Value, fashion are main drivers for rugs
By Lissa Wyman -- Furniture Today, April 13, 2003
High Point — Last week's market yielded few surprises for rug vendors.
Walk-in traffic was virtually nonexistent, but key accounts kept appointments. Splashy introductions were rare. For the most part, rug resources re-introduced collections they had shown at Atlanta's January market, with a few tweaks and additional patterns.
"Value" was the most-frequently uttered word. The high end continues to soften, so every vendor is challenged to bring out high style at low prices. In less than five years, the "sweet spot" for hand-tufted rugs has declined from over $1,000 to less than $400 in a 6′ by 9′ size. Machine-made polypropylene rugs used to be in the $299 to $599 range. Now the best-selling range is $99 to $199.
The less expensive rugs are not only for discount and mass-market channels, say rug vendors. Even furniture and department stores need some hot price points to stimulate business.
"The market is looking for value, but it is still sensitive to fashion. So if you can combine those two elements, you can hold your own," said Alex Peykar, a principal at Nourison.
Nourison's new Versailles Palace collection was a case in point. Hand-tufted of wool and art-silk in formal 18th-century designs, it retails at $700.
Rug vendors are developing closer design ties to the furniture business. These product-to-product partnerships are in their infancy, but everyone agrees it's a great way to help furniture retailers sell rugs that coordinate with specific furniture lines.
The Drexel Heritage-Miresco partnership is an example. The Houston-based importer developed a group of 10 rugs to coordinate with Drexel's Under the Tuscan Sun collection, and is developing rugs that go with other Drexel Heritage furniture collections.
"For retailers, this makes it easier to sell rugs with confidence," said Lisa Dennis of Miresco. "They don't need a lot of technical expertise, For the consumer, it takes the guesswork out of choosing the right rug."
An entire rack of Hellenic rugs has been set up for Ashley HomeStore retailers.
"The Ashley design team went through our line and chose the rugs that coordinated with their furniture," said Steve Mazarakis, Hellenic's president. "It's a no-brainer for both the retailer and the consumer."
The biggest rug news this market was price. Low price.
Even the venerable Karastan had value-oriented products. A new machine-woven Wilton line, made of a proprietary Eversoft nylon, will retail under $500, said Bill Storey, senior vice president.
"We will always continue our flagship look of classic Oriental styling, but it's a big world out there," he said. "We are also trying to capture a younger customer."
"It's not enough to have the right look," said Mark Mahdavi, president of Mahdavis. "Now you have to have the right look at a price. Consumers want more for their money than ever before,"
Wolfgang Rempen, president of Foreign Accents, said, "Perhaps the reason we're ahead for the year is that we've created a color and value story in the contemporary market. We have over 100 designs that retail for less than $500. It gives the retailer the opportunity to get into the contemporary business with a very modest investment."
Charlie Peck, president of Trans-Ocean, said the company's midmarket emphasis has helped it weather the current economic storm. "Our biggest advantage is that we have middle-tier customers and middle-tier products with high-fashion looks," he said.
At Kas Oriental Rugs, principals Rao Yarlagadda and Hari Tummala said the market was slow, but they expressed optimism.
"The problems in the economy seem to be more psychological than real," Yarlagadda said. "When the war in Iraq is over, I believe the rug and furniture business will be back on track again."
Not every vendor is developing lower-priced products. Shaw Rugs unveiled more premium merchandise this market, and was one of the few to make a major product introduction. Its William E. Poole collection, in collaboration with the luxury home designer, is a group of classic designs in either wool or nylon retailing at $500 to $800.
Shaw also made its entry into wool and silk hand-tufted rugs from China with a new group of Tommy Bahama designs that will retail at $1,000. In addition, Shaw introduced a step-up Kathy Ireland Gallery collection at $349.
"Everyone else seems to be chasing the $99 rug, but we are going in the opposite direction," said Jeff Meadows, vice president of the Shaw Rugs division. "All the programs we're developing for furniture and floor covering stores are moving in the direction of higher quality. We must be doing something right. Business is growing at a double-digit rate."
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