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Rug importer Kas planning to double volume in 5 years

By Lissa Wyman -- Furniture Today, April 8, 2007

Somerset, N.J. — 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 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 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 company will have a 6,000-square-foot showroom in Building C of the World Market Center in Las Vegas, which will open in July 2008. Kas recently doubled its showroom space at The New York Textiles Building, where national chains do much of their buying. It also shows in High Point.

"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.

Kas has demonstrated an ability to remake itself and prosper in the rapidly changing rug industry. In the future, it expects growth to come from machine-made rugs, especially with national accounts.

"Penetrating this market is a process," Newton said. "But we feel we have the products, the prices and the service to be an important player in this channel.

"We're not going after national accounts instead of our core retailers, but in addition to them," he added. "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 5 by 8 size, with the sweet spot now at $199. "The best price point at the mass-market level is now $149," Tummala said.

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."

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Kas aims to double business in 5 years

Mar 28, 2007

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