828 International' hand-knotted Gabbeh rug.

Sphinx' 100 percent wool Kyber Pass area rug.
"Inventory" has become a dirty word in the rug business. As a result, retailers are coming to Atlanta's International Area Rug Market July 18 through 21 looking for value-oriented merchandise from vendors who can make quick deliveries.

That attitude has fueled the growth of both the inexpensive handmade products and machine-made rugs. Tufted, hand-loomed and Tibetan-weave rugs can be made in a matter of months, compared to the year, or longer, lead time required to produce fine hand-knotted rugs.

Many retailers are still smarting from the sting of recession, a period during which they were caught with slow-moving inventory. And they want to protect themselves from a reoccurrence of that phenomenon. In effect, they are asking vendors to serve as their warehouses.

This is particularly evident at the high end of the product category. And, indeed, there is still a small, appreciative market for the high-quality, expensive rug. But to a large degree, that segment of the market has become a consignment business. "Retailers are reluctant to commit financially to a product which, by its nature, does not turn quickly," says Bob Kirby, president of Jaipur Rugs. "They still want to carry it but, unfortunately, they don’t want to buy it."

A selection from United Weavers' Minster Collection.
The High Point, N.C., International Home Furnishings show, which is presented twice annually, has become a product preview for the rug business. "High Point gives us the opportunity to do some fine tuning," says Ron Couri, CEO of Couristan. "The buying cycle has become much quicker. We want to be in full production this summer in order to have fresh new products in the stores in time for the fall selling season."

For both machine-made and handmade products, the challenge is to change constantly and keep goods moving quickly out the door.

Paul D'huyvetter, senior vice president of Oriental Weavers USA, says the rugs that are hanging in Atlanta are ready to be shipped to the stores.

"We've got to change constantly and get merchandise into the stores immediately," he explains. "Competition is tougher than ever and we've got to keep up with the trends. Some of the rugs we introduced in January are already getting new colors and patterns. Change has become the name of the game."

Charlie Peck, president of Trans Ocean Imports, believes lean inventories give retailers more flexibility. As a result, they want a constant stream of new items.

"Retailers don't want to make a commitment to a lot of stock. They are counting on suppliers to drop-ship," notes Peck. "As a result, the fashion turnaround time is getting faster than ever. New items are coming in a constant stream -- even in handmade qualities."

Even though the rug business is recovering, Peck predicted that retailers won't return to their old stocking methods. "Buyers aren't making long-term commitments. I think the drop-ship strategy is here to stay," he says.

Trans Ocean Imports' Cosmos Collection is hand tufted in India of 50 percent wool and 50 percent cotton. Its suggested retail price is $499 in 5-by-8-foot format.
The Atlanta market will be filled with value-oriented handmade rugs that go with today's casual lifestyle furnishings. On the other hand, new machine-made rugs are duplicating the tightly knotted formal looks of the extreme high end of the market.

Red is the color of the moment, with beige and sand tones not far behind. Grays and blacks will be coming on strong later in the year, vendors predict.

On the handmade side, inexpensive hand-tufted and Tibetan weave hand-knotted rugs are pouring on the market at price points ranging from $300 to $700 in 6-by-9-foot format.

"There have been great strides made in boosting production capabilities and quality in the rug-making countries of India and China," explains Alex Peykar, a principal of Nourison. "As a result, costs have come down. The bottom line is that the consumer gets outstanding value."

Gene Newman, president of Noonoo Rug, says value is key in the handmade business. "Although our company has been built on the high end business, there is no question that the quality has become extremely good at the lower price points," he says. "We will be introducing more medium-priced merchandise in Atlanta."

John Graham, president of the Sphinx Division of Oriental Weavers, notes that "in terms of price, there is now very little differentiation between handmade and machine-made products." Sphinx is best known as an importer of machine-made rugs, and introduced its first handmade rugs in January.

The Kalaty Lateef design in 8-foot round is hand knotted in India.
"The real issue is color and design. It's not how the product is made," observes Linda Harlow, who heads the Sphinx Oasis division of handmade products. "We don't want to have the cheapest product on the market, but we do want to offer the best value. Quality and fair prices are things the consumer understands immediately."

Oasis hand-tufted rugs are available in the $599 range and Indian-weave hand knots are at the $999 level for 6-by-9-foot sizes.

The rug business used to be neatly divided between handmade and machine-made producers. Now, in an effort to become "one-stop" shops, more vendors are carrying both.

Harounian Rugs International, for instance, will be introducing its first machine-made rugs in July. "We listen and respond to suggestions from retailers," says Lee Harounian, a company principal. "We are trying to adapt handmade aesthetics to machine-made technology."

Harounian's new 1.5 million-point rugs are made to duplicate the look of high-priced wool and silk Chinese hand knots. The retail price point will be in the $399 price range for 6-by-9-foot format. HRI is also showing its first Royal Doulton licensed line in hand-tufted constructions.

Hand tufted of wool with faux silk highlights, Nourison's Beauvais Collection is inspired by classic French designs.
As prices in the furniture industry drift downward, increased pressure is on to produce good-looking rugs that are price congruent with upholstered furniture.

"We are doing extremely well in contemporary design hand-tufted goods," notes Momeni Executive Vice President Reza Momeni. "These price points of $399 and $499 work well with the casual trends in furniture."

In keeping with the move to casual living, Momeni is also introducing inexpensive hand-woven products retailing in the $299 range. "They have a lot of style, yet they are extremely affordable. It's a look that's great for young adults and people just starting out."

The young adult market is a growing target audience for major machine-made producers such as Shaw Rugs. "We're making a big push in the opening price point of $149 in both woven and printed products," says Jeff Meadows, vice president of the Shaw Rugs division. "The looks are bold and colorful, but it's not a juvenile product."

Furniture styling has inspired rug makers for many years, but new product ideas can come from other sources, as well. "When we were at the Surfaces floor covering show in January, we saw how Bamboo floors are a growing phenomenon," notes Hari Tummala, executive vice president of Kas Oriental Rugs. "So we developed a new line of rugs that use natural Bamboo in several types of weave. It's a fresh, informal look at an affordable price point under $400."