Rug market battles blahs with better values
By Lissa Wyman -- Furniture Today, January 20, 2003
Atlanta — Just like the weather, everyone talks about the economy, but rug producers did something about it at last week's International Rug Market here. Tired of three years of business blahs, many vendors introduced product at value-oriented price points to lure retailers and consumers into the market again.
These middle-market rugs were not confined to machine-made goods. Many new hand-tufted and Tibetan-knot products are now falling into the $400 to $600 retail price category. Even high-end vendors are developing products geared to price points under $1,000 for a 6 by 9.
"Moderate prices are what's driving the rug industry now," said Alex Peykar, a Nourison principal. "Consumers are looking for perceived value."
He doesn't see a turnaround at the high end for some time, but is cautiously optimistic about 2003, with an improved economy likely in the second half.
Peykar said service remains key as retailers continue to whittle costs. "They count on suppliers more than ever to be in a deep stocking position," he said.
Although the economy has been soft, there is still life in the rug business, said Mike Riley, executive vice president of Sphinx by Oriental Weavers. "We ended 2002 ahead of 2001 and we are extremely positive about 2003," he said.
"Retailers tightened up on inventory in 2002," said Riley. "They are much more efficient operations. A lot of department stores and other large retailers will be more aggressive and will push harder in the coming year."
"Our focus is on the high-volume, midlevel portion of the market," said Reza Momeni, president of Momeni, which imports hand-made rugs.
"2003 will continue to be a challenging year for all consumer goods," said Charles Peck, president of Trans Ocean Imports, "That means we have to work harder in developing fresh looks and new color palettes."
Peck said Trans Ocean will continue to make inroads into the specialty store channel. "The furniture and floor covering store category will grow at a much higher rate than other channels," he predicted. "We are developing a lot of proprietary products for furniture stores. They want to create differentiated looks that are not available in other stores."
Samir Abuhadba, general manager of United Weavers of America, said, "I think we will be seeing recovery in the second half. We are using this period to build internal service systems, installing a new computer system for greater efficiency."
He said UWA has forged closer ties with retail partners during the downturn. "Our key customers have truly become partners in the design process," Abuhadba said. "They told us they want good products at better prices, and they say that middle-income consumers want casual, comfortable looks. That's what we're giving them."
Ivan Phillips, president of Delos, a year-old importer, said, "We are non-traditional and non-mass market, so we are in a perfect position for growth.
"In this economy, we'd rather be a little guy with a small line rather than a big guy that's just trying to feed the monster."
"I think 2003 will be a very good year," said John Shepherd, chairman of 828 International Trading. Known for its aggressive pricing, 828 filled out the line by introducing hand-made products at slightly higher price points. Shepherd said the company also is eyeing the home chain channel.
The move into popular priced hand-made rugs began a few years ago. It spread from large importers such as Nourison, Momeni and Feizy to machine-made specialists such as Sphinx by Oriental Weavers, 828 International and Hellenic.
Vendors say they are listening closely to their retail customers and the consumer.
Harounian Rugs International, known primarily for its hand-knotted antique reproductions, is now appealing to a broader market, said Lee Harounian, a principal of HRI.
The high end has been hit by the recession, executives noted.
"As a result, we are placing a new emphasis on the popular price points for which we have not been historically known," said Gene Newman, chairman of Noonoo.
Jaipur Rugs, best known for intricately patterned hand-knotted rugs that retail in the $2,000 range, made a major departure with a series of dense hand knots in subtle tone-on-tone contemporary designs. Retails will be under $1,000 for a 5 by 8.
Meanwhile, makers of small accent rugs like Burlington Rugs are moving to larger rugs. "Our goal is to be a major supplier up and down the various channels of distribution," said John McCleod, vice president of sales.
