Last year holds lessons for future rug business
Lissa Wyman, Rug Editor -- Furniture Today, January 14, 2007
I'm a believer in letting history guide our behavior. Now is the perfect time to reflect on how developments in 2006 will affect the rug industry in 2007 and beyond. These items, in no particular order of importance, will affect our business in different ways. But we'd better learn from them ... or else.
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Diversification. As the industry matures and the fight for market share becomes ever more intense, rug vendors are reinventing themselves. Safavieh, Abbyson and Due Process have entered the furniture business. Big furniture vendors like Klaussner are entering the rug business. Meanwhile, rug vendors are diversifying within floor coverings, with Couristan, Nourison and Karastan making major introductions of coordinating broadloom carpeting, rugs and runners.
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Profitability or, more specifically, the lack of it. The free fall of rug prices continues at an alarming rate. I traveled all over the world in 2006, and the message from rug makers is the same everywhere: We can't make a decent profit. That may be great for the consumer, but quality as well as profits are being squeezed out of our product. Where will it all end?
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Home Depot's acquisition of Home Decorators Collection. This surprise announcement in April 2006 indicates how seriously Big Orange is taking the rug business. Home Decorators is one of the top catalog sellers of rugs. Home Depot is already the largest U.S. retailer of broadloom and hard-surface flooring. It's upgrading its rug selection, and hand-knotted rugs at over $1,000 retail are now hanging side-by-side with machine-made rugs at $200. The last time I was in a Home Depot, a nice young man actually came over to ask me if I needed help. Add it all up and Home Depot could make a major impact in the rug business.
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Internet rug retailers expanding into catalog sales and even brick-and-mortar stores. Taking a cue from eBay, almost all the Internet rug giants have also developed auction sites. Meanwhile, rug vendors are looking to the Web for new ways to provide services to customers. Sophisticated vendor sites now allow retailers to buy goods and track orders online. I predict that both retail and wholesale will continue to find new ways to use the Internet.
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Couristan and Haima Enterprises create Couristan China. Not only will Couristan make rugs in China, it's moving its entire Axminster carpet production to China, shifting its focus from Europe to Asia.
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Personality parade. Martha Stewart and Safavieh. Nourison and Liz Claiborne. Jessica McClintock and Loloi. Jaclyn Smith and Dalyn. Feizy and Sandra Lee. Feizy and Tracy Porter. The list goes on and on. My opinion: Names alone will not sell rugs. Licensed collections have to be merchandised properly at retail.
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