Atlanta Market Business Report Part I:
RETAILERS SAY 4TH QUARTER
GAINS SPUR CAUTIOUS OPTIMISM
 

By Lissa Wyman

ATLANTA -- A slight increase in fourth quarter 2009 retail business is giving rug dealers hope that the business free- fall is over, according to buyers attending the recent Atlanta International Rug Market. But they are cautious. No one is saying that the "good old days" are back.

Large and small retailers told Rugnews.com that they are beginning to have some faith that consumers are ready to start buying rugs again, albeit cautiously. Inventories have been worked down to manageable levels and as a result, retailers were buying in Atlanta, also cautiously.

Sam Presnell, owner of The Rug Gallery in Cincinnati, summed up the feeling of many retailers by saying, "It looks like the recession hit bottom last Summer and we've experienced four steady sales months. We're going into 2010 with a little more confidence."

Igor Yakovenko, buyer for Air Base, the large floor covering chain based in New Castle, DE, said that 2009 was "the toughest year I can remember." He said during the recession he has he kept in mind the advice of a former mentor: "Don't waste a good recession."

As a result, Yakovenko noted, "We are leaner, meaner and more focused than we were two years ago."

Yakovenko described American society as "bi-polar."

"Consumers either feel unrealistically poor and stop spending entirely or they feel unrealistically rich and they buy everything."

Right now, they are cautiously re-entering the market. "Consumers want good service and color and design. But most of all, they are looking for good deals," he said.

Gary Cissell, floor covering merchandising manager for Nebraska Furniture Mart, said the company had a unique strategy for dealing with the recession. "We refuse to participate in it," he said.

"We're promoting like crazy and we continue to work closely with our vendors to develop new promotional ideas. We are relying on our vendors to develop new products to stimulate the consumer's imagination."

Now that business is improving, Paige Ward, buyer for Shades of Light/Rugs Underfoot in Richmond, VA. said she is on the lookout for fresh merchandise with  a lot of wow appeal.

"We are all coming of a deep recession and now we've got to re-invent ourselves. We want to get fresh, get hip, get fun, get real," she said.

Today's target consumer is younger and does not want the same rugs their mothers bought. "What they don't want is the dark red and blue oriental styles. If they want traditional, they want washed antique looks such as oushaks. They're also price conscious, so we have to fill price points. For a lot of younger customers, dhurries and flatweaves are the way to go. They're in and they're out. They're not forever."

Kathryn Sergenian of the PS Rug Division of Sergenian's in Madison, WI, said she is cautiously optimistic. "We feel much better about the economy, and we continue to try to sell as much inventory as possible. But realistically, we don't see a full recovery until towards the end of the year," she noted.

Sergenian said that post-holiday business has been quite good. "People have taken down their Christmas decorations and the house looks bare. They want to feel good about coming home, and a new rug provides a quick fix for making the house look better," she said.

Internet business is also improving, according to David Craig, chairman of Rugs Direct, Winchester, VA. "Business is improving slowly. At least it's headed in the right direction," he said. " In 2009, sales declined until July 2009, and then things started to pick up."

Randy Kremer, Rugs Direct president, added that "Cyber Monday" following Christmas was the best single sales day in the company's history.

The sales boost is not happening without help, the Sales Direct executives stressed. "We worked closely with vendors on special Cyber Monday promotions to generate a lot of excitement," said Bill Martin, vice president of sales. "We saw some pent up demand and we worked on it."

Fred Nasseri, owner of The Gallery of Oriental Rugs in Wilmington, NC, noted that retailers who have built public trust over the years will pull through the inevitable cyclical downturns.

"If you are in business to make a quick buck, you'll be very disappointed. You've got to build trust with honesty. You can only deceive people with 70% off sales for a short time," he said.

"To be a leader, you have to be patient. We've been in business for a long time, and we are doing quite well," said Nasseri.

The hand-knot business is improving for Designer Rug Warehouse in Atlanta, according to partner Ali Inal.  "Business in '08 and '09 was very challenging, but now we are moving forward," he said. "Sales started picking up at the end of August and there has been continued improvement through the fourth quarter." he said, adding that consumer are looking for hand knotted rugs once again.

The upturn in the fourth quarter has renewed Inal's confidence. "I placed substantial orders in Atlanta, mostly in hand knotted categories," he said.

Chris Watson of Watson & Co. in Denver said the region is not greatly affected by large swings in the general economy. "The highs are not as high and the lows are not as low," he said. Right now, business is moving along at about 2% ahead of last year. "Under the current conditions, we're quite pleased," he said.

Tim Nenne, owner of The Growing Grounds in Bloomington, IL, a garden center and casual furnishings specialist, said the store has diversified in recent years, adding an interior design department and a rug department.

Nenne noted that Bloomington is a market that is fairly insulated from recession. "Our area is home to three universities and the corporate offices of State Farm, so we are in good shape. In fact, we had a great year in 2009," Nenne said.

Mark Gonsenhauser, president of Gonsenhauser Rugs & Carpet in Virginia Beach, VA, said that business is starting to pick up again.

Gonsenhauser said he has used the recession to solidify his business. "We expanded the store and added new categories," he noted. "We have added cleaning and repair services and added a new Karastan gallery."

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