07132014 Atlanta Summer Market Business Story

By Mary Welch

 As the economy tanked and the rug market adjusted to a downturn, gray, tellingly, became the most popular color in rugs. As the economy slowly improves, rug vendors are seeing blue skies ahead -- and ironically, blue is fast becoming the lead color. And, for those who want to carry the analogy even further, yellow is following close behind. Does that mean the rug economy may see a sunny bottom line soon?

It just may. At the recent Atlanta International Rug Market, vendors were all optimistic.

As Alex Peykar, a principal at Nourison, simply stated,  “The level of optimism we are getting from retailers is increasing.”

Asha Chaudhary, president of Jaipur, said the market has changed dramatically during  the last couple of years because “you can find really amazing styles at every price point. Machine made rugs are gaining in popularity as are natural fibers,” she said.

The key, said Chaudhary, is to “have a huge breadth of products at every price point, listen to the customer and keep evolving.”

The economy is slowing turning around and Capel has been writing a lot of orders, according to Cameron Capel, vice president, national accounts for Capel Rugs.

".We think there is a pent up demand, and we think business will ramp up in the fall. We’re very optimistic and we expect to see growth by the end of the year,”she said.

Tanuj Gupta, president of Amer Rugs, is eying at least 40% growth this year. “The last three years were challenging because we were relatively new in the market and we were establishing our brand. Now, that is in place and we are very optimistic.”

Helping fuel the growth are new lines, new accessories, new celebrity endorsements and new ways to reach customers. But regardless, one tenet still rings true: “Customers want fashion at a good price. It’s called value,” said Mark Ferullo, vice president, Rizzy Rug & Home, which returned to AmericasMart after an 18-month absence.   

Diversification

Surya, which expects a 2014 growth of 50%, is expanding its machine made and indoor/outdoor collections as well as a Global line with Moroccan influences, Oriental, with Asian inspired silk pillows and Art Deco with rich fabrics. “We’re doing a lot of coordination between each category with rugs, pillows, throws, and our designers each bring something special,” said Jim Curtin, vice president of sales, national accounts.

Surya is a leading player in the accessories market, with President Satya Tiwari calling the company a “home accessories” company rather than a rug company and physically separating its showroom at AmericasMart from the rug floors. “Satya is a visionary and truly believes in building a brand,” said Curtin. The company has more than 6,000 retail, design and e-commerce accounts that offer its 20,000-product catalog of rugs, pillows, throws, accent furnitures and other accessories.  Surya, which is building a $33 million office and distribution center in Cartersville, Ga., posted 2013 sales of $80 million.

Cyrus Yaraghi, a principal at Safavieh, is looking at 30% growth by year’s end. “We did not suffer in the recession because we adapted quickly,” he said. “Our strategy was to find new ways to keep our business growing. It wasn’t easy but we did it.”

Safavieh, which expanded its warehouse facilities and will launch a line of chandeliers in Las Vegas, currently offers lines of upholstery (“everything you need to decorate”) as well as home office desks, chairs, walls art and mirrors. “Rugs is still our primary business but accessories are growing at  significant pace,” Yaraghi said

Kaleen, which has tripled its number of rug lines in the past year, is looking at diversifying into new product categories “maybe down the road,” said Blake Dennard.,  senior vice president of Kaleen.

Also striking in the accessories arena is Momeni, which has a new line  that combines Ralph Lauren,  Christoff and Henri Bendel.

LR Resources offers a line of accents and pillows and is looking at furniture and accessories but no final decision has been made, according to Mike Thompson, vice president of sales.

Blue Becoming a Dominant Palette.

Atlanta showrooms were still showing a lot of grays and blacks but blue is making a strong play for the primary color going into Fall and 2015, especially in the mid-price range.

Dark blues, such as navy and denim, dominated and “if you can get the right colors, especially the right indigo, you’ve hit the jackpot. Customers are looking at color, then the design, then the price,” said Gupta.

Also popular were neutrals with a pop of a bright color such as yellow, purple and, to a lesser extent, orange.

Tone on tone, often with a metallic accent, is still selling strong and pastels, such as foam greens and aquas, are gaining market share.

New Celebrity Licensed Collections

Kas announced a new partnership with the Donny Osmond Home Collection in January. This Summer in Atlanta, the company offered a “sneak peak,” with an official  launch scheduled in Las Vegas.

 â€œWe’ve had a great reaction because it’s a husband and a wife and their message is a beautiful family and home life. The collection is like them, casual, likable and normal. Their team also does a great job of cross marketing,”said Kevin Welch, national sales manager.

Also selling on the upper end is Bob Mackie. “It’s a high end tufted collection that puts us in a different ball park,” Welch added.

Giovanni Marra, director of marketing at Nourison, said  that Calvin Klein’s line is still a strong seller  and Kathy Ireland’s offerings are picking up “heavily.”

Nourison’s high end lines are also making a comeback. “I think people are looking for more of an investment piece,” and although the company’s “sweet spot” is rugs in the $700 to $1,700 range, rugs in the $1,500 to $1,799 are doing quite well. “We’ve been a bit surprised at how the high-end has picked up. It’s encouraging,” Mara said.

Capel’s licensees, such as designers Kevin O’Brien,  Genevieve Gorder and CoCo Cozy have maintained their customer base as have the Biltmore and Williamsburg lines. “Each of our licensees has different looks, which expands our customer base,” said Cameron Capel. “And, they grow their own customer base, such as Williamsburg, which will introduce a new tag line and look at High Point called “Trend meets Traditional.”

Artist and designer Bob Timberlake and his area rugs found a new home with Mohawk Home after Shaw Living pulled out of the category. Timberlake debuted his rugs in Atlanta and found -- or relocated -- his customers, said Bandon Culpepper, vice president, specialty sales for Mohawk Home. “We pushed hard to get Bob and a lot of retailers waited to see what he would do with us, and they like what they’ve seen.”

Culpepper said the Bob Timberlake team has been given “realistic but aggressive,” sales goals but says that with the new products “we have a lot of ammunition.”

 Hot Summer Looks

Transitional and casual looks are burning up the cash registers and there is a renewed interest in traditional -- but no so traditional.  “You need to update it a bit, tweak it,” said Austin Craley, vice president of sales for Loloi. “Put in a little more fashion forward colors.” 

High-end is also doing well at Loloi, says Craley. “Our high end, hand knotted offerings are doing extremely well. We also are seeing a lot of strength in our value price point with unique constructions and textures in fashion forward colors. It’s a good value for the money.” Loloi’s oversize rugs are also doing big business.

Capel is true to is legacy with braided rugs still relevant and half its business but the company is also updating them with “great saturations of color, such as yellow,” said Cameron Capel.

Momeni is offering several new collections including Casa (artful paint look) and the Ziegler collection, one of a kind, easy to transition rugs, said Rezi Memeni, president.

Geometrics are still hot and if one needs an ethnic look, then go Moroccan.

Vintage looks with worn, zero pile, erased weave and faded colors were also seen throughout the rug showrooms.

 Kaleen offered four new collections including: Glam  (flat weave, geometrical, casual); Global Inspirational; Brush Strokes (water color pastels with a slash of color) and Kenwood (a jute silk blend that is reversible).

 Distribution Channels

Lee Harounian, a principal of Harounian Rugs International, said the company changed its product mix -- adding lower priced items -- to attract new customers during the downturn.  But things are picking up considerably. “The mass merchants have played a big role in our growth,” he said.

 â€œWe’re still selling high-end,” said Harounian, “but mass merchants have played a big role in our growth.”

The distribution channels also influence what sells, said Mike Thompson, vice president of sales for LR Resources. “First off, you have to balance innovation and what sells. Online  bolder colors, more modern, geometric patterns sell well.. That sometimes is at odds with what sells at retail. I think younger people buy online and they want the color and modern looks.”

Instagram and Pinterest are also bringing customers to stores or online. “People are getting their inspiration from Pinterest,” said Ferullo. “They see something and say ‘I want that look.’ We had a designer get more than 1,000 followers on Instagram in three weeks.”

07.13.14