EXECUTIVE SESSION:
HOW WE KILLED THE TRADITIONAL
ORIENTAL RUG BUSINESS

By Rob Leahy

The traditional Oriental rug business model is dead. 

Why? 

The Oriental rug business was unique among retail strategies.  No other consumer product was sold as durable art works that enhanced the home, gave comfort and had a considerable opportunity to appreciate in value. 

 

It was a very good business model, both for the dealers and for consumers.  But, like anything in American business, what seems ‘good’ can always be made ‘better’.  

So, as consumer demand became predictable, rug importers began stocking rugs in standardized colors and patterns. 

 

Soon, the ‘program’ rug business erupted.  Once the veil of a ‘one of a kind work of art’  had been pierced, rugs became a home goods commodity just like sofas, tables and lamps.  Now the rug had to go with the drapes and consumers could finally pick their wall paint colors first! 

 

Think about that.  By allowing consumers to select the rug’s colors, its design and also to have it available in the perfect size the entire Oriental rug business model came undone.  The rug business had always been based on trust in the dealer.  The consumer would go to a store or two that had a good reputation and pick the best rug that they could from among that seller’s selection. 

 

The seller’s selection was in fact the very starting point of his reputation.  

 In those days, you didn’t get a chance to build your brand for quality and service unless you satisfied some consumers with your store’s choice of rug color and design.   Selection was the creation of trust!

 

We’ve commoditized the ‘artistry’ out of our business. In the late 1970’s a small number of US rug importers began to commission oriental rug production overseas in the most popular colors and designs, selling them alongside their ‘one of a kind’ rugs. 

 

The program rug business was born. In fact, this same evolution had begun a number of times in recent rug history, but never became so widespread. In the 1880's English merchants like Zeigler & Co. commissioned standardized rugs and between the 20th Century's World Wars by New York importing houses like K.S. Taushandjian built up stocks of "American" Sarouk rugs, (Later stripping and painting many of them other colors when demand dropped off. (See www.jacobsenrugs.com/w-p.htm  for details).

 

However, by1980, the industrial revolution had extended to the weaving countries, offering better jobs to onetime hand weavers and, more importantly, new methods of production were available.

 

Since an interior designer could now get the same rug again and again their interest in studying rugs diminished.  The consumer could now get whatever they wanted. And, with a designer’s input less important, the situation invited variations on the programmed rug theme.

 

First, Wilton woven replicas of Oriental rugs exploded onto the scene in the 1980’s then, by the late 1990’s, less expensive tufted versions began to take over the rug market. 

 

Now a commodity, fashion ruled that red/ blue oriental design had become too common.  For designers and consumers with style, it was time for a change.  It affected all Orientals, across all the price points. First, color went out of the rugs and, then, the design drifted away.   

 

Nepal’s production, now available after Europeans tired of traditional Tibetan design, filled the void at the upper price points, Indo-Tibetan at the middle and, (yes), even cheaper tufted constructions at the low end.  

 

With these lower rug prices, consumers could afford to experiment and they found that they could change their look every couple of years and not have to write off nearly as significant a purchase as they would have in years prior. 

 

Lower price points also allowed new segments of consumers to buy rugs who, years ago, couldn’t have afforded them.The internet expanded the consumer’s ability to see many more designs and colors as innovative new retail channels appeared to fill the demand.  

 

But, for rug dealers that strived to maintain the ‘trusted’ local rug dealer business model the ‘have it your way’ rug business of today had an even more treacherous impact on their businesses.

 

The designer and consumer, so often able to get the rug they desired, now no longer had to compromise their expectations. Higher end consumers are more swayed by current fashion trends than the vast middle and a dealer having or finding the rug that realizes the five necessary purchase criteria is often impossible.  

 

Considering  antique and other one of a kind rugs these parameters are now:  1) having all the right colors, 2) in an acceptable pattern, 3 ) at the proper size, 4) in good condition and 5) with a satisfactory price.  If seems if you have the first four, the fifth is not a problem.  But, without concessions, having those four is very difficult.  

 

While custom ordering a rug is an option many clients, even interior designers, are reluctant to take a chance on the final result delivered many months later.  Not willing to concede on their expectations, as would have seemed reasonable in a more artistic pursuit, the consumer purchases a ‘program’ rug that lets them balance these purchase criteria.  

 

Fine rugs, whether or not they are Orientals, once purchased like ‘art’ have become just another ‘furnishing’. 

 

It is still a good business for many of the dealers and for their vendors, but it is truly a different business.  During the past five years it had become painfully evident that, as dealers, we must continue to react and evolve.   There is no standard rug retail business model any longer, in fact, evolving along with the consumer ‘IS’ the new model.  

 

08.21.13

Rob Leahy is owner of Fine Rugs of Charleston, Charleston, SC. He has been an observer and participant in the rug business since 1971, opening his current retail business in 2003.  He recently completed service a Subject Matter Expert for the US Department of Commerce Rob Leahy

 

And what do YOU think?
Please comment below, and please use your name.

Use the comment box below to share your thoughts with rugnews.com readers. Feel free to comment on the state of the industry, share tips on improving business or just to let off steam. Please do not use this privilege to make libelous remarks or to sell your products. If you want to sell your products, our advertising rates are posted on the site under the Advertise tab. Please use your name and email address.