Buyers attending the upcoming International Area Rug Market in Atlanta (Jan. 17-20) will see an industry on the cusp of major change. The big, splashy introductions scheduled to be unveiled during the event are evidence of a profound alteration in the way rug companies do business and develop product strategies.

Big companies are getting bigger, and the gap between “players” and “niche” companies is getting wider. Large manufacturers and importers are expanding through major licensing agreements, product diversification and more channels of distribution.

Licensing programs

Big licensing relationships will dominate the rug business news over the next year. Consider some of the higher-profile pairings: Martha Stewart and Shaw Industries; Calvin Klein and Nourison; Ralph Lauren and Karastan. Only a few rug vendors have the resources to hook up with those mega-brands. Will it pan out on the bottom line? It appears likely that 2002 will be a major turning point in the industry.

A strong license can be a vehicle to explore new design territory. Nourison has been diversifying its line for several years, expanding from handmade to machine-made products four years ago. Alex Peykar, a Nourison principal, sees the new alliance with Calvin Klein as another diversification step.

“It’s not worth it to have a licensing arrangement if it only means putting someone’s name on an ordinary product,” Peykar says. “We are constantly looking for ways to lead.”

Known as an importer of stylish machine-made rugs, Oriental Weavers-Sphinx is now venturing into the handmade business. Linda Harlow, the longtime rug buyer for Macy’s West, heads the new Oasis division.

“The challenge is to develop products that are really different from everything else,” she explains. “At the same time, they’ve got to be saleable. I want a full line of best sellers.”

Increased diversification

Product diversification is a key marketing strategy for Feizy Rugs, according to company President Amir Loloi. Until two years ago, the company had been known principally as a high-end importer of traditional handmade products. But during the past two years, Feizy has become deeply involved with machine-made and hand-tufted rugs offered at value-oriented price points.

“We have new-machine made rugs that retail at $249, as well as hand-knotted rugs that retail at $2,900,” says Loloi. “Our aim is to create affordable rugs that are indistinguishable from the finest handmade products.”

828 International Trading is a fast-growing company that is also expanding beyond its initial boundaries as a machine-made rug importer. Currently, 828 is introducing a large assortment of hand-tufted and hand-knotted products at price points usually associated with machine-made rugs.

“We are on an aggressive growth trajectory,” says Jim Clardy, 828 president. “We want to be a one-stop shop for value-oriented, high-fashion products.”

Expanded distribution

Very large companies -- such as Mohawk and Shaw -- are planning to become even larger. Mohawk currently has a major hold on the mass-market and discount channels of distribution. Late last year, the company bought Goodwin Weavers, a brand geared to the gift and decorative home accents business. The Goodwin Weavers brand is now emerging in the rug business and Mohawk Home is steering it into mainstream department and furniture stores.

“Thomas Kinkade licensed rugs are just the first step in developing a major presence for the Goodwin Weavers name at the quality price points,” explains Pat Moyer, vice president of marketing for Mohawk Home.

Its alliance with Martha Stewart is just one facet of Shaw’s growth strategy, according to Jeff Meadows, vice president of the company’s rug division. The floor covering giant entered the rug business less than 10 years ago and has focused on the traditional department, specialty-store and home-accent channels of distribution. However, that will change in the coming year as the company makes an aggressive push into the mass-market segment.

“National big box chains, mass market stores and home centers now account for nearly half of the rug business,” Meadows observes. “We want to get a piece of that action.”

Emerging fashion trends

Business strategy is just one aspect of the major changes in store for the rug industry. Fashion directions are also due for a big shift in 2002.

Tribal patterns. Colorful, geometric designs have always constituted an important niche area, but it’s a category that is now experiencing significant growth. In the hand-made realm, tribal rugs offer consumers real value, because they are priced much lower than traditional Persian hand-knots. From a decorating standpoint, the tribals are very adaptable, fitting in well with Southwest-inspired furnishings, leather and casual contemporary styling. Vibrant colors re-emerge. After several years hidden under blotchy, tea-stained finishes, clear jewel-tone colors are retaking the spotlight. In fact, they are the basis of this year’s most important fashion trend. Red, in permutations ranging from claret to blood-orange to fire engine, is especially important. Blues are also taking off, particularly in deep navy, eggplant and cobalt. Naturals -- such as wheat, Berber beige and nearly white -- are getting much lighter and clearer.

According to Charlie Peck of Trans-Ocean, consumers look for details that offer added value -- especially in times of economic or political uncertainty. “Buyers are looking for sharply priced products with the extra attention that makes a line really special,” he notes. For example, Trans-Ocean designer Liora Manne has developed a new collection with the look of a stenciled jute border rug and has added leather binding. Machine woven of polypropylene, it retails for $199 in 6-by-9-foot format.

In the post-Sept. 11 world, consumers are seeking comfort and refuge in their homes and families. Traditional styling could become more important than ever as a result.

“In a world that is filled with anxiety, people want safety and comfort,” explains David Duncan, Karastan’s vice president of marketing. “They also want to surround themselves with products that are safe and comfortable.” Through its range of products, he adds, Karastan is well positioned to accommodate these psychological needs.

What should the rug industry expect as the United States grapples with sorrow and uncertainty? “Although our nation has never been through anything like this, we are all eternal optimists and we will survive,” says Couristan CEO Ron Couri. “We will be bringing out many new product lines and, for the most part it, will be business as usual.”