September 14, 2004

Rugnews.com exclusive interview:
HELLENIC EYES GROWTH WITH COORDINATION OF FURNITURE AND RUGS
 

By Lissa Wyman

BROOKLYN, NY -- The  aesthetics and pricing of the furniture business are guiding new product development for Hellenic Rug Imports.  It's a concept  that will fuel the company's future growth, Steve Mazarakis, Hellenic's president, told rugnews.com in an exclusive interview.

Mazarakis observed that the rug industry has traditionally had its own culture and aesthetic that  has existed parallel to the rest of the home furnishings world but not within it.

Now, working closely with furniture manufacturers and retailers, Hellenic aims to meld the two home fashion industries by developing products customized to the needs of furniture stores.

"As much as we would like to believe that rugs are the focal point of a room, that is simply not the way Americans approach home fashion," he noted.

"We are  now developing  products geared specifically to the colors, trend and price points of the home furnishings industry."

Hellenic's  target  is primarily mid-market retailers aimed at  middle class Americans. "Most importantly, these stores are looking for  items that hit specific price points," he said.

Mazarakis said the company is working closely  with furniture makers and retailers to develop lines that complement furniture price points. "It's ridiculous to offer a rug collection that doesn't match the price of the furniture you sell," he said. "You can't expect someone to buy a $5,000 rug when the sofa is only $699."

Hellenic also works with store designers to develop vignettes for the selling floor, taking the guesswork out of the consumer's selection process. "Many consumers may be unsure of themselves when they enter a store. But if they see a room setting where everything goes together and fits their budget, they'll buy with confidence," said Mazarakis.

During the last six months, Hellenic has been putting its home furnishings strategy into action. In April, the company inaugurated  the Hellenic Home division of coordinated rugs, pillows and decorative accessories. In June, the company announced it would be part of Dick Idol's World Vineyards program, a lifestyle umbrella which will also features Klaussner  furniture.

After a sneak preview during the Atlanta Summer market, Hellenic officially introduces its World Vineyard rugs this Fall. The collection includes both hand made and machine made rugs retailing from $99 to $699 in 5x8 size.

In another expansion, Hellenic will be the rug component of a new home furnishings licensing program under the Christina Ferrare umbrella. Magnussen is the furniture case goods line.

Hellenic will step up its commitment to  furniture stores in the Spring with its first showroom at the Tupelo. MS market.

Furniture stores offer more growth opportunities for the rug business than floor covering specialty stores, Mazarakis observed. "There are approximately 30,000 floor covering stores in this country, and very few of them are important in the rug business. Floor covering stores are oriented to large, installed sales of carpeting and  hard surface flooring. Rugs are incidental to that business. If they put up a 20-arm rack, they think they're in the rug business. But they're not," he said.

In addition to the furniture channel, Hellenic is also building business with its core group of customers, catalogs and rug specialty stores. "Catalogs have always been a major factor with us. They were responsible for our explosive growth in the flokati business," said Mazarakis. "They provide an excellent channel for many of the unique items we produce."

Discussing rug specialty stores, Mazarakis explained that channel has undergone major changes in the past decade. "At one point, hand knotted rugs dominated the  rug specialty store category. Today, with the advent of affordable hand tufted products, hand knotted rugs are only a small part of that business. The huge assortment of products and price points  now available through specialty stores has brought rugs to a much broader audience," he said. "Today, rugs are available to everyone, not just the wealthy."

As hand tufted production becomes more competitive, the price differential between hand made and machine made has become virtually non existent, Mazarakis pointed out.

Consumers  may not care too much about construction, but they do care about quality and value, Mazarakis stressed.

.While competition has brought hand tufted prices down, there is also tremendous upward pressure on prices as labor, raw material and transportation costs rise.  "Hand tufted rugs offer great value, but they are extremely labor intensive. As a result, I predict there will be great  opportunities in the next five years in the machine made wool business," he predicted.

The overall demand for rugs continues to grow along the entire price spectrum, said Mazarakis. "Hand tufted rugs offer great value, but there are production limitations. They can't fill the needs of the giant mass market retail chains. The big power loomed manufacturers are the ones that can  efficiently supply  the giant chains. And the new rugs get better looking all the time," Mazarakis observed. 

Mazarakis said Hellenic is not going after those mega-stores , but  he said that the mid-size mass market chains under 1,000 stores are an important part of the company's growth plan.

Mazarakis, a Greek-American, spent his early years in the U.S.  He returned to Greece at the age of 14 and became involved with rug retailing at 18. Eventually, he had seven stores in Greece which catered to American tourists visiting the Greek Islands. When President Reagan issued a travel advisory to Greece in 1986, that business dried up. He returned to the U.S. in 1988 and became involved with importing and retailing of high end hand knotted rugs. Back to Greece in the early 90's, where he again built a successful retail business. It was during the 90's that he began to sell "tons of flokatis" to Americans,  he said. "When I realized the potential for Flokatis in the States, I decided to  establish a real importing business.."

In 1997, Hellenic Rug Imports was founded. Since then, the company has grown and diversified under the top management of Mazarakis and Peter Rogakos, chief operating officer of Hellenic.

 Beginning with flokatis, the company has expanded into hand made, hand knotted and machine rugs from India, China, South America, Turkey, Belgium and other rug producing countries. Peter Rogakos is the chief operating officer of Hellenic Rug Imports.

In 2002, the company formed a Canadian division with Ankush Gupta as president.  In 2003, the company purchased a large distribution facility in Calhoun, GA. Hellenic now has dual headquarters in Brooklyn and Calhoun.

In addition to rugs, Hellenic is now involved with wood flooring, rug underlay, pillows and home accessory items. The company shows in Atlanta, New York, High Point, San Francisco and Surfaces. Next year, Hellenic will open in Tupelo, MS.

Business continues to grow at a torrid pace. "Sales are up 40% for the year to date. There's plenty of business out there," said Mazarakis.

What is the biggest challenge the company faces? "Getting to the next level of growth," Mazarakis answers.

What is the company's biggest strength? "People.We have hard-working, dedicated, passionate people."