Rug show points to busy year
By Lissa Wyman -- Furniture Today, January 23, 2005
Atlanta — The rug industry is optimistic. Vendors at last week's International Rug Market at AmericasMart Atlanta showed an unusually large number of introductions and said show attendance was the best in years.
A rosy sales outlook is just part of the story. Vendors foresee 2005 as a year of dramatic change in retail channels, sourcing and marketing approaches.
Large vendors look to keep getting larger as they target multiple retail distribution channels. Shaw Living, for instance, aims to become a factor in both the mass market channel and with independent furniture and floor covering stores, according to Jeff Meadows, vice president of the division.
"The rug business has come to the point that major players must provide a whole range of products and services tailored to each retail channel," he said.
Shaw continues to deepen its commitment to its Kathy Ireland collections, with traditional and contemporary designs at every price point. "We now have a true good-better-best selection of Kathy Ireland products, from woven polypropylene to nylon to wool," said Meadows.
He said the company also is introducing proprietary soft-yarn and stain-repellent technologies that are new to the rug business and "allow us to differentiate ourselves from other manufacturers and importers."
Mike Riley, executive vice president of Sphinx by Oriental Weavers, said the rug business spiked in the last quarter of 2004. "2005 sales will continue to be strong as we develop new retail markets and broaden our product line," he said.
The growth of the mass market retail channel is one of the most significant trends in the rug category, Riley said.
"Wal-Mart now accounts for approximately 15% of the home textiles business and by 2007, that is expected to rise to over 45% of the market," he said. "You can't ignore that. We have to adapt and keep running ahead of the pack. In 2005 we will be adding new product lines and developing new marketing techniques for individual retail channels."
Oriental Weavers, which is headquartered in Egypt and also has manufacturing facilities in the United States, recently began sourcing both hand-made and machine-made rugs in China.
"Everything looks good for the rug business except the exchange rate. The dollar stinks," said Ron Couri, CEO of Couristan. Couri said sales volume was strong in the second half of 2004, but profit margins were affected by the strength of the euro against the dollar.
"Our 2004 introductions have been well-placed and should start bringing in significant volume in early 2005. We also think we have a strong introductory line this January," said Couri.
Steve Mazarakis, president of Hellenic Rug Imports, also is bullish. "We're in a major growth mode, so we expect 2005 increases up to 50%," he said. Hellenic introduced its first Bob Mackie rug collections last week and Mazarakis is predicting a long and successful partnership.
"It's going to be HUGE," he said.
Hellenic is introducing marketing programs tailored to the needs of various channels of distribution, he said. "We are developing container programs for large furniture chains. We are also developing new products and programs for the Internet business, which will become a separate profit center for Hellenic this year."
Don Newton, who joined Orian Rugs less than a year ago as vice president and general manager, predicts that this will be the year the company begins to benefit from dramatic changes the company has made.
"Now we've got the people, programs and products in place," he said. Last week, Orian introduced the J.Garcia product line, based on the art of rock icon Jerry Garcia. "It's our first licensed collection and early response has been very strong," he said.
Orian, best known for selling to the mass market, is now targeting furniture, rug and floor covering specialty stores. Judging from the retail bookings at January market, the year of change is already paying off, said Newton.
"It's been our best market ever," he said.
Jim Thompson, vice president of sales and marketing for the rug division of Natco Home, also is looking for growth this year. The company's Central Oriental rug line is best known as an importer of Belgian rugs, but in the past 18 months it has added American machine-made rugs to its mix. "Our new cross-woven line is made in Maine and early retail reaction has been very positive," said Thompson.
Central also is introducing hand-carved poly-propylene rugs from Turkey, which will retail at $299. Diversity of sourcing allows the company a buffer against the vicissitudes of the American dollar against other currencies, he said.
"We continue to show our Belgian products, and we have not raised prices," he said. "However as the dollar continues to weaken, profitability has become an issue. Turkey offers a lot of capacity and a lot of interest in the development of new products."
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