Area Rugs Size Up to Trade Up

New York —While the 9-to-5 working middle class takes the hit in a slow economy and housing market, the rich stay rich. So what to do, when so much of the home textiles industry relies on middle-income America's dollars, spent at the mainstream national retail chains?

Trade up.

Many area rug suppliers are configuring a new recipe for success, heeding an emerging trend that is paying off, in more ways than one, during this difficult time.

Over the last three to five years — particularly during this past year — more and more area rug makers have begun carving out a nice niche business for themselves, what they describe as “small but steady and consistent,” in the mansion-size area rug segment. They are responding, they say, to retailers' and consumers' increasing demands for these upscale, big ticket, 10-by-12 and larger pieces.

“The high end of the market has been hurt less than the lower end, so the oversized part of the business has continued to be as strong as ever,” said Austin Craley, vp sales, for New York-based Momeni. “We're getting more calls for these rugs. A lot of that has to do with the larger houses being built all around the country with 'great rooms' that need these larger rugs.”

Craley said Momeni has always stocked oversized rugs in its warehouse, which was recently relocated to New Jersey. But “every year, we're adding more,” he said.

Currently Momeni has an inventory of about 50 mansion size rugs, sizes 10-by-14 and larger. It also offers another 250 styles, stemming from 20 collections, in custom sizes.

“We have been growing this segment steadily,” he said. “The 20 collections we offer are a large increase from two years ago. Three to four years ago we had maybe half that many.”

While Momeni's portion of sales from oversized rugs is “probably less than 10%” of the company's total, Craley said, “it is still a big part of our business, and a steady part of our overall business.”

The 10% range is not an uncommon fraction of sales for this niche category.

Brooklyn, N.Y.-based Hellenic Rug Imports, for example, ranks its oversized rug businesses similarly, said Steve Mazarakis, president. Admittedly, carrying and offering larger-scale area rugs has proven to be “a big investment,” he said, “but well worth it because these are expensive rugs. They carry a higher ticket.”

Saddle Brook, N.J.-based Nourison's investment in mansion-size rugs has gone within the past three years from one collection to seven, including some of “our key signature collections,” that include oversize dimensions, said Julie Rosenblum, brand manager.

That surge, she said, is due to several factors: growth in larger residential homes with ample space for larger-scale rugs; the company's 95% inventory stock level for its goods; and the availability of more competitive prices for antique-like rugs.

Nourison's highest price tag in oversized rugs is $7,199, which is the ticket for a 12-by-18 Nourmak, a collection that features the company's patented weaving process that creates the worn look of an antique. Nourmak is the first collection Nourison offered in mansion sizes.

The company's most competitively priced oversized rug is a 12-by-15 Grand Chalet for $4,199. This machine-made collection comprises New Zealand wool blended with Nourison's own trademarked Luxcelle silk-like fiber.

“Consumers are inclined to buy the look of an antique rug in a larger size but at a fraction of the price,” Rosenblum said.

As she indicated, what is rapidly changing the dynamics of this once-select segment is the birth of new constructions and product sources overseas.

“The majority of the large rugs used to be fine hand-knotted rugs with big price tags attached, and now these rugs are being made in more affordable constructions, so more people might feel they can afford them,” said Wendy Reiss, key account manager for Somerset, N.J.-based Kas Rugs.

Kas is another supplier stretching its mansion offerings, both by volume and constructions.

“The reason larger size rugs are being sold more now is due to hand-tufted and tufted products becoming more of the product mix,” said Hari Tummala, vp, Kas, agreeing that “mansion-size rugs are not as expensive as they used to be, so more people can afford them.”

Kas' bulk of mansion rugs are Chinese hand-tufted, hand-carved and higher quality products. But the company is avidly adding more large scales “in all price ranges” to its machine-made collections, spanning all categories and designs.

“We now go from higher-end hand-tufted to machine-made opening price points,” Reiss said.

The 6-by-9 has long been Kas' best selling size, “but an 8-by-10 is catching up, and now so are the even larger sizes.”

Couristan is about to make its first move into mansion sizes come 2008, with the debut 12-foot-6-inch-by-15-foot size to its assortment in the form of its higher-end handmade rugs.

“Over the last three to five years, we've seen a steady increase in inquiries for oversize areas rugs,” said Larry Mahurter, director of advertising and sales promotion. “Adding larger rugs has been pending for us for quite a while.”

Couristan's largest rug in its current assortment measures 9 feet by 12 feet 6 inches.

Hellenic, for one, reserves the majority of its oversize rug business for the high-end of the market, and brand-wise restricts it only to its Candice Olson designer licensed program.

But to stay competitive, the company has added a smattering of lower price-point offerings as product availability has permitted.

“There are now more affordable mansion rugs coming out of India, China and Pakistan,” Mazarakis said.

Dalton, Ga.-based Karastan, Mohawk Industries' high-end area rug division, is also maintaining its upscale perspective, offering a standard 10-by-14 and 11-foot-5-inch-by-16-foot “in several key top of the line collections,” said Anne Carley, director of rug marketing.

Not just smarter price points but also short lead times are Karastan's edge over its growing competition, Carley said.

“We have the unique ability in our Axminster collections to create large custom size rugs by trimming borders and hand-seaming several rugs together,” she said. “Our advantage is that we can provide this service in a fraction of the time it would take to hand-knot a rug of comparable size.”

She argued that selling oversize rugs for retailers is “somewhat less price-sensitive than selling sizes that traditionally are frequently promoted in advertising.”