Hari Tummala

Rao Yarlagadda

By Lissa Wyman

SOMERSET, NJ -- There's no doubt that the current economic downturn is getting on everyone's nerves, but some companies are taking action rather than just standing on the sidelines waiting for the storm to pass.

Kas Oriental Rugs is one of those companies which has decided to move forward. In a wide-ranging interview at Kas headquarters here, Rugnews.com discussed the state of the rug business and the state of the economy with Hari Tummala, executive vice president, and Rao Yarlagadda, Kas president.

In an economic climate where housing still seems to be on a negative path, banks are in trouble and the prices of life's necessities are on the rise, rugs are way down on the list of consumer priorities, Yarlagadda pointed out.

"People are scared. They don't know the value or their homes and they aren't taking home equity loans to fix them up. Gas and food prices are up. So rugs are about the last thing  consumers are thinking about, " said Yarlagadda.

As tough as business is, Kas still sees room for growth at Kas. "Despite the economy, we want to continue on a growth track. We are taking a conservative, back to basics approach to our business," he said.

The strategy for Kas is to keep close control over inventory levels and accounts receivable and at the same time develop new products that will capture the imagination of today's cautious consumer.

Retailers as well as consumers are buying cautiously, noted Yarlagadda. "In today's economy, most rugs are drop-shipped to consumers or to stores. Retailers don't stock in depth. More and more, the wholesalers are carrying the inventory for the stores," he said.

Despite the current economic woes, Tummala stressed that Kas never stops developing new products and new designs. "We are known for our imaginative products and we are also working to get new things into the market. We've got to keep the momentum going," said Tummala.

For the present, Kas remains totally committed to the rug business, and has no immediate plans to branch out into other categories such as home textiles or fashion accessories.

"We are rug specialists and that's where we want to keep our focus. Textiles and home accessories are another business entirely, and we don't want to be distracted from our primary business," said Yarlagadda.

In the past 18 months, Kas has strengthened its sales and marketing staff. In January, 2007, Kas appointed Don Newton as sales and marketing vice president and Brandon Culpepper as national sales manager. Under Newton and Culpepper, the company has built a new network of field sales representatives.

"In addition to building new business, we strive to become more important to the existing customer base. Our sales agents are doing well and getting into the stores on a regular basis, which is really key," said Tummala. "It's really key to get into the stores and get to know the customer's business."

Post-market follow-up in the stores is more important than ever, particularly when economic conditions are tough. "Many retailers didn't get to the markets this Summer, so our job is to bring the new products to them," Tummala added.

The proliferation of markets is something that many rug vendors are concerned about, and Kas is no exception.

"We've made big investments in showrooms in all the major markets, but we can't expect immediate returns. This is a long-term proposition," Yarlagadda remarked.

Some of the new products recently introduced by Kas include:

Fleur de Lis pattern is part of the new Fiore  collection of hand tufted transitional designs. Made in China. Wool.  Suggested retail is $399 in 5x8. 

Kas is taking a new approach to the animal skin trend in its popular Sahara collection. This design combines a tropical leaf pattern with a lush leopard skin motif. Hand tufted in India. Wool. Suggested retail price is $399 in 5x8.

09.02.08