We are retailers of better rugs. And by better rugs, I am talking about hand knotted carpets, and while they were once easily grouped as “Oriental” rugs, that is not the case anymore.

Rob Leahy, Norma Wilhoit and Chris Noland at rug market

Rob Leahy, Norma Wilhoit and Chris Noland at rug market

Trend 1:  The rugs which once were the hallmark of style and grace in home furnishings are being priced out of the reach of all but the wealthiest of consumers.

Industrialization around the world has provided new opportunities for workers in once very poor countries to employ machine assisted labor techniques, allowing them to increase family incomes and improve their standard of living.  This is a good thing, but it has dramatically affected the supply of labor willing to produce hand knotted carpets and rugs.

As a result, lower priced, lower quality alternatives have surfaced, and consumers are buying these rugs because they express contemporary fashion and a current color palete.

The opportunity: The desire to express unique and individual taste has moved up market and is creating a demand for a whole range of better quality hand knotted rugs. We need to recognize and embrace these changes and re-invent our businesses.

Trend 2:  Retail, as we have known it, is dying.  Marc Andreessen, the creator of the original web browser, Netscape, was recently quoted saying that all physical retail stores will die, succumbing eventually to online competition. Stores that do survive will become places that are visited to design and co-create custom products with the personal assistance of experts.

The opportunity: “Better rug” retailers, as sellers of individualized color and design should be able to separate themselves from the branded online competition. Rug retailers can evolve, and indeed must, in order to survive.  This does not mean simply going online. Consider the wasteland the ‘brands’ left behind in the record, camera and bookstore markets. Best Buy is now being taken apart at the seams by ‘brands’ that sell direct to Best Buy’s onetime customers. There is a whole range of service, informational and display innovations that can be employed to enable ‘bricks and mortar’ retailers get back in the game.

Interior of a typical American rug store

Interior of a typical American rug store

Inside Fine Rugs of Charleston

Inside Fine Rugs of Charleston

 

The challenge and the future: The paradox of needing to raise prices because of diminishing supply and wanting to lower prices because of increased competition is very perplexing.  It requires a creative approach. In my next post, I’ll detail how a rug retailer can innovate and evolve into a new age of success and profitability.

 

One comment on “Two trends that are killing the rug business

  1. Shakti Saxena

    The Rug Industry today has been hit by three major factors. First, the cost of producing rugs at most developing counteries like India, Pakistan, Afganistan and Nepal has gone up substantially due to rise in the cost of local inputs caused by general inflation and reducing labour force in this sector. Secondly the demand segment at the developed, rich counteries has generally been sliding down due to continued and sustained recessionary trends. The third factor remains the gross malpractices adopted by a number of intermediaries, who while ensure that the manufacturer never gets his due price also guarantee that the landing cost of finished rugs at the importing end is substantially higher than it ought to be.

    Most of the large importing companies depute their buying cum inspection agents at the point of origin of these rugs. While earlier these agents only fleeced both the manufacturer and the importers through their unjustifiable commissions, now have started to demand a share in the profits of the manufacturer which is slowly but surely killing the industry as also artificially jacking up the pricing of the product.

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