Market Insights says that while consumers aren’t buying as many yards of carpet these days, they are spending more per yard on what they do purchase, often for a higher-end, better looking product. But, as Torcivia points out, manufacturers have also increased their prices.
Moving forward, the question remains if and how manufacturers can maintain this momentum, and understanding what’s driving this renewed consumer interest in “soft” will be key.
ADDING SOFTNESS BACK INTO THE HOME
Covid has perhaps put a microscope on what carpet manufacturers have been saying, and hoping for, in recent years. As hard surface continues to gain steam, many predicted that over time, homeowners would begin to circle back to the traditional carpet and rugs market, recognizing that hard surface lacks the built-in comforts that homeowners ultimately desire. Hard floors can’t make a room quieter; kids won’t curl up on them to study. The longer people were sheltering in place, it wasn’t enough to just update flooring because they had the time and extra money. It needed to have function, as well, and for some homeowners, that meant it needed to make living, working and schooling in a packed home more comfortable.
Like many families across the country, Denise Silbert, vice president of marketing, soft surface for Mohawk, was forced to work from home alongside her husband, taking turns using a quieter room of the house for calls or Zoom meetings. “We did this whole dance with ‘Okay, you’re on a call, so you can be in this room.’ And what we found was the room with the carpet was so much more pleasant to work in because it’s more cozy and comfortable, but also because of the acoustical aspect of it, which really came into play.” It’s been a common theme for anyone sharing a space with a partner, children schooling at home or animals, or any combination of those. “It is hard to have a successful Zoom call when you hear animals or children stomping on a hard surface floor,” she adds.
Homeowners are looking not only for decor and goods that provide style, but as health and emotional well-being take on a more critical role, they are recognizing that what they put in their home, including materials, colors and patterns, can and do impact a person’s mood and state of mind. It’s a trend that was happening prior to virus sequestration but has perhaps taken on a renewed relevance as a result of it. Says Brad Christensen, soft surface category director for Shaw Residential, “The consumer wants to infuse the home with a sentimental feeling and needs products designed for multi-functional spaces that promote well being. As the home evolves to include spaces for learning, working and self-care, things like acoustics and cleanability will be top of mind.”
Says Joe Young, soft surface category manager for Engineered Floors, “The carpet industry used to use the general phrase ‘carpet, it just feels better.’ And that couldn’t ring more true than today. With more family members spending more time at home than ever, carpet provides a comfortable place to work and play for the whole family.”
The effects of the ongoing pandemic have been most severe on the commercial side of the broadloom industry as America’s workforce left their office buildings to work from home last spring, students vacated classrooms, restaurants closed or limited service, and travel ground to a halt. Commercial broadloom, which represents 17% of the total broadloom category, suffered double-digit losses in 2020.
While some parts of the commercial market have slowly begun to see activity again, many experts agree that it could be months before the world returns to “normal,” whatever that looks like moving forward, leaving a question mark over long-term impacts to carpet makers.
For the flooring industry, part of the challenge looking ahead is that the commercial retail brick-and-mortar sector has been hurt by online retail sales, a trend emerging prior to the pandemic but likely accelerated in terms of years as a result of it. Torcivia says the retail sector was overbuilt to begin with. Additionally, tax revenues are down, so institutional projects like government buildings and museums, which are largely driven by those funds, are down, as well. And with travel stalled for the time being, hotel and airport projects will be on the backburner a bit longer.
When it comes to office buildings, Torcivia said there’s a “wait-and-see” approach. “With work-from-home, employers don’t need as much space, but they are stuck with their leases.” He adds that for office spaces there’s room to grow because of the different ways people who have returned to offices are using spaces now, perhaps seeking more distance than once-popular co-working areas.
How quickly things bounce back in the commercial market could rely on the vaccine rollout and how soon people feel comfortable returning to public settings. In the meantime, Torcivia notes, there’s going to be an overall diminished demand and growth in the commercial broadloom sector, which means slow sales, and it might be early next year before there’s a shift away from that. Says Torcivia, “It’s going to be a long, hot summer.”
PLAYING WITH COLOR AND PATTERN
Homeowners over the years have gained an increasing expectation that their flooring be a reflection of their personal style and lifestyle.
Manufacturers and designers say homeowners these days feel more willing to make more daring and bold decisions on flooring if it doesn’t have to fill an entire house. Torcivia says wall-to-wall flooring can become a more cumbersome decision if a homeowner is trying to figure out how to coordinate and style an entire home around a singular flooring. However, when faced with just one room, decisions become bolder or more edgy.
Zampaglione notes that consumers are wanting to decorate more distinctively, especially in recent months. She says, “People have really gotten bold in their choices and want to infuse color in their space and not gravitate toward the greys or the beiges or the neutral. We’re seeing a lot of patterns and color.” In response, she says, the firm is continuing to come out with more color choices.
Another aspect is that because they aren’t buying a whole house of carpet, they feel more empowered to buy higher-end product. Says Young, “Because the consumer is purchasing fewer units, they do not mind spending money on better goods.”
Zampaglione agrees, adding that Covid may have further amplified the consumers’ desire to spend more on what they want because they aren’t dining out or traveling. And with so much time being spent at home, “I feel like people are treating themselves to what may not have been done a few years ago. Now they say, ‘You know what? I want my home to be as comfortable as possible. I want it to be beautiful.’ We are seeing they are doing multiple areas of the home.”
And thanks to the Internet and social media, they are exposed to more ideas than ever. Says Zampaglione, “Consumers are so educated now from looking at social media and researching. They have an understanding of how good design works and that combination of layering and textures and patterns, and I feel like design is achievable now for the consumer.”
So what are they buying and for what areas of the house? Over the years, broadloom has steadily lost share in the home, retreating to more intimate areas-bedrooms, dens and offices, or in upstairs hallways. That’s not likely to change much.
What has shifted, though, is what they are picking for those spaces. And right now, it’s all about color and pattern. Says Jason Surratt, vice president of residential carpet for Mannington Mills, “We’ve seen an uptick in overall patterns over the last three to five years, and it continues to increase.”
Adds Christensen, “Patterns, textures and colors that mimic natural materials and make us feel comfortable and calm are trending, as consumers look to make the home a haven from the outside world.”
But even knowing what they want, creating a strategy to reach the consumer can still be hard. Surratt says, “You’ve really got to hone into each individual consumer’s needs from both color and pattern aesthetics. It takes a lot of market feedback, which last year was even harder because a lot of that was done on a screen as there was very little travel out into the region to get that market feedback like we normally would.”
Adding to the challenge is that consumers are increasingly seeking out products that have enhanced styling. The good news for manufacturers is that with advancements in technology, like the Tailored Loop machine from Card-Monroe, and evolution in fiber construction, manufacturers are able to create designs that answer consumers’ needs in more creative ways than ever.
Says Brittany Stanley, senior vice president of marketing for Mohawk’s soft surfaces, “Technology and styling might be the antidote to carpet declines, and that seems to be ringing true. Differentiated looks in carpet have elevated the options, so rather than playing it safe, consumers are choosing more design-forward looks, including pattern and colors. Handcrafted woven looks continue to be in high demand.”
Adds Surratt, “Some of the newer technology makes products that would typically only be able to achieve that aesthetic or design through a woven loom, which would be very expensive. Being able to convert that over to a tufting platform takes a significant amount of the cost out. It creates a larger overall consumer base that can afford or be interested in that product. And that was really the drive two years as we went to launch a collection called Modern Contours. That was really kind of the first high fashion-forward, high aesthetic luxury looks at an affordable price point by bringing out these great beautiful patterns in polyester. It brought the style that the consumer was looking for but at a price point that a larger overall base could afford.”
Part of the enduring negative perception around carpet is that it uglies out fast, making it an unwise investment. Enter fiber advancements. Says Nuckols, “The consumer wants a product that’s going to last. Polyester has certainly grown significantly; it’s now the dominant fiber in the residential market. But it’s not a durable product.” In recent years, since the launch of Invista’s PetProtect solution-dyed nylon 6,6, more manufacturers have been touting higher-performance products. And as more carpet is relegated to the bedrooms and upstairs living areas, the average face weight is going up, manufacturers say, which circles back to consumers’ willingness to invest more, especially when comparing hard surface products against soft ones.
Combined with tufting tech, they hope consumers will come back around to carpet. Says Christensen, “Fiber innovations are enhancing performance and styling options at all price points, and today’s consumers aren’t willing to sacrifice when shopping for a new floor.”
Even though consumers are getting their design inspiration online and doing more research about flooring than ever before doesn’t mean they are quite ready to buy carpet in e-commerce channels, industry leaders say. Carpet is ultimately still a tactile experience, and given that it’s a large investment, unlike a T-shirt or shoes, consumers will want see and feel the texture before buying.
But that doesn’t mean manufacturers and retailers should ignore their online presence. Thanks to the pandemic, experts say, e-commerce and online activity has been accelerated by years. And moving forward, that’s not likely to change. Says Christensen, “Expectations around services like curbside delivery, in-home shopping and personalized consultations will likely persist in a post-Covid retail environment.”
What manufacturers can do to meet the challenge, experts say, is continue to improve their online tools and services. Zampaglione says Stanton relied more heavily on sampling last year. She adds, “We offered free samples to the consumer, which is not typical for us; usually they have to pay. During the time that we offered it for free, samples were just going out the door.”
Elsewhere, companies like Shaw are improving digital platforms. Says Christensen, “Leveraging virtual shopping options, like Shaw’s Floorvana+ visualization tool, will help narrow down the selection and allow consumers to begin/continue shopping from the comfort and safety of their own home.”
Copyright 2021 Floor Focus