Can the rug industry stop its downward spiral?
Lissa Wyman, Rug editor -- Furniture Today, January 4, 2010
At the turn of the new century, the rug industry was prospering. At the end of the first decade, the industry was in tatters.
I'm no Ben Bernanke, but I think I can summarize the whole mess in one sentence: As the products we sell become cheaper, profits become more elusive. That's what happened to the rug throughout the 2000s.
“Perceived value” became the rallying call of the decade. “Inherent value” got lost in the race to sell more.
Manufacturers in India, China and the United States developed new techniques to crank out rugs faster and cheaper. Rugs spread from independent stores to mass market retailers. There was constant pressure at all levels to keep pushing prices down to reach a much wider audience.
Consumers pressured retailers. They shopped rugs on the Internet to find the cheapest price possible.
Traditional retailers pressured manufacturers and importers. They wanted something called “price protection,” a quaint concept that went out of date around 1979. Mass market retailers threatened to withdraw their love from vendors unless their price demands were met.
Manufacturers installed high-speed looms that could provide a rug for everyone on the planet in about two minutes. When the manufacturers had trouble getting orders to keep the machinery rolling, they did the only sensible thing — they cut prices.
Importers were having their own set of problems. Manufacturers in India and China developed new techniques to produce hand-tufted and hand-knotted rugs at bargain basement prices.
Many importers saw this as an opportunity to enter the mass market. The number of rug importers doubled over the past decade. In the past five years, when the market started to go wobbly, many overseas manufacturers established distribution in the U.S. Others decided to go directly to U.S. retailers.
Frankly, I don't have any answers on how to extricate the rug industry from this inevitable downward spiral.
But maybe I'm seeing a few signs of sanity. For one thing, I think that manufacturers and retailers are moving away from being all things to all people. I predict more specialization for 2010 and beyond.
I see vendors developing innovative products and diversifying into new product categories. They are developing custom programs that allow designers and consumers a way to participate in the creative process. Some are bowing out of the mass market to focus on true partnerships with a select number of retailers. They are working on thorny inventory issues to keep supply lines flowing.
Will this be enough to save the rug industry? I hope so.
-
How will 2011's top five stories play out this year?
Jan 18, 2012
Featured Company
-
Wright Labels
Bill and Tom Wright founded Wright of Thomasville in 1961 on the idea that printing was a creative medium and the belief that "a promise made is a promise kept." The Wright brothers focused their attention on providing exceptional printing for the... more
VIEW ALL GALLERIES
