07202012 Atlanta Market Report #2 Rug Vendors Are Optimistic Despite Bumps in the Economy

Atlanta Market Report #2:
ATLANTA MARKET TRAFFIC  IS SEASONABLY SOFT BUT RUG VENDORS STILL OPTIMISTIC
FOR FOURTH QUARTER  BUSINESS

By Lissa Wyman

ATLANTA -- No one expected the Atlanta market to be crazy-busy. And it wasn't. But vendors are not letting the seasonable softness in market traffic get them down.

Most rug vendors said market got off to a strong start, but traffic died down after the second day.

After a strong first quarter for the industry,  things started to slow down in early June, many executives told Rugnews.com. Since then, sales have bumped along in a fairly lackluster way, but vendors predict that the Fall season will be good and rugs will end the year on the plus side.

"The January market and the first quarter gave us a fantastic feeling for the year, we thought this might be a rockin' year," said Mike Riley, president of Oriental Weavers of America."But consumer uncertainty and rising gas prices slowed business down in the second quarter. It's not just us. It's affecting a lot of businesses in and out of the rug industry."

Atlanta, traffic was strong during the first day, and Riley said he's positive about the remainder of the year, although the economic recovery is still in a fragile state.

 "Our plan is to offer twice the fashion and twice the value," Riley said.

"Business is good," said John Magee, president of Capel. "Market traffic so far this year has been up significantly over last year. We're more aggressive than we've ever been and people want to see the new face of Capel."

Having products at a range of price points is more important than ever, according to major vendors.

"We introduced products at entry level prices of $199 to $299,  but we've also done well with high end products such as the new Barclay Butera line, Joseph Abboud and Calvin Klein products," noted Thomas Itty, marketing manager for Nourison. One of Nourison's best received products was Dune, a hand knotted Indian collection in ikat designs with colors that resemble antique vegetal dyed yarns. It retails at $1,999 in 6x9.."We are represented at every price point," said Itty.

Coming up next for Nourison is a new video marketing tool that will eventually include all Nourison collections. Siam and Symphony were the first videos, and they will be on FaceBook and available to dealers for in-store use, according to Itty.

Cyrus Yaraghi, a principal of Safavieh, said Atlanta Summer Market was better than expected. "In addition to the larger accounts, we also saw independent stores showing up again. I hope that indicates their business is getting a bit better. We need the mom-and-pop stores. They help balance our business."

Mark Ferullo, vice president of sales for Rizzy Home, judged the Atlanta market as good, with a lot of large accounts in attendance. Overall, he said business is strong. "We're rockin' and rollin'. Business is way ahead of last year," he said.

"We've had action across the board," he added. "We 've also had interest in higher end knotted rugs and our Waverly licensed products are selling very well."

One of the value-oriented lines Rizzy introduced this season was an entry-level flat weave, priced at $99 in 5x8.

Reza Momeni, president of Momeni, noted that business has been up-and-down this year. "We had a good first quarter, but then it slowed down," he said. "But we're bullish for Fall. We've good good orders booked and things are shipping and turning at the retail level."

Momeni added that the first day of the Atlanta market was especially strong. "It was one of the busiest days we ever had, and we had quality buyers," he said.

In addition to rugs, Momeni also noted that the company's new home accents, ottomans and pillows are doing well. :"We're expanding into new categories and business is really fun again," said Momeni.

Like many other vendors, Jim Curtin, vice president of sales for Shaw Living, said that the first quarter was strong, but business fell off in the second period.

"In recent weeks, we saw business spike, so hopefully the rest of the year will be good. It's an election year. Anything can happen," he said.

As retailing has changed, rug specialty retailers have faced unique challenges in order to build store traffic. "Rug stores have to diversify their product mix to help get people into the store," he said.

Looking forward, vendors also must re-examine their business plans, Curtin said. "We'll have some news about new directions in January," he promised.

"Summer markets are very appointment driven," observed Amir Loloi, president and founder of Loloi Rugs. "Atlanta was a good market for us."

Loloi said that business began to pick up again at the beginning of July. "We're very optimistic about the rest of the year," he said.

Steve Codella, senior vice president of sales for the eastern division of Couristan, said that major accounts were in the Atlanta showroom for the first two days of market, but then things slowed. "We had productive and positive meetings with customers and business in general has been good. Dealers are cautiously optimistic for Fall," he said.

Summer market was good for Surya, according to Satya Tiwari, president. "We had good appointments coming in and overall, we found that retailers were much more upbeat. They want to build their businesses and they want to diversify in a meaningful way."

Tiwari said that Surya will be showing for the first time at the Tupelo Furniture Market. "We will be going to Tupelo with a range of products at the $199 and under price point. We'll be pretty aggressive in developing that segment of the business," he said.

Dynamic Rug was just getting settled into its new 2,700 sq. ft. showroom on the third floor of AmericasMart. "We'll have the grand opening celebration in January," promised Matthew Rouhanian, president.

Like many other vendors, Rouhanian said the first quarter was good, but business got tough in the second quarters. "We're moving through it and trying to be ahead of the market," he said.

Kaleen will also be having showroom festivities in January when it expands into the adjoining space on the third floor. "We will more than double our space in January. It's a much needed move as our business continues to grow and we expand the number of product offerings," said Joe Barkley, executive vice president.

Michael Heath, national sales manager for Chandra,  said that business has been excellent, despite the recession. "We've had double digit increases in 53 or the last 54 months," he said.

Millennium Weavers is a newly established company specializing in machine made rugs in unique constructions and textures.  Millennium rugs are currently being distributed by LR Resources in the southeast. "We hope to make further announcements very soon about expansions into other areas of the country," said Mike Thompson, vice president of the company's rug division.

"The sales agents had good appointments here, so it was a good start for the Fall season," said Thompson.

"Overall, the market was not too bad," commented Sadi Sevimli of Tayse Rugs. :This is a Summer market, so we did not have high expectations."

Sevimli said that business is growing and expanding for the young company, which specializes in Turkish machine-made products.

"Even though the economic recovery has been slow, a retailer must have fresh products that offer good value. That's what people are looking for, and value is our specialty."

Kami Navid, president of Jaunty, said that business is on the upswing. "Usually performance in the second half is better than the first, but we are ahead for the first six months by double digits," he said.

"People respond to our customer service and quick delivery and they like the fact that we do not sell our products on the Internet," Navid said.

Jim Thompson, vice president of sales and marketing for Central Oriental.   "Our business is really good, and we are expanding our factory in Maine again," he said. "Our story resonates with both retailers and consumers. We have products at very competitive prices and many of them are made in the USA."

Roshan Bhattari, president of Paramount Rug, is surviving the tough economic times. "We are coming through the most difficult period and we are optimistic about the future. We showed 15 or 20 new prototypes at this market that had strong customer reaction, so we'll have some exciting introductions in January."

The economy is still tough, and the high rate of unemployment and sluggish housing market is not helping the rug business at all. But vendors large and small are hanging tough and trying to make the best of it.

Rugnews.com will have more comments and observations from Las Vegas!

To read the Atlanta Market Report
on Styling Trends,
 click here

7.20.12