Kas aims to double business in 5 years
Plans to diversifying its product
Lissa Wyman -- Furniture Today, March 28, 2007
AT THE MARKET — Kas Oriental Rugs, the 26-year-old rug importer, has launched a plan to double its business over the next five years.
The expansion will come on several fronts: by building sales to national accounts, furniture stores and Internet retailers, and by diversifying its product.
In January, Kas named industry veteran Don Newton as vice president of marketing. He is focusing on national retail accounts, a channel with big potential, according to Rao Yarlagadda, president.
"Newton’s appointment will bring great opportunities for Kas to expand distribution and take Kas to the next level of business," Yarlagadda said.
Newton is traveling the country with the sales staff, and on his own, to keep close tabs on what is happening at retail, said Yarlaggadda.
Newton rounds out an executive sales team that includes Yarlagadda and Hari Tummala, executive vice president, who heads product development.
Kas is expanding its presence at markets as well. The Somerset, N.J.-based company signed an agreement in January for a 6,000-square-foot permanent showroom in Building C of the World Market Center in Las Vegas, which will open in July 2008. Kas also recently doubled its showroom space at The New York Textiles Building, where national chains do much of their buying.
In High Point, Kas shows in the International Home Furnishings Center, D-301.
"We have always sold some products into mass market channels, but now we are focusing on the large stores because that’s where we see the greatest potential," said Yarlagadda.
But he stressed that growth in national accounts won’t affect the company’s core strengths with independent, mainstream retailers such as furniture and specialty stores.
"We are especially interested in getting greater market share in the furniture store channel, as more home furnishings stores become full-service businesses," he said.
In its 26 years, Kas has demonstrated an ability to remake itself and prosper in the rapidly changing rug industry.
"We began as a traditional rug importer selling hand-made Indian rugs," Yarlagadda recalled. "Today, we import both hand-made and machine-made rugs from countries such as India, China, Turkey and Belgium."
In the future, Kas is expecting its growth to come from machine-made rugs, especially in the national accounts channel. Newton, who has more than 20 years of experience in national accounts, is optimistic about the company’s potential.
"Penetrating this market is a process. But we feel we have the products, the prices and the service to be an important player in this channel," he said.
"We’re not going after national accounts instead of our core retailers, but in addition to them," he said. "We never want it to become a dangerously high percentage of our business."
Yarlagadda and Newton also noted that the company offers differentiated designs and colors for each retail channel.
"We have a very broad product line and we don’t have to sell the same products to everyone. We offer all our customers protection," said Yarlagadda.
Tummala said the biggest changes in the rug business have been the explosion of products and the simultaneous dropping of price points.
"In the hand-tufted construction, our strongest retail price point is now $399 to $499. Some of the big container customers are selling hand-tufted rugs for as low as $199," he said. "Five years ago, the best selling price point was $699 for hand-tufted rugs."
In machine-made, Kas rugs range from $99 to $399 in a 5 by 8 size, with the sweet spot now at $199. "The best price point at the mass market level is now $149," Tummala added.
He said consumers are getting great value and fashion for the price. "There may be a quality difference between high- and low-end rugs, but the colors and designs are basically the same."
With the commitment to expansion, the Kas executives said the company can never rest on its laurels.
"We can’t take a break from new product offerings, and our strength has always been color and design," said Tummala. "We introduced 425 new designs in January, but when we go to High Point, the first question our customers will ask is, ‘What’s new?’ If we don’t have something new to show them, they will go across the hall to a vendor that does. Constant fashion change is what drives this business."
Added Yarlagadda, "We are not afraid to make the commitment to sampling and inventory."
In addition to its three top executives, Kas has a group of fresh young talent.
In January, the company named Brandon Culpepper as national sales manager, with responsibility for all regional managers and independent sales agents.
"In the past, virtually all are sales were generated by independent sales agents. As we grow, we are adding more company-employed salespeople," said Yarlagadda. Kas recently announced the appointment of regional sales managers in the West and Midwest.
Wendy Reiss has been with the company for several years and is responsible for key accounts and advertising.
"With new colors and designs and expanded emphasis on national accounts, Kas has a lot of potential for growth," said Reiss.
Yarlagadda’s daughters, Santhi and Kranthi, also play key roles. Santhi is responsible for Internet, catalog and new business development, while Kranthi heads operations and customer service.
"The Internet channel is still in its infancy, but it has already become a stand-alone sales category. In the next few years, this category could double or triple in sales. We want to be part of that growth," said Santhi Yarlagadda.
With the plan to double sales in five years, it will be Kranthi Yarlagadda’s job to get products through the pipeline in timely fashion.
"Over the past few years, we have updated our operational systems," she said. "Our sales and service people work together as a team, so we are ready to handle the company’s growth."
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