SPECIAL REPORT: AREA RUG EXECS LAY OUT STRATEGIES TO FINISH YEAR STRONG FOLLOWING PROMISING Q1
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HIGH POINT, N.C. -- With the first quarter down, area rug executives here reported a decent start to 2019, and they're putting plans in place to ensure the year finishes strong, according to a RugNews.com survey.
Surveyed area rug executives, some of whom reported a mixed first quarter, said they expected to end the year ahead of 2018. For some area rug players queried at High Point Market, certain areas of business that helped bolster first quarter results included strategies to boost e-commerce, programs to target designers, and improved supply systems. However, most surveyed executives were cautiously optimistic. They're not resting on their laurels heading into the second half of the year and have plans underway to ensure a strong finish to 2019.
Satya Tiwari, Surya; Teresa Roberts, Jaipur Living; Reza Momeni, Momeni; Blake Dennard, Kaleen; Cameron Feizy, Feizy.
"The first quarter has been great," said Teresa Roberts, director of national sales for Jaipur Living. "Over the last year we're seeing double digit growth, mostly in our designer and custom business." To that point, the company announced an expanded custom program just prior to market, followed by a display featuring oversized custom rugs in its Showplace showroom.
At Surya, Satya Tiwari, president, noted that while the first quarter was good, certain areas saw better growth than others. "High-end and low-end are still growing, and e-commerce is doing well," he said. The growth is credited to several years of transition for Surya. "In the last two years, we are a new company," said Tiwari, pointing out that Surya has virtually reinvented itself, from a new warehouse and new operating systems, to a well-stocked assortment of good design at all levels. "We are good-better-best, and everything in between," Tiwari proclaimed.
Nourison's Giovanni Marra said that strong demand carried over from 2018 to give the new year a strong start. The company, at High Point, debuted a new one-of-a-kind gallery of 100 rugs to target the growing demand for current looks and handmade pieces among interior designers and dealers. However, he pointed out that political turmoil and uncertainty surrounding tariffs put a damper on growth during part of the first quarter.
For LR Resources, 2019 results to date also began strong, said Mike Thompson, vice president sales - direct division/GM. "January started off strong, both at market and in our retail accounts. And, mid- to late February, traffic and business in general, moderated to flat with last year.
"But, since mid-April, we have seen improvement and are on track to achieve moderate growth in mid- to small-size retail," he continued. "
Our, larger brick and mortar, as well as e-commerce accounts, are on a steady, moderate growth path too."
Mike Thompson, LR Resources; Brandon Culpepper, Orian; Anupriya Choudhary, Amer Rugs; Giovanni Marra, Nourison.
Likewise at Kaleen, 2019 kicked off moderately. "First quarter and part of Q2 were a little bit soft on the rug side of our business -- pretty much flat with 2018," reported Kaleen's Blake Dennard. "But the broadloom side continues to outpace itself," he continued. "Each time we forecast a big, big increase, we blow it away. That side of our business is outstanding, and it's partly to do with rugs because a big portion of our broadloom is fabricated rugs. We feel like some of the area rug business may be shifting from pre-made on-the-shelf rugs to custom fabricated rugs."
An anomaly among High Point exhibitors, Orian Rugs set a record in Q1, reporting its best in company history. According to chief revenue officer Brandon Culpepper, it was part of a growth spurt from new product intros that are to going increase sales even further as the new Palmetto Living by Orian brand opens doors to more furniture stores and independents, while Orian products continue to serve the company's bread and butter big box and national chain business. "High Point was very positive for us, but we saw a mixed reaction from some retailers who did not have as strong a first quarter they hoped -- yet they were optimistic for the year overall," he reports.
PLANS TO FINISH 2019 AHEAD
With an outlook that's "cautiously optimistic," Marra said that Nourison is working on striking a good balance between e-commerce and brick-and-mortar business. "We're trying to assure both [channels] of our support and attention," he explained. One of the changes was to restrict high-end offerings from e-commerce customers, and to put in place firm IMPA price structures for the rest of the products sold online. "This helps brick and mortar compete," Marra said. In exchange, Nourison is working on creating mid- and lower-end collections based on consumer trends that will be geared towards online customers.
Jaipur Living is banking on an improvement in lead time in custom orders to help drive business this year. The company has pared down delivery time for custom hand-knots from 35 weeks to 25 weeks, and a quick custom order program is available within three to 10 weeks. On Jaipur's website, a custom calculator can estimate price and lead time based on dimensions, shape and pattern. The calculator will be part of an entirely new website that Jaipur will launch soon and which will offer a more user-friendly experience for wholesale customers.
After last year's rebranding, Reza Momeni, president of Momeni Rugs, says this year, the focus is on developing fresh products and making sure strong sellers are in-stock all the time. The company's well-received new licensing partner, Madcap Cottage, is starting to ship, which is helping to give Momeni a boost.
LR Resources introduced two new collections at High Point, Imagine and Outlander, both of which were well received at spring market, Thompson said, adding that the company also grew its successful Naturals collection with new designs. In addition, the company will be debuting at Las Vegas this coming market, and anticipates that will contribute to a strong second half of the year as well.
Ariel Hakimian, Rugs America; Cameron Capel, Capel Rugs; Adem Ogunc, Well Woven
At Rugs America, owner Ariel Hakimian is enjoying a strong start to 2019. "Our online sales are up 400 percent year-over-year," he said. "Our brick and mortar business is good, too." Hakimian credits the success to a strong in-stock position, efficient logistics and on-time shipping.
But of course product design plays a part, too. "Where I have the most success is taking an aesthetic that doesn't exist at an affordable price point, and creating it," he said.
A similar strategy is also winning points at Capel Rugs. "Retailers came to our showroom in good spirits about the state of their business and were ready to buy fresh looks with a strong value proposition," said Cameron Capel, president - sales and marketing, at Capel. "We were pleased by the orders and activity we generated," she continued, noting that two new collections of machine-made wool were top sellers for their combination of value and style to provide retailers the key features they need to meet the needs of today's consumers.
Meanwhile, High Point newcomer Well Woven's game plan is to grow its design team in New York to ensure it has winning products on offer. "Our goal is focusing on the price-conscious consumer, but delivering extraordinary values through our design and production capabilities," said operations manager Adem Ogunc, noting that 2019 started strong. The five-year-old company also is hitting the trade show circuit strong -- summer will be its first time exhibiting in Las Vegas -- to ensure they're in front of the right customers with their offerings.
KEEPING POSITIVE
"Overall, I expect steady growth," said Anupriya Choudhary, director of Amer Rugs. "Our new introductions got a good response, and we're looking to add new accounts." In particular, the company will focus on furniture retailers with drop-shop programs geared towards them. And the company is also improving its operations and bringing in new management to make the systems more sophisticated.
"My expectations are to continue to grow in the double digits for the rest of the year," said Roberts of Jaipur Living. "We're growing and we change with the industry," putting the company in a good place, she said.
Adds Cameron Feizy, principal, Feizy, "Things have been looking up, and we can expect sales to increase. We expect our machine-made business to increase as retailers continue to demand more high-end looks come from the machine segment. Those products are getting more sophisticated."
And, at Kaleen, Dennard expects an up fall and winter. "We are expecting improvement in Q3 and Q4 with the upcoming roll out of our Hilary Farr collections, which we plan to introduce during October High Point. The early responses to her brand have been strong and the cooperation with her Social Media team have already given us a good bump and exposure to her followers."