Atlanta Market Business Report 3:
RUG VENDORS SAY ATLANTA MARKET
A SUCCESS - PREDICT 2010 REC0VERY
BUT OPTIMISM IS REALISTIC

By Lissa Wyman

ATLANTA -- After two years of extremely tough business  rug vendors are predicting some recovery in 2010. However, their optimism is tempered with a large dose of realism.

The success of the recent Atlanta International Rug Market has given rug importers and manufacturers a good psychological start for the new decade.

Many vendors noted that larger customers are doing well and are placing orders. However, business still lags with the small independent store.

Building for the Future

"A lot of larger retailers did well in 2009, and now they are in the market to invest in the future," said Satya Tiwari, president of Surya.

Surya has spent the past two recessionary years making major investments in product diversification, expanding to new market channels and the development of new merchandising programs.

"Seeing the optimism of our retailers also makes us optimistic. And we believe we have the right products and strategies for the future.

"We are targeting a 20% increase for 2010," said Tiwari.

While heartened by the recent up-tick in business, there is still plenty of rebuilding ahead, many vendors noted.

"A lot of retailers came off a good fourth quarter, but the first quarter will be tough," predicted Paul Sullivan, senior vice president of sales and marketing for Orian.

"We continue to do what we do best. We concentrate on unique products that offer consumers unique looks at affordable prices," said Sullivan. Orian's Carolina Wild collection is a group of Wilton-woven patterned shags  retailing for $199 in 5x8. It is made on Wilton machines with proprietary adaptations to achieve a unique look.

Introduced last year, Carolina Wild is "selling by the gazillions," according to Sullivan and the company continues to add color creels and new designs.

Orian's principal retail channel is the mass market, and $149 continues to be the "sweet spot" in that channel. However, Orian is also developing such new products as Texture Weave, a single ply heat set group that retails at $89.

"2010 will be interesting," predicted Sullivan. "We will continue to see a thinning out of the retail community and we will probably see increases in raw material costs. We are committed to customer service, delivery and quality," he said. "We should do well if we stay focused on what we do best. We don't want to drift off into areas where we don't have expertise."

In the past decade, Couristan has built its indoor-outdoor collections to major proportions. The company is considered one of the country's largest suppliers of indoor outdoors rugs and has developed a broad range of construction in these products.

"We continue to emphasize the value price points in the $100 to $200 range of indoor-outdoor rugs, but we are also developing high fashion products retailing up to $299. We cover the entire spectrum in this category," said Larry Mahurter, director of advertising and marketing for Couristan.

In general, Couristan's machine-made business is evolving, Mahurter noted. "We are re-inventing ourselves in the middle price range of $299 to $499 with luxury looks at affordable prices."

The hand-knot business is also undergoing a sea-change. "Today, our best selling hand knotted collection is Impressions, a Tibetan weave that retails at $1,499 in 6x9. That is the category we are growing. A few years ago, our best selling hand knot price point was $2,499."

Momeni kicked off its 35th anniversary year and opened a new showroom during the Atlanta market.

The market was better than last year, and retailers were more upbeat, said Reza Momeni, company president.

"We saw a lot of new customers, and the showroom was really buzzing for three straight days," added Stephen Hoberman, national accounts manager.

Generating a lot of buyer interest at Momeni was the Royal Collection, a million-point Turkish machine made group at the entry-level price point of $199.

"We've also had strong response to our Momeni Concepts custom program," noted Momeni. "This program allows retailers to get into the custom business with a minimal investment, and our new www.momeniconcepts.com  web-site allows consumer to work with the design at home and then directs them to a participating Momeni dealer."

Retail Pick Up Signals Industry Recovery
 

"All signs point to an increase in 2010," observed Matthew Rohanian, president of Dynamic Rugs. "For the last two markets, everyone was holding back, but we saw a lot of larger buyers in Atlanta," he said.

"Retailers have sold down inventory and now it's time to buy again. They are being very cautious, but they are here in the market and they are in the market again."

Bud Young, vice president of marketing at Capel, said that designer business started picking up last August, and that channel continues to gain steam. "Designer customers are not spending as much as in the past, but at least they are spending," Young noted. "As the design business improves, we expect to see the trend to filter down to other channels."

Best known as a US-manufacturer of braided rugs, Capel has evolved into a full line importer and distributor of all types of rugs. But Young said that in the past year, Capel's braid business has surged. "We have made a major effort to develop new color palettes and more contemporary looks using the braid construction made at our manufacturing facilities in North Carolina. The Our braid business is booming."

Lee Harounian, a principal of Harounian Rugs International, also said that retail business is picking up, most notably at large companies. "The market was much better for us than last year. Appointments showed up and we even had some walk in traffic," said Harounian. "Our product speaks for itself. Nobody left the showroom empty-handed."

Harounian said that there was very good response the the company's Himalayan collection, a Nepalese weave made of wool and silk and retailing for $1,499.

"2009 was a challenging year, but business picked up in the last quarter," noted Chuck Cashin, senior vice president of Amici.

"Hand knotted products started coming back in October, and that continued through December. I think that indicates a pent-up demand for higher quality rugs. I'm encouraged."

"We had a good Fall selling season and business didn't die in December," said Wendy Reiss, key accounts manager for Kas Oriental Rugs.

"We have introduced about 200 new rugs, and we are keying in on the popular $199 to $499 price range," she added. Price points are an important part of Kas' new product strategy, "But color and design always come first," Reiss emphasized.

"Retailers are coming off a good fourth quarter so they feel good about 2010," said Michael Heath, national sales manager for Chandra Rugs.

Heath said shags and indoor-outdoor products are best sellers and that rugs designed by licensing partner Amy Butler continue to sell rugs.

Heath noted that Chandra's business has undergone a subtle but important change over the past year. "Before, Chandra appealed to boutique retailers, now rug dealers are showing more interest," he said. "I believe that traditional stores either have to get into the tufted category or watch their business fade away."

Asha Chaudhary, chief executive officer of Jaipur, said the company experience steady business throughout the market. "There is a lot of optimism on the part of our customers and we are looking forward to a beautiful 2010," she said.

"We're excited about the energy and we are positioned for growth in the coming year, " added Josh Roberts, vice president of sales and marketing for Jaipur.

Jaipur is best known for it's hand knotted rugs out of India, but the company is diversifying into new price points and product categories. Later in the year, Jaipur expects to introduce a hand tufted polyester collection that is made in China and will retail at the $299 level.

"We look forward to seeing some optimism in the Main Street retailer. That's something we were missing in 2009," said Joe Barkley, executive vice president of Kaleen.

"All the national folks were in Atlanta and they bought, and I hear the Atlanta Gift Market was robust. We hope that will trickle down to the Main Street level."

Barkley noted that retail business has changed dramatically in the last two years. "With a few notable exceptions, it seems the day of the single-product specialty store is over. They have to diversify in order to survive. As vendors, we have to grow and develop new product categories as well."

"This market was a solid success, and I think it indicates that the rug business is recovering," said David Grasse, president of Due Process Stable Trading Company.

Due Process was a pioneer in the development of a small-sample merchandising program for handmade rugs.

"This program has been a success for both high end and mid-range retailers. It allows them to show a broad range of high end rugs with minimal investment," said Grasse.

Like many other vendors, Paramount has focused on building corporate infrastructure during the past two year. The company now distributes most of its product out of an Atlanta facility and also has developed a drop-ship program out of Nepal.
 

"The Atlanta Market was much better than previous years. The success of this market makes us feel that all of our work in the past year or two is paying off," said Roshan Bhattarai, a principal of the Nepalese-based manufacturer.

Rafi Amirian, vice president of marketing for Shalom Brothers, predicted that 2010 will be a very good year for the rug business.

"Retailers have finally sold off inventory and they are now in the market to buy," he said.

In programmed collections, Amirian noted that  buyers have had especially  strong reaction to the company's Illusions collection, which is hand knotted of wool and retails for approximately $999 in 5x8 size. "Illusions is available in transitional, contemporary and modern designs. It works well with all type of furniture styling."

Buyers are also looking for one-of-a-kind products, he added."Retailers want unique products that help differentiate them from the competition," he said.

Mahesh K Choudhary, president of Amer Rugs, Inc., said he is now spending more time in the US over-seeing the development of the company's American operations. Amer is a vertical manufacturer and distributor of fine rugs, based in Jaipur, India.

"We saw serious customers in Atlanta who bought. They feel enthusiastic about 2010 after going through hard times in the past two years, Choudhary observed.

"We saw much better turnout at the January market and we see positive signs all around," said Michael Harounian, a principal of Ebisons Harounian.  "The road to recovery will be long, and I predict that consumer confidence will build through 2010. This should be a good year, and 2011 will be even better," he said.

Harounian stressed that the company is ready for recovery. "We introduced new products instead of sitting back. The companies that have fresh merchandise are the ones that will get the business," he said.

Best-selling retail price point for hand-knot rugs is currently $1,500 in 6x9 size, said Harounian.
 

Global Eagle has been marketing its Turkish-made rugs in the US for only a short time, "But we are doing very well," said Seyed Abrahim, a company principal. "We specialize in value-oriented price points in fashionable looks. Our aim is to be one of the leading low-cost producers and distributors of rugs in the US."

Last year, Global Eagle opened its first US showroom in Atlanta and the company is opening a second showroom in Las Vegas on Feb. 1.

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