Broadloom Report: Manufacturers continue to invest in broadloom – Feb 2024

By Jessica Chevalier

In recent years, residential broadloom has found itself in a unique position: from a demand perspective, revenue numbers are down-its square footage in the home having shrunk dramatically as hard surface took over living spaces-and yet, from a product perspective, advances in technology have enabled more beautiful, sophisticated and feature-rich offerings than ever before.

However, while new products are eye-catching and promise ease around cleanability and durability, the bulk of them utilize polyester, which many industry sources agree does not have the performance characteristics of nylon, and, while the use of polyester may allow the producer to achieve a price point that batters the bank account a bit less, there exists a concern about how the widespread use of polyester will bode for the category in the long term. It comes down to this: is polyester good enough for the low-traffic shelter spaces where broadloom is currently installed, or will the products ugly out and, thereby, sully the consumers’ opinion of carpet?

While total carpet (residential and commercial, broadloom and tile) ended 2023 down 12% in quantity and 10% in dollars, according to Market Insights, residential carpet was down 14% in dollars. Says Market Insights’ Santo Torcivia, “These figures would seem to indicate carpet tile continues to grow as a share of all carpet. Further, carpet’s position in residential is being hurt not only by the economic downturn but also by hard surface flooring taking share. Lastly, carpet has been [heavily] affected by the 12% downturn in housing starts.”

CARPET IN COVID: PUSH AND PULL
Amid the pandemic, some homeowners-spending their days working from home offices-were reminded of the strengths carpet brings to the table: its comfort and warmth underfoot, its ability to muffle sound, and the cozy atmosphere it creates. Covid was scary, and carpet promoted comfort.

While many of carpet’s qualities appealed to Covid consumers, one detractor was the product’s cleanability or, perhaps more accurately, the consumer’s understanding of its cleanability. “A hard surface product that can be disinfected may have swayed the RSA to push hard surface products over carpet,” says Drew Hash, president and CEO of Southwind Building Products. “It was a big selling point that consumers saw value in.”

At the same time, the chaos of Covid challenged other sectors, particularly LVT, which relies heavily on imports, likely pushing some consumers toward products that did not require a wait, broadloom among them.

While carpet’s marketshare grew 1% in 2022, that was mostly on the commercial side. In terms of actual sales, residential business was down about 6% in dollars and double digits in units. And though that may have been an improvement from its performance in the recent past, this was, in part, a rising-tides-lifts-all-boats scenario, as consumers, sequestered in their homes, were eager to make improvements and, government stimulus monies in hand and spending curbed, had the money to do it.

“Our take is that 2022 was a cyclical surge for soft floorcovering,” says Jared Coffin, vice president of product management at The Dixie Group. “The mega trend toward more hard surface floors in the home is not new, and we believe the market is stabilizing close to its current share of hard versus soft. In 2022, we were still coming out of Covid, with people spending lots of time at home and doing lots of redecorating and updating some finishes.”

One of broadloom’s strengths in the current market is its ability to be fabricated into custom area rugs. As both manufacturers and retailers fabricate rugs, it’s hard to nail down what percentage of broadloom goes to wall-to-wall and what percentage is fabricated into rugs, but it is certainly true that hard surface flooring often feels “naked” without some sort of soft surface atop it, and the vast majority of consumers who install a hard surface floor will purchase a rug to use atop it in the weeks or months that follow.

2023 PERFORMANCE
With the bump of Covid behind it, the residential broadloom market suffered in 2023. “It was sluggish compared to the previous two years,” reports Geoff Siebold, national sales manager for Stanton Carpet. “We attributed it to less traffic at retail as well as a longer lifecycle for orders from quote to close. During ‘21 and ‘22, most designers and consumers were anxious to select and order product within one to two weeks. Money was less of a concern and seemed to be spent more freely. In ‘23, though purchases were happening, people were requesting quotes and then taking their time to part with their money, oftentimes elongating the close from one to two weeks to approximately eight to 12 weeks.”

Jamie Welborn, senior vice president of residential carpet product development at Mohawk Industries, believes this sluggishness was driven by big-picture factors. “2023 was down for sure,” he says. “That was driven more by the economy than anything else. With housing starts down and interest rates up, builder was down probably 20% with fewer houses being built. The multifamily portion was pretty good, but it couldn’t overtake slowness of building. Specialty retail was very slow with a lack of foot traffic, driven by inflation; people didn’t have the appetite to remodel.”

All told, Welborn believes that residential broadloom was down 12% to 14% in volume in 2023 and expects 2024 to be flat over 2023 at best or down 2% to 4%. “I think the first half will be challenged because we’re still in the same cycle of inflation,” he notes. “I do think we will see a better environment in the back half of the year. With the shortage of housing, stabilization of interest rates and pent-up housing demand, builder won’t be down as much. The question is how quickly will specialty retail foot traffic come back?”

Quentin Quathamer, director of residential carpet for Mannington Mills, paints a similar picture, “Last year, we believe that broadloom was down in the mid-teens, so it was not a great year,” he says. “It was the continuation of what we saw at end of 2022 with high interest rates and inflation. We will see how this rolls into 2024, but we expect middle to high single digits down in broadloom for 2024.”

Jason Surratt, president of Tarkett Home, is hopeful that 2024 may bring a “slight uptick in dollars,” though he expects units to be down.

Interviewees largely agree that any uptick in the residential broadloom market will come in the middle to second half of the year. “With positive news with regard to interest rate reductions in the coming months as well as growing activity in the real estate market, it should bode well for the entire floorcovering channel,” says Siebold, who notes that both tailored flatwoven products and more opulent, shiny finishes seem to be faring well in the current market. The company is having success in its flatwoven woolen offerings as well as its indoor/outdoor products.

All in all, activity in the carpet market was bookended last year. “Base-grade products for multifamily and property management did well and, from the single-family home side, high-end goods did well, products fashionable from a pattern standpoint with a better durability story,” say Surratt. Tarkett Home uses 100% solution-dyed polyester. Its broadloom is manufactured in the Dalton plant it acquired as part of its purchase of Lexmark.

“We are seeing luxury price points faring best currently,” adds Hash. “Consumers may be purchasing less units in the home, but what is purchased are better-end goods. Sales dollars were stronger due to product mix shifts to luxury products versus prior years.”

Shaw also saw bright spots last year. “2023 represented a year where we saw unit decline in the industry, yet an appeal for better product and mix,” says Jon England, senior vice president of residential brands. “We were pleasantly surprised with several ‘solution-based’ collections, which provide a clear consumer proposition.”

He adds, “Similarly, we are seeing consumers lean away from the basics and demanding better solutions for their families’ everyday lives. With consumers buying less carpet for their home, we are seeing bigger tickets and better products being installed. Those higher-end products in the carpet market are leaning away from solid-color cut-piles and more toward multicolored visuals and LCL/loop patterns.” Shaw is investing approximately $500 million in its fiber manufacturing facility in Aiken, South Carolina. The project will include construction of new and expanded building assets and installation of new equipment.

“Our decorative division enjoyed double-digit growth in 2023, and we expect the same to continue into 2024,” reports Len Andolino, vice president, decorative division, for The Dixie Group. “Although the industry in general was sluggish, high-end customers were still buying.”

CATCHING THE CONSUMER’S EYE…AGAIN
With broadloom no longer the go-to choice for the home it once was, manufacturers must take a look at their strategy to determine if it’s relevant to the current market.

“We have a saying: ‘Pretty carpet sells,’” says Andolino. “That sounds basic and obvious, but it’s true. We produce and import pretty carpet, and that will be the case going forward.”

While “pretty” may be what hooks the consumer, additional factors may be needed to reel them in. “What does carpet deliver that the consumer wants?” asks Quathamer. “It’s comfortable, soft, quiet, warm. Hard surface can’t deliver on those as well.” Mannington’s broadloom assortment is 60% to 65% wallet-friendly, serving independent retailers primarily and builders secondarily.

But examining the category’s perceived weaknesses is also key. “Will it perform and be easy to maintain? Will it be clean and healthy? We need to deliver on that to grow confidence there,” says Quathamer, who reports that Mannington is spending time, effort and energy to fulfill those desires. For example, the company is using “100% solution-dyed fiber and partnering with Microban, the leading antimicrobial brand in market, which has something like 72% consumer awareness; 97% of consumers would prefer a product that is antimicrobial,” he says.

Tarkett Home is leaning into the comfort story. “Our new Cloud 9 [polyester] fiber delivers a luxury comfort story at an affordable price point, and it doesn’t sacrifice performance for comfort,” says Surratt. “Most of our portfolio starts at the mid-level with a focus on bringing a unique, differentiated product that drives value for us and the retailer. It rises to the affordable side of the high end.” The firm targets the residential remodel primarily with some builder and multifamily specifications at the mid-level of those markets.

“With room-to-room design, consumers are more willing to choose pattern and color, and they will pay more to have an option that fits their design taste,” reports Coffin. The goal of The Dixie Group, which serves the mid-market and up with a focus on residential design, is to elevate style and design with a focus on fashion. “In a fast-paced world with lots of noise and distraction when you come home, you want to be comfortable and love your home,” says Coffin.

It is worth noting as well that consumers can often purchase a beautiful piece of carpet for less than they can install hard surface. Carpet isn’t a lifetime floor, but neither are many of the hard surface flooring products popular in the market today. Of course, it is incumbent on the carpet market to tell that story.

“I’ve been in the residential carpet business for the last 20 years, and I think we have hit rock bottom for residential carpet,” says Welborn. “When I first got in, carpet had 65% of the home. Now, it probably has 35% of square footage. It’s never getting back to 65%, but I don’t see us losing more either. We will always have bedrooms, but for high traffic areas, hard surface has won with its waterproof story, design and prices.”

Welborn also points to the HGTV-effect, which must be confronted head-on. “What we are up against is how HGTV presents carpet to the masses. Nine out of ten couples who renovate say ‘Ew, carpet. That’s dirty.’ Most of the industry doesn’t do direct consumer advertising. The retail stores that sell the most carpet do great local advertising, hitting durability and cleanability hard.”

Another headwind for carpet, notes Welborn, is the fact that big boxes, which do a lot of volume, push hard surface.

Hash points to another potentially problematic factor for carpet-the assumption that all consumers desire hard surface. “Many want carpet but feel pressured to follow a certain trend,” he notes. “If we sell the unique attributes of different types of flooring, the consumer will decide what is important. As an industry we must continue to provide elevated style, design and more exciting products, but these styles must also provide the consumer a product engineered to perform well for them against household durability and soil/stain challenges.”

EDUCATING THE EDUCATORS
With little to no consumer-facing advertising from carpet manufacturers, the industry is reliant on the retail sales associate (RSA) to communicate broadloom’s attributes and value to the consumer.

Seasoned RSAs have been using the fiber performance story for decades to upgrade the consumer and they are slow to adapt to what they are being told about the new polyester. Much like upgrading the consumer on pad, they learned a long time ago that they make more money when the consumer upgrades to higher quality, better performing flooring.

Andolino and his team commit a lot of time to RSA training. “It’s critical that RSAs know and understand as much as they can so they can answer consumers’ questions,” Andolino notes. “We don’t want RSAs to undersell or oversell. Just because it’s expensive doesn’t mean it’s stainless steel and will last forever. Expensive means difficult to make-the highest quality of materials and practices. And these products need to be installed in the right places. Not every one is good for stairs. Some can go in hospitality or light commercial, but if the RSA doesn’t understand those details, they will never sell it that way.”

Surratt believes that the best sales strategy for carpet is leaning into its differentiators. “Comfort is a key attribute for our customer, and that has been missing from an education standpoint,” he says. “A lot of marketing materials push durability because hard surface touts durability. But leaning into what makes carpet unique-acoustic benefits, comfort and the fact that you can get a higher-end piece of carpet at a much more affordable cost than hard surface-is more effective.” To this end, in 2023, Tarkett Home created presentations that territory sales could use when they are talking about its products, so that “we are all singing from the same music,” says Allison Bromwell, director of marketing for Tarkett Home. “This gives them confidence in speaking to RSAs, which, in turn, gives RSAs confidence in speaking to consumers.”

Adds Hash, “Technology in the form of video conferencing, online learning and social media sources will continue to play a role in education. The key is to make sure the RSA is asking the consumer questions that will help them find the right product for their needs. The RSA can be a real hero to a consumer by taking the time to understand their lifestyle and suggesting the right flooring for them. Seventeen percent of the U.S. population is 65 years or older. This is typically the generation that thought carpet was a luxury and may still want this option but may feel swayed toward hard surface flooring by the RSA because of the overall popularity of the category.”

“We find that when an RSA is open to learning the basics about fiber and construction, the sales results are exponential,” says Siebold. “That type of information and education leads to more confidence regarding application, care and maintenance, which are, ultimately, the key topics every consumer is concerned about.”

England points to the power that point-of-sale merchandising also plays-for both the consumer and the RSA. He notes, “Our display fixtures and samples are important in that effort, as well. The Anso Colorwall, the Pet Perfect Destination display launched last year, the Simply The Best marketing kit that attaches to the 24-pin flex merchandising displays, and now the Shaw Floors Classics display from this year are all geared to allow the RSA to familiarize themselves with the features and benefits that resonate with consumers and also assist in the event a consumer needs to shop unassisted during parts of their journey.”

BUILDING RELATIONSHIPS WITH BUILDERS
Similarly, builder education is very important to broadloom producers, as they can amount to significant square yardage across neighborhoods of homes.

“Keeping builders abreast of where the market overall is moving from a product standpoint is key,” says Surratt. “Rather than the same old thing, we educate them on what the consumer is really looking for and make sure they have that in their portfolio.”

England notes that carpet manufacturers must also work hard to understand the preferences and needs of builders.

“New home construction costs and elevated mortgage rates continue to pressure builders into specifying only base-grade products,” says Hash. “Providing this channel with incremental, affordable and thoughtfully designed upgrades will provide better results for manufacturers, dealers and homebuilders. Delivering a more desirable and better-performing solution for the homebuyer is key.”

It’s important to remember that impressions of a material often stick with the consumer. A poor-performing, base-grade broadloom in a starter home may lead to a lifelong disdain for the product, so an upsell to a higher-quality product isn’t necessarily just a short-term win but also a long-term one.

“Historically, the biggest challenge has been that flooring is the last consideration in many cases during the build process,” notes Siebold. “People spend the majority of their upgrade dollars on cabinets, lighting and plumbing fixtures. If we could get the builders to offer better carpet as a base-grade option, it would elevate the entire interior finish as well as the opportunity to offer even better goods as an upgrade.”

Adds Coffin, “There is always price pressure in the builder market, so much gets value engineered to hit a price. We’ve got to show why better is better, and builders have to want to get their customers a better experience in soft flooring. We have heard about some movement back to carpet in basements and large open coverage areas that had gone LVP.”

SUSTAINABILITY
Today’s consumers are becoming more concerned about the sustainable profile of products they purchase than ever before. And while it may be true that many consumers aren’t willing to pay significantly more for a green product than a conventional one, it is still important that manufacturers have their environmental ducks in a row, as these issues will only become more significant with time and climate change.

Carpet may not be the first product that consumers think of when they are seeking a green choice. That is due to both the fact that carpet-wool excluded-is an oil-based product but also because carpet hasn’t effectively extolled its own virtues with regard to sustainability.

Notably, carpet is the only flooring category with a large-scale, functional reclamation and recycling infrastructure in this country. Used nylon carpet doesn’t simply have the possibility of being turned into new fiber-it’s actually happening. But it’s safe to say that the bulk of consumers aren’t aware of this fact, as the industry does little to tout it.

“As an industry, we have sold ourselves short on sustainability with broadloom over the last ten to 15 years,” says Surratt. “The migration away from piece- and continuous-dyed products meant less water usage. The amount of recycled material we’re incorporating into backings and fibers is increasing. We probably don’t tout it well enough.”

Of course, poring through green claims is no consumer’s favorite pastime, which is why third-party verifications are so important.

“The consumer should look for certifications from organizations that support sustainability and environmental standards,” notes Hash. “The durability and longevity of carpet has improved dramatically. This makes it more sustainable than ever before because it lasts longer in the home.”

And Siebold believes it’s about getting back to the basics of product construction, “We need to consider wool as a first option instead of second or third,” he says. “We also need to continue developing more products that leverage recycled materials to create yarn and backing.”

Copyright 2024 Floor Focus 

Related Topics:Anderson Tuftex, Mohawk Industries, Shaw Industries Group, Inc., Karastan, Tuftex, The Dixie Group, Tarkett, Mannington Mills, Masland Carpets & Rugs, Shaw Floors