Rug vendors key on value
By Lissa Wyman -- Furniture Today, March 31, 2003
High Point — Rug vendors are introducing collections designed to give High Point shoppers the Mother of All Values.
With retail prices under $499 for a 6 by 9, these MOAV rugs are coming from virtually every source, including traditional high-end producers.
Like every other industry, the rug business is suffering geopolitical jitters this spring. But that's just part of the story. As rugs enter the nation's mass market mainstream, the downward pressure on prices is becoming critical in every retail channel. That's where MOAV rugs come in.
"In the present state of the economy, people want value, value, value," said Amir Loloi, president of Feizy rug. "They are not making long-range plans, they are putting major decisions on hold. But if we give them excitement and value, they'll make the commitment. We are going into High Point with a full deck of brand new products. We've got to keep our customers happy and excited."
The combination of outside economic factors and increased competition is favoring larger vendors with the resources to weather the storm and continue to develop new products.
"Being an undercapitalized small importer would not be a pretty place to be at this time," said Mike Riley, executive vice president of Sphinx by Oriental Weavers.
Rounding out the mix
Best known for its medium and higher priced machine-made and hand-made rugs, Nourison is introducing a large collection at the value-oriented $199 price point.
"The line is rounding out our product mix," said Alex Peykar, a Nourison principal. "It doesn't mean we are changing our marketing direction."
Peykar said companies that keep their focus are best equipped to hold their own in a fragile economic climate.
"There will always be ups and downs in the economy, for many different reasons. But if we continue to concentrate on what we do best, we will go forward. That's always been our philosophy," he said.
Peykar said the company is also expanding its assortment of accent rugs presented at the New York Home Textiles Show, taking place just before High Point. The hooked rugs retail at less than $100 in 4 by 6 size.
"We entered that business recently and have found niches of opportunity. This spring, we are introducing our most extensive assortment to date," he said.
Peykar added that the high end of the market — over $5,000 in 9x12 — has felt the brunt of the economic slowdown. "The industry is in 'maintenance mode' at the high end, but we're not giving up on it by any means. It will come back."
Reasons for optimism
"The long winter and unsettling international political climate have resulted in tough times at the retail level. However, I do see a spark of optimism at the store level for spring," said Joan Catello, sales manager for Kas Rugs. "Retail traffic may be down, but the amount of business we do is still incredible. The rug industry has grown significantly in the past 10 years."
In tough times, attitude is a key ingredient for success, Catello said. "The most successful retailers and suppliers are the ones that approach the business with an open mind and fresh merchandise."
No matter how optimistic executives are, no one is predicting this High Point market will set any records.
"We have modest expectations for traffic, but we will be going into the show with new products and strong promotions to help stimulate retail sales," said Ron Couri, president and chief executive officer of Couristan. "Things are a little rough out there now, but our new products were well received in January. We are preparing for the best."
Samir Abuhadba, general manager of United Weavers of America, said his company is emphasizing value-oriented products and is coming off a successful round of winter markets. "So I'm also anticipating a good High Point market," he said.
Abuhadba said the company's rug and furniture throw combination has been a hit. "Many retailers are using the matching throws as a premium promotion with the purchase of a rug. We are expanding that program to include over 15 patterns. It's been a great door-opener for us."
United Weavers, headquartered in Saudi Arabia, is a major international provider of carpets and rugs. "The worldwide economy has slowed, but fortunately we are able to use this period to improve our technology and internal systems. We can adjust to changes in the market. We'll be OK," said Abuhadba.
Also moving full steam ahead with expansion plans is Sphinx. The U.S. importing arm of Cairo-based Oriental Weavers opened its first New York showroom this spring and will enter the hotly competitive textile rug arena aimed at linens and domestics customers.
Known primarily as a high style, mid-market supplier, Sphinx expanded into hand-made rugs less than two years ago. The line now covers the full spectrum of rug constructions and price points.
Sphinx's entry into the Mother of All Values product race is a new polypropylene line offering fashion-forward looks at $199.
Meanwhile, Oriental Weavers USA, the domestic manufacturing division of Oriental Weavers, also is making an aggressive bid to offer the MOAV. The new Florent line, introduced in honor of a longtime executive, the late Paul D'huyvetter, will retail at $149.
"This product line covers the full range of styling, and it's right at the most competitive level of the rug business today," said Steve Stultz, senior vice president of sales and marketing.
Small retailers coming?
Lee Harounian, a principal of Harounian Rugs International, said that the company has increased its bookings for appointments at market. "We are going in with new products and high hopes. We have a lot of appointments with the larger stores, but we will have to wait and see if the smaller independent stores will also be there."
Once devoted exclusively to imports, Central Oriental is now also making rugs in the United States at parent company Natco Home's facility in Maine. "We are making a major expansion in domestically made products. This area will be increasingly important for us," said Mark Ferullo, president. Central also is adding new sizes and shapes to its best-selling product lines, he said.
Even at higher price points, the value story is important.
At Jaipur Rugs, which has specialized in hand-knotted rugs in traditional styling, contemporary and transitional designs are becoming more important. "Our presentation of contemporary rugs will be greatly expanded at High Point. Price points are lower, but these rugs offer incredible value and quality," said Bob Kirby, president.
Consumers may be temporarily spooked by the current geopolitical situation, but for the long term, the home furnishings industry looks promising, said Steve Mazarakis, president of Hellenic Rug Imports.
"We specialize in the middle to low end of the price spectrum, and that's where we feel the growth will be in the next five years," he said. "Overall, we have an extremely positive attitude. We are taking the present situation in stride, and we will continue with our expansion plans," he said. "We are up over 30% in the first quarter and we think we have a lot to offer."
In less than a year, newcomer Delos has already carved a highly specialized contemporary niche for itself, according to Celeste Phillips, executive vice president.
"We have a look and we are zeroing in on it. We're small, we can't have the same rugs that everybody else has. We've got to give people a compelling reason to buy from us," she said.
The Delos line features large-scale designs and vibrant colors. Phillips, who is also the lead designer for Delos, said it's important to be in tune with the fast-paced color changes in other consumer categories such as apparel.
"I let my imagination go," she said. "I'm using a lot of purple, red, olive greens, oranges, glacier blue and combinations of black and white. I want the line to be as vibrant as possible."
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