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Atlanta International Area Rug Market: Sluggish economy takes toll, but those who came spent

ATLANTA—Those working to lure buyers into their showrooms during the summer edition of the Atlanta International Area Rug Market all agreed the lingering sluggishness of the economy is affecting their bottom line. There is, however, no general consensus on just what they can do about it.

Steve Roan, vice president of Karastan Rugs, expressed anger toward the federal government for not showing more leadership during tough times. While Roan was excited about Karastan’s products, he was less excited about the U.S. government’s handling of the economy, which he said has played a role in creating consumer uncertainty.

It is that uncertainty, Roan said, that has seeped into buyers’ psyches and impacted the rug market. “I’d like to see those guys get a performance review,” he joked when Congress and the White House battled over raising the debt ceiling.

Karastan, however, is taking steps to put itself in a more profitable situation. The company is focusing on its U.S.-made products and by the year’s end, all products will be domestically manufactured, Roan said. The company will use a new tag line—Still Made in the U.S.A.

While the cost of doing busi- ness in the U.S. has risen significantly in recent years, the cost of doing business overseas has risen even more, he noted.

It’s not just Karastan. Kim Barta, brand manager for Shaw Living, pointed out, “We’ve been screaming [Made in USA for a number of years] and it looks like customers are also starting to push back on the retail end in search of products made here.”

As a way of proving the durability of its domestically made products, Karastan made a point of displaying three rugs that sit near the escalators on the third floor of AmericasMart Building 1. Visitors to rug show- rooms on the floor have been walking over those rugs for five years, Roan said, and they have not yet needed to be replaced. The durable rugs are part of Karastan’s Axminster line, which are handset and, like traditional handmade rugs, have no backing.

At Ebisons Harounian Imports, Michael Harounian expressed both patience and optimism in connection with the current economy and handmade Oriental rugs. “A luxury item is not recession proof,” he said of the plush, colorful offerings in his showroom. “But I have seen positive signs in the economy. It’s only a matter of time before Americans start spending money again. I don’t think it’s so bad.”

He added that the market proved to be about what he expected and said buyers who were there were spending money.

Chas Sydney, senior vice president of area rug and external business development for AmericasMart, said the economy has slowed for everyone. But, he thinks the economy has hit the higher-end handmade products the hardest. “The machine-made, lower price point items have fared a little better.”

Sydney said his task is to make sure retailers know about the show and understand why they need to be there. “We have a full staff here whose job it is to call and visit the retailers and entice them to come.”

Sydney called attending any kind of trade show “the best education you can get.”

Brad Quin and his wife, Elaine, of Acworth, Ga., first-time attendees, agreed with Sydney’s assessment. As a homebuilder he sees the rug market as a way to vary what he can show his clients. “The market is very impressive,” Quin said. “I think we’re going to make this an annual thing.”

Jonathan Kashanian, vice president of F.J. Kashanian Corp., said he was pleased with what the market had to offer. “My appointments showed and those who were here bought,” said Kashanian, who was in Atlanta with his mother, Gilda, a designer for the company that specializes in handmade Oriental rugs.

He added 2011 has been a better year than 2010, but even so, sales have been up and down. “It seems like when the stock market goes up, people are in a mood to buy, but when it goes down they don’t.”

Rising prices

Rug prices continue to climb amidst higher prices for both wool and cotton and labor, according to Kashanian. He said his strategy is to make sure the variety is there.

“I try to bring something new to the market every year,” Kashanian explained. The New Jersey-based company is a seven-time winner of the Americas Magnificent Carpets Award, handed out during the market’s winter edition to honor the best new products in various price points at the show.

Aaron Gray, marketing director for Oriental Weavers USA, said the cost of raw materials is “through the roof,” and that is largely because of fuel prices. He explained because polypropylene—the most poplar face fiber for machine-made rugs—is an oil-based product, both the cost of manufacturing and transporting has become more costly in recent years.

Oriental Weavers USA is a division of Oriental Weavers Group, a collection of companies headquartered in Cairo, Egypt. Luckily, Gray said, the company has not been impacted by unrest in Egypt, where the company does some manufacturing for its U.S. division.

“We saw about a week’s delay in getting some products around January,” he explained, “but other than that we haven’t had any problems. We haven’t missed a beat.”

Environmentally friendly offerings drew Donna Hazzard and her daughter, Emily, to the rug market. The pair from Gum Springs, Va., was at the show because they are launching an e-commerce site, greenpieced.com. “There are more and more green offerings at the market,” said Donna Hazzard,            who was extremely impressed with some of the green efforts by Shaw Living.

Hazzard said she has been to the market before and indicated her philosophy is to spend wisely but not cheaply. “When you pay a little more for high quality items it usually pays off. It’s better to pay a little more and have it last than pay less and have to replace something sooner than you thought you might have to.”

Because of the continuing downturn in the economy, Shaw is holding back some releases for the January 2012 market, Barta said. “Customers are looking for value-oriented pricing; they are looking to spend less money.” She added in addition to seeking the Made in USA label, many retailers have been looking for green products, something the company offers as all its nylon rugs feature post-consumer recycled content and are 100% recyclable.

A stroll by Tufan Rugs revealed a showroom that was offering something a little different. Sina Sadri describes his shag offerings as “mostly contemporary,” and many of the designs are vividly colorful with swirling patterns of polyester.

He laughed when asked if the economy had affected his business. But one of his best strategies has been to keep inventory down. Nevertheless, he did have three new designs for the summer market with a price of $480 for an 8 x 10.

Suzanne Smith, a buyer looking for bargains for My Ladies Gifts & Home Decor, said she was planning to spend more this year than last. “Our sales have been up. A lot of it is in your attitude. If you reflect a positive attitude to your customers, they are going to buy.”

-Joe Fondetti