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RETAIL INSIGHTS: MARK MORAN SHARES NW RUGS & FURNITURE'S SMALL-FORMAT STRATEGY FOR GROWTH
NW Rugs & Furniture addresses changing consumer shopping patterns and future growth with a new small format concept in addition to its area rug superstores in western states. |
TIGARD, Ore. -- Bigger isn't always better, or so says Mark Moran, buyer and co-founder of NW Rugs & Furniture, an area rug and home furnishings chain with seven locations. This company, the largest family-owned rug retailer in the western U.S., is known for its area rug superstore concept, with footprints of 20,000 square feet that carry roughly 2,500 SKUs.
Lifestyle settings with furniture and accessories are integral to both large and small format stores at NW Rugs & Furniture.
But its newest store, in the Sherman Oaks neighborhood of Los Angeles, is only 6,000 square feet. This neighborhood-style store is the company's sixth location, and its answer to the ever-changing retail landscape. "I believe the internet is changing the way people shop," says Moran. "It plays a huge role in our business: emailing pictures, getting referrals. The younger generation has done a lot of pre-shopping online. We've realized that we don't necessarily need bigger stores. We can put more, smaller locations in nicer neighborhoods and be successful."
SMALL FORMAT BLUEPRINT
Moran says that he envisions the new smaller-format store concept as between a Home Goods and Urban Outfitters in terms of product offerings and clientele. Even with the smaller location, customers can still have access to the thousands of options in styles, constructions, and sizes that is available at the larger stores, but in a more intimate setting.
The Beaverton, Oregon, superstore is one of three NW Rugs & Furniture locations in the Portland area.
In addition to the new Sherman Oaks store, the company has five more doors: three in Portland; a second store in Los Angeles; and one in Las Vegas. There's also a branded concession in Scottsdale, located inside Ladlow's Fine Furniture. This arrangement is a throwback to the company's origins in the early 1990s -- Moran and partner Shawn Nili originally operated as a concession in a furniture store in Portland. When the store went bankrupt, that's when Moran and Nili decided to strike out on their own with freestanding locations.
Shawn Nili and Mark Moran, co-founders of NW Rugs & Furniture have succeeded by offering a vast array of options from entry level machine-mades to high end hand-knotteds.
Moran and Nili originally envisioned their company as an area rug superstore -- "Rugs 'r Us," quips Moran. "Our three stores in Portland are all 20,000 square feet," he says. "For a city of that size, people might think that's overkill, yet each of our stores is able to stand on its own."
Because of the size of the stores, the company is able to stock a vast array of merchandise. There are machine-made options from entry level to better quality, as well as hand-knotted options and high-end Persian rugs. "One of our strengths is that we have an enormous inventory," says Moran. "People come in and they're overwhelmed, it's almost too much."
Half of the space in NW Rugs & Furniture superstores is allocated to rugs on arm racks and in stacks; the other half to furniture vignettes.
That's where the "& Furniture" of the store's name comes in. "We started to add furniture and accessories years ago, to make the stores look better" and more approachable or accessible. Now, says Moran, the buying team finds itself part of the furniture business, with nearly half the store displaying furniture and accessories, arranged in vignettes with, of course, area rugs anchoring the displays. Interestingly enough, when the company made furniture a larger part of its merchandise assortment, traffic increased, but it hasn't always translated to more sales.
The other half of the store's space is allocated to area rugs, arranged on swinging arm racks or stacks on the floor. Most of the big industry players are represented in the showrooms. "We've worked with almost everyone at one time or another," says Moran.
The buying team at NW Rugs & Furniture merchandises furniture with rugs in vignettes to from bedrooms to dining rooms and living rooms.
RUG BUYING TRENDS
Area rugs still account for about 80 percent of the sales, and within that, Moran says he's seeing a lot of movement in the programmed machine-made rug options that are relatively inexpensive but offer a lot of variety of looks and quality in construction. He says prices start at around $299 for a 5 by 8 size, and there is a big focus on sweet spot pricing of just under $1000, as well as in the $1500 to $2000 range.
"People used to come in and would specifically ask for a handmade rug, knowing what that means in terms of quality and something that would last," says Moran. "But now we let the distinction blur. A rug is a rug, and when people come in, you help them with size, style, color, and price. If they end up with handmade, they end up with handmade."
The buying team at NW Rugs & Furniture merchandises furniture with rugs in vignettes in a variety of design styles.
While the company does offer custom area rugs, they've found that it isn't a big business, in part because there is already so much available that customers are usually able to find just what they need in terms of sizing or design, without having to resort to a custom order.
Naturally, service is an important component of NW Rugs' business. After all, the company was built on four touchstones: quality, service, selection, and value. Salespeople receive extensive on the job training, and the company works with outside designers as much as possible, knowing that these experts are able to steer customers to better-quality offerings.
NW Rugs & Furniture presents consumers with rugs to coordinate with myriad furniture styles from traditional to transitional and soft contemporary.
GROWTH PROJECTIONS
The company doesn't share annual sales, but Moran says, "We've been holding our own" in terms of growth. "Everybody's holding their breath for this year, but we're hopeful. We're budgeting for flat sales but hoping for 10 percent up."
Looking forward, Moran hopes to add more of the smaller-concept stores, but isn't in a rush. "If we go to more stores, I'd like a smaller footprint but still be able to provide that quality, service, selection, and value -- and do it just as well."
NW Rugs & Furniture's large format store in Agoura Hills, California (above) and the chain's newest store, the small footprint location in Sherman Oaks.