Fabricated Area Rug Report: Soft surface manufacturers are going long with fabricated rug programs - December 2022
By Jessica Chevalier
Fabricated area rugs offer the ability for a consumer to get exactly what they want in a rug: the precise color, texture, size, shape and finish. And for today’s custom-loving consumer, that is appealing. As such, soft surface manufacturers have invested in growing their fabricated rug programs and are seeing good payoff for those investments, with retailers more than happy to house a fabricated area rug display rather than investing an expanse of valuable floorspace and capital in an expensive selection of rugs that may or may not appeal to their customers’ needs and tastes.
Fabricated area rugs are made from running-line SKUs of broadloom and can be fabricated by either the mill or in-house by retailers themselves. As a rule of thumb, the higher the decorative level of the broadloom, the more likely it is to be fabricated into rugs. Some industry pundits believe the size of the fabricated market to be roughly 54 million yards annually, noting that more fabrication is likely done through the retailer than the mill.
A GROWING BUSINESS
The growth of the fabricated area rug business is due to a collision of other factors, as well. The trend toward using hard surface in the home is an important dynamic in the growth of area rug demand, including fabricated rugs. As wall-to-wall carpet has receded to the more private zones of the home, consumers have sought out area rugs as a way of adding warmth and texture, as well as coziness, to their communal spaces. This isn’t exclusive to fabricated area rugs, of course, but it has increased demand for area rugs of all types, and fabricated rugs offer the significant benefit of being constructed to the consumer’s exact needs for a specific space.
Another driver that has pushed retailers toward fabricated rug programs rather than stocked area rugs is the proliferation of online rug sales. In spite of the fact that, a decade ago, many doubted that a product so dependent on color accuracy and physical feel would be a popular choice for e-commerce, that is exactly where the low and mid-range business has gone. Online retailers like Wayfair, Overstock and Rugs Direct account for a sizable amount of rug business, and that leads retailers to seek differentiated options.
Rug manufacturers have satiated that need with straightforward programs that make the customization process simple for both the retailer and consumer. “If you don’t have a strong and aggressive fabricated area rug story to tell, you will be left in the dust,” says Len Andolino, vice president of The Dixie Group’s decorative division. Andolino, a veteran of the area rug business, joined Dixie in 2021 with the goal of building the company’s wool and decorative product portfolio. The company has workrooms in both California and Georgia for fabricating rugs.
“Stanton has been fabricating rugs for the better part of 20 years,” says Christine Zampaglione, senior director of marketing for Stanton. “Over the last five to ten, we have seen tremendous growth in this area. We do 100+ custom rugs a day.” Stanton’s fabricated rugs are completed in five to seven days.
Kaleen stocks rolls and fabricates rugs in Chatsworth, Georgia. “In my view, customers are moving away from cheap rugs,” says Monty Rathi, COO of Kaleen. “They want good quality rugs, and they want their size, rather than just what’s available. We are shifting from the traditional area rug business to fabricated rugs, a custom quick-ship program. Fabricated rugs are becoming a major portion of our business.”
The prevalence of social media for design has also been a boon to the fabricated rug business, as manufacturers have a direct line of communication to the consumer through which to educate them on fabricated rugs. Manufacturers can easily dispel what may be common misunderstandings about the fabricated rug business, and they can, of course, show samples to attract the consumer’s eye.
At this point, manufacturers largely have well-oiled processes for both retailers and consumers that make the rug fabrication process simple and offer quick turn-around on the finished product.
The stair runner business has greatly benefited from the proliferation of fabricated area rug programs. “When I got into the area rug business,” recalls Andolino, “stair runners were 27” wide and as traditional as you could get. From 27”, they went to 31”, and if manufacturers were really crazy, they’d do 36”. That business has totally eroded. In new homes, the staircases are wider. Today, the stair runner business is alive and well; it’s just done differently. Consumers are choosing beautiful, patterned broadloom and putting it on their staircase. That’s why our new displays say ‘broadloom, area rugs, runner.’ The products can be sold as any of the three.”
One of the great strengths of the fabricated area rug value proposition is that consumers can create the exact look that they want, which means that manufacturers must prioritize style-and a wide variety of it-because consumers have differentiated tastes and needs. As most manufacturers offer styles that can be installed both wall-to-wall and fabricated into rugs, Andolino says he and his team make a point of considering how each SKU will look in the rug format. “Even though we stock it by the roll, up to 50% will be fabricated into a custom size or shape area rug,” he reports. Other industry pundits believe that up to 25% of sales for non-decorative product and up to 40% of decorative product is fabricated into rugs, either by the mill or retailer.
Along with choosing the size and pattern that they want, fabricating rugs gives consumers the opportunity to choose the finish: machine serging, hand serging or micro-serging, or straps for different edgings. Consumers can also choose to have cushions or pads permanently attached. According to Andolino and Rathi, the most popular way to finish a rug is to simply have it serged.
Styling-wise, Rathi has noted that, at recent markets, furnishings, such as couches, have moved away from print, making way for the rug to act as a pop of pattern and texture. Regarding what’s in demand for rugs, Rathi reports, “We are seeing simplicity in patterns with a little bit of color. Consumers don’t want too much color, but they do want some-a sprinkle of color.” Popular tones currently include teal, mocha, light grey, silver, navy, black and white, he says. And he believes that bringing fashion is key to success in the fabricated rug business.
This year, Kaleen began a new distribution program for its fabricated rug business, targeting furniture and rug stores with its displays. The company notes that many of its competitors aren’t going after this business because they are broadloom-based businesses that have relationships primarily with flooring retailers.
Kaleen’s display-offering both broadloom and area rugs-features SKUs that are color-coded at different square-foot pricing levels. Retailers simply multiply the per-square-foot price by the number of feet needed to determine the finished price-whether wall-to-wall or rug. Rathi reports that pricing on its fabricated rugs is generally comparable with prices on high-end stocked rugs.
Kaleen Custom, the company’s online rug portal, allows consumers to build a rug quickly online. “All consumers do is pick their style, color and size, and in five minutes, they can place an order,” says Rathi.
Dixie also has an online portal through which fabricated orders flow. Its portal features a rug calculator that enables retailers to get pricing on custom pieces 24/7. It will soon roll out point-of-sale tools for the fabricated program, as well.
Stanton’s online rug site, called Create-A-Rug, is a simple four-step process that allows customers to customize rugs up to the inch. The technology is applicable for both B2B and B2C transactions. On the B2B side, a retailer can sit with the consumer and design a rug through the online portal, getting pricing immediately. On the B2C side, a rug is created by a consumer online, then the quote is sent by Stanton to a retail partner. The consumer obtains the price quote through the local retailer.
Stanton also offers retail partners a stocked rug program, the products for which are derived from the most popular fabricated rug styles. These products are hand-serged overseas but don’t offer the bells and whistles that customers can get through fabrication, such as binding and backing, and are not available in custom sizes. However, they do have a quick turnaround; stocked rugs leave the company’s Calhoun, Georgia facility in two to three days, a few days faster than fabricated rugs.
As is true for so many industries and businesses, labor is a challenge for area rug manufacturers that are fabricating area rugs. Due to being short-handed, Kaleen has seen its turnaround on fabricated rug orders go from seven to ten days to four to six weeks. “Our goal is to get back to the original span,” says Rathi. “It’s gotten a little better, but not much. Fabrication requires skilled labor. That is hard to find, and the skilled laborers require a lot of money. Finding that new trainee who wants to learn the business has been hard.”
There are some retailers in the U.S. that have built the infrastructure to fabricate rugs in-house. The benefits are obvious: an additional revenue source and potentially faster turnaround for the consumer. The manufacturers with whom we spoke have no good estimate on how many retailers are doing this, as they don’t track how product is utilized once it leaves their hands. However, they do note that the success of such programs hinges on having skilled laborers to run them, and that can be a challenge. Some retailers, such as Delaware-based Airbase, fabricate rugs both in-house and through manufacturer partners. The company’s president, Michael Longwill, estimates that, over the course of the last five years, the fabricated rug business “has grown in the same proportion as business in general.”
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