Area rug vendors that were nimble and quickly found new approaches to adapt to COVID reaped rewards. Shown, HRI's top-selling Intrigue
SPECIAL REPORT -- Few would have predicted at the January 2020 shows that a global pandemic would grind business around the world to a halt and drastically alter the retail landscape. From inventory to logistics to consumer behavior COVID-19 changed everything almost instantly. For the area rug industry, the major surprise was how the crisis resulted in a major boost in rug sales by Q3 & Q4. But getting to that point required a major shift in business strategies, inventory decisions and market approaches, many of which are likely here to stay.
RugNews.com surveyed executives at major area rug vendors to discover the initiatives that helped them survive (and even thrive) the roller-coaster year that was 2020.
FOCUS ON BEST-SELLING RUGS
Amer's Bohemian collection, rolled out in 2020, was a hit with buyers looking for e-commerce-friendly rugs.
"We took a hit during Q2 as many of our brick & mortar customers suffered through some very tough times," Anupriya Choudhary, director, Amer Rugs, told RugNews.com. "Our private label, interior design and e-commerce businesses continued to be strong, so as things opened up we were well-positioned for the rebound."
But what proved a critical factor to succeeding at Amer was its recently implemented enterprise resource planning (ERP) management system, which allowed the Norcross, Georgia-based company to forecast demand and stay in-stock on best-selling area rugs.
"We increased commitments on our most popular collections as we experienced long delays and very long lead times especially on machine-made products," Choudhary explained.
While Feizy did stock up on best sellers, buyers still were interested in the company's latest designs, including its hit Palomar collection.
Likewise, at Dallas-based Feizy a decision was made to focus on best-selling collections. "We have been very fortunate that there were minimal disruptions to our business due to Coronavirus," said Justin Yeck, Feizy's VP, omnichannel sales, marketing, product development and design. "Just like the home furnishings industry, our sales have remained solid and fortunately we were able to maintain a strong supply chain throughout the pandemic keeping us in stock -- the only real challenges we had at the beginning of the pandemic was scheduling our teams to ensure their safety and still maintaining a high level of shipments."
However the early set-backs at Feizy were short-lived as the company and others in the industry acclimated to the new environment. "We continued to find efficient ways of managing safety, quick shipping, and strong customer service.
"We did review our best sellers and bought deeper to account for any inventory challenges, but largely we remained fairly unaffected by inventory challenges. We have such a large breadth of product in all price ranges that if we were out of stock on something we could pivot the client's choice or they were willing to wait -- considering the climate in the industry."
TAKING A GAMBLE ON NEW DESIGNS
The machine-made Refine collection, crafted from a shrink poly and viscose blend, from Dynamic Rugs was a best seller in 2020 -- a year that saw demand for new product skyrocket.
Machine-made specialist Dynamic Rugs, which has expanded its range to include handmade constructions, noted that once stores began to open back up following the initial nationwide shutdown in the spring of 2020, the shift in demand for home furnishings was unexpected. "I’ll never forget the surprise from our buyers that their stores had lines going around the corner for people to get in and shop for their homes – especially big ticket decorative items like their rugs," recalled Anoosha Rouhanian. "Since then, everything became go go go!
"Even during normal times, things have been so fast-paced in the home décor industry. But all of a sudden demand was through the roof," she continued.
Area rug buyers in 2020 gave Dynamic Rugs' Mood collection of high-low designs a thumbs up for its marriage of fashion and value.
Luckily the Frederick, Maryland, company in mid-2019 had opened a new warehouse, which dramatically expanded its capacity by 60 percent. "We had just purchased a new warehouse and were able to stockpile a lot of merchandise," said company founder Matthew Rouhanian. "We did not cancel orders and have focused on building a strong rapport with our factories for years. The result was that our manufacturers were there for us and made us feel prioritized when it came to receiving merchandise.
"And while Dynamic Rugs always forecasts trends and demand, we now had to forecast even further ahead and make decisions faster than normal," he added. "Without markets and in-person meetings, we no longer had the ability to gauge customer response to new product before placing an order. Instead, if we felt strongly about a product, we would place an order immediately and commit ourselves. This way, we would be ready to meet our customers' needs as soon as possible."
Kaleen Rugs' machine-made Soumela collection was a success for its e-commerce friendly, lightweight design last year.
Kaleen Rugs, which operates its own factories in India and in April tripled its production capabilities with its new facility becoming fully operational, had made a strategic decision to grow its machine-made indoor and indoor-outdoor area rug assortments, which proved a fortuitous move.
"One of the significant impacts during the start of the pandemic was obtaining new inventory," reported Monty Rathi, COO, Kaleen. "Most of our overseas manufacturing facilities, much like the United States, were closed down during the beginning of the pandemic.
"Our inventory suffered an all-time low," he continued. "However, once our factories opened back up, we quickly rebounded to above normal inventory levels. As a result of what happened early in the pandemic, we increased our safety stock on our machine-made collections, which includes our indoor-outdoor rugs, as they have been very popular."
In fact, Kaleen Rugs, headquartered in Dalton, experienced record-breaking unit sales during summer 2020 in these categories. "Our outdoor and machine-made indoor rugs more than doubled in sales so far this year because they are lightweight and perfect for e-commerce," Rathi noted.
HRI shoppers couldn't get enough of the company's Sunbrella collection of performance rugs, which added the 1000 range, in 2020, and even COVID didn't slow HRI sales down.
New York's Harounian Rugs International (HRI) headed into 2020 following a successful launch of its Sunbrella performance area rug collection. "We were in a good inventory position going into 2020 and, through constant communication with our customers on availability and ETAs, have been able actually increase our new orders and shipping in 2020 over 2019," Greg Jordt, executive VP, sales and marketing, told RugNews.com.
"Constant and continuous communication has been critical. We made sure our sales force and customers are all informed constantly on all aspects of product, availability and logistics," Jordt continued. The innovations and creativity of our sales reps, suppliers and our corporate office in finding new ways to do business and service our customers will continue going forward. It has made us better in all aspects of our business."
HRI's runaway success, the new Sunbrella collection of performance rugs, helped push the company to a strong finish in 2020.
AREA RUG MARKET & SHOW STRATEGIES UNDER THE MICROSCOPE
Amer intends to reduce its showroom presence following COVID as many buyers easily transitioned to remote meetings to purchase rugs such as Cairo, above.
What's more, the influence and impact of the COVID crisis on the area rug industry will likely change the way many companies do business permanently. For years, many industry players bemoaned the unrelenting trade schedule with show after show. But 2020 forced a reconciliation on that point as many markets were cancelled and companies shifted to virtual and digital product presentations -- many quiet successfully.
"The total lack of markets in 2020 and yet the impressive growth in our sales for the year really forced us to reflect on how we are going to approach our markets and showrooms going forward," Jordt said. "We are in the process of creating our new 2021 strategies now but that surely will be different from pre-COVID years."
At Amer Rugs the changes wrought by 2020 already have affected its plans for in-person markets. Said Choudhary: "Product presentations by video have become the ‘new normal’ in our industry, and interior designers have proven they can effectively work with clients via Zoom from a remote location. Those changes are here to stay. As a result, Amer is reducing our market showroom presence globally, as we continue to emphasize marketing and selling through digital channels."
For the moment, Feizy is uncertain of the importance of markets for the remainder of 2021, but Yeck does expect recent events to impact them looking ahead. "Prior to COVID, we had really changed our showroom focus to telling more of a cohesive story using current trends. We wanted our showroom to be a destination, to push the edge of rug showrooms and to be Instagram-able, get clients talking and continue to highlight our tradition of being a trendsetter, not a follower. But people are going to gravitate to smaller gatherings for the next few years. Unfortunately I am not sure the major market owners can sustain that shift for very long." Yeck explained. "But who knows. After all this is through, the first thing people may want to do is gather together and celebrate the design and retail communities."
Feizy's one of a kind area rugs were a draw for area rug buyers looking for something special - and available - during the pandemic.