Rugnews.com Editorial:
DECADE IN REVIEW: FROM HEIGHTS TO
DEPTHS IN 10 YEARS -- WHAT A RIDE!

By Lissa Wyman

People often say the rug business is like a roller coaster ride. But in the last few years, there haven't been many "ups" from which to plummet. If we must go to amusement parks to get our analogies, I'd say the rug business is more like a Tilt-A-Whirl. That's the ride that jostles you against your riding mates 'til you turn black and blue and spins you around until you throw up. No matter how much you cry, it won't stop and let you off.

The past ten years have been quite a ride, alright. The best we can do is learn from history on the off-chance that we won't have to repeat it.

At the turn of the new century, the rug industry was still doing well, after peaking in the late 90's. At the end of the first decade, the rug 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 became cheaper, profits became more elusive.

That’s what happened to the rug throughout the 2000’s. They got cheaper and cheaper. In all senses of the word. The irony is that people got very good at making very bad rugs. Like girls gone bad, a lot of cheap rugs are very pretty. It's easy to be seduced by their charming designs and colors.

At the turn of the century, American consumers seemed to have an insatiable desire for rugs. They turned up their noses at cheap wall-to-wall carpeting and opted for hardwood and ceramic tile floors. Rugs were -- and are -- a perfect complement to smooth surface floors.

Everybody wanted rugs and the rug industry wanted to accommodate them. “Perceived value” became the rallying cry of the 2000’s.

Unfortunately, “Inherent value” got lost in the race to sell more-more-more.

Rugs spread from independent specialty stores to mass market retailers. There was constant pressure at all levels to keep pushing prices down to reach a wider and wider audience.

The Internet came along. Brick-and-mortar retailers claimed Internet retailers had an unfair advantage. Predatory consumers  shopped rugs on the Internet and made it a game 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 They wanted something called “price protection,” a quaint concept that went out of date around 1979.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.

Rug makers around the globe developed new techniques to crank out rugs faster and cheaper. 

Manufacturers in nearly every country invested in huge, expensive Van de Wiele looms that churned out rugs at an alarming rate.

Manufacturers could provide a rug for every man, woman and child 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 problems.  Manufacturers in India and China developed new techniques to produce hand tufted and hand knotted rugs at prices that were once reserved for bargain basements.

Hand-tufted rugs became the most popular handmade construction in the world and flooded the market. They were cheap and pretty and could be called "handmade."

Many  importers saw this as an opportunity to enter the mass market world.  Everybody and their brothers and cousins thought it was a great idea. The number of rug has importers doubled over the past decade. 

In the past five years, when the market really started to go wobbly, many overseas manufacturers established distribution in the U.S.  Others decided to go directly to US retailers. 

These developments  have caused a great deal of tooth-gnashing and garment rending.

That's where we are now. What a mess.

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 on the horizon.  For one thing, I think that manufacturers and retailers are moving away from the concept of being all things to all people.

 I  predict more specialization for 2010 and beyond.

I see vendors developing ideas to define and differentiate themselves in an over-crowded market. They are developing truly innovative products never before seen on the market. They are 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 mob scene to focus on  true partnerships with a select number of retailers. They are working on thorny inventory issues to keep supply lines flowing.

Retailers who survived the past decade have done so because they are smart, not because they are lucky.

They're trying to get off the Tilt-A-Whirl and develop new ideas that will attract today's young, high-tech customers.

They are embracing new ways to service customers. They are using the Internet in partnership with their customers. They are trying new business models that entail sleek in-store selling aids such as flat-panel computer screens. They are engaging customers in the creative process of designing rugs. They are (finally) emerging from the dingy store fronts of the early 20th Century and developing new showrooms that are filled with light. They are working on building trust, not suspicion.

Can the rug industry be saved? I hope so.

Happy New Year, everyone. Peace on Earth.

12.31.09