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Tariffs, pandemic change the way rug suppliers bring product stateside

The hand-knotted Jordan Collection was one of Surya’s introductions at last month’s High Point Market. The rugs are made in India.

The process of moving rugs from the factory to the consumer, while never a simple venture, has become more complicated over the last couple of years.

Imports are the lifeblood of the U.S. rug industry. According to reports from the U.S. Customs Service, U.S. Census Bureau and U.S. International Trade Commission, India was the leading importer of area rugs in 2019 with $432 million, down slightly from 2018’s $433 million. China saw a drastic drop, with $190 million in 2019 from $281 million. Turkey was next with $109 million in 2019, down from $135 million, and Egypt was fourth with $69.8 million, up 16.1{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} from 2018’s $60.1 million.

In 2018, President Donald Trump authorized tariffs on goods imported from China, with rugs and carpets among them. The country is a significant maker of machine-made products for many of the rug industry’s top players, so these levies have impacted production and strategy.

As COVID-19 raged across the globe this year, lockdowns halted production in numerous countries as entire populations were mandated to stay at home to help stave off the deadly virus. In addition to the pandemic’s grim death toll, these delays caused kinks in the supply chain and forced companies to think even more creatively to bring their products stateside. Once here, those concerns shifted to maintaining warehousing staff and managing complicated shipping orders.

“We always forecast sales and try to streamline it,” said Surya President Satya Tiwari. “But with COVID, you have to put in an extra buffer. You’ve got to plan some break in the supply chain.”

For this report, Home Accents Today asked executives from rug companies to weigh in on recent global impacts as it relates to importing rugs, how they’ve blunted those impacts and how they’ve communicated those causes and effects with their stakeholders.

As part of its response to the ongoing COVID-19 pandemic, Harounian Rugs International shared information with its customer base, including the ongoing status of its machine-made Sunbrella rugs.

Breaks and repairs in the supply chain

As tariffs increased the cost of doing business in China, a number of rug manufacturers pivoted to other countries as they were able.

This pet turf made by Oriental Weavers is an example of product that was moved from China to the company’s other factories.

“Seeing as many retailers realized that the tariffs were not going away any time soon, they began to look for replacement products produced elsewhere,” said Jonathan Witt, president of Oriental Weavers, which manufactures machine-made rugs in China, Egypt and the U.S. “For Oriental Weavers specifically, we were the beneficiaries of several replacement programs that could be produced in our facilities in Egypt and the United States at lower cost than China once the tariffs were in place.”

Surya took it upon itself to be more proactive in placing production orders everywhere, including China. By doing so, the company is less reliant on prototypes and samples. In addition to China, the Cartersville, Ga.-based supplier brings rugs stateside from India, Egypt and Turkey.

“One way we solve the problem is by taking a bigger risk,” said Tiwari. “We write bigger production orders. This started in the days when we were dealing with the tariffs; how do we be more aggressive? We started streamlining the purchasing so we can digest extra risk.”

Feizy manufactures and imports from India, China and Turkey and has had longstanding relationships with numerous factories and weavers, allowing it to shift production as needed and where it makes sense. In terms of dealing with China, Justin Yeck, vice president of omnichannel sales, marketing, product development and design, said the Dallas-based producer bore the brunt of the tariff-based increases in Chinese rugs, which aren’t a huge driver of business anyway.

“We continue to look at different manufacturers across the globe to consistently source the best product. We are fortunate to have 47 years of relationships with our vendors, which allow us to lock in great pricing for our clients,” Yeck said. “We absorbed a majority of tariff costs on our Chinese products requiring only a nominal increase in price for our clients. We continue to drive our large portfolio of other products. Chinese shags are a small part of our overall offerings. We have so many options for clients that satisfy a wide range of tastes.”

Kas Rugs, which imports from Turkey, India, China, Belgium and Egypt, also relied on relationships to help keep things flowing.

“One of things Kas is proud and thankful of is our strong relationships with our suppliers.  We have worked with them to ensure continuous deliveries and strong communication so that we can work as a team to increase growth during these difficult times,” said Wendy Reiss, vice president of sales and national accounts.  “We, in turn, relay any issues immediately to our sales and customer service teams who are in constant communication with our customers. Strong communication we feel equals strong relationships.”

As shutdowns have affected countries across the globe, rug vendors prepared and pivoted accordingly.

“We’ve been very fortunate that we control the full production in our own factories, and even in some of the others, we control a big portion of the production. We also do a lot of forecasting of our needs. We really haven’t missed a beat in the supply chain,” said Gerard O’Keefe, Nourison’s vice president of sales. “The production in China was shut down for about five weeks; some of our production in India was shut down for five or six weeks. We were fortunate that we had a lot in the pipeline already, in containers and on their way.”

Tiwari said the lockdown in India was different than in other countries, because everything stopped.

“India had a very immediate and longer lockdown than most countries so that was challenging for everyone. In India, the lockdown was a complete lockdown; it wasn’t essential versus non-essential or anything like that,” he said. “I feel like in India, we needed to be ultra-creative to get the yarns to the weavers so they could weave while they were locked down.”

Rugs from Feizy’s Palomar Collection are made of 100{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} wool in India.

Communication, the other chain

Jaipur Living turned to existing inventory when factories shut down, then turned to technology to continue customer outreach.

“The COVID-19 crisis has been an unprecedented challenge for so many businesses, including Jaipur Living. When factories shut down in India and Turkey, we had thousands of rugs, pillows, poufs and throws in-stock and available to ship,” said Asha Chaudhary, CEO. “We concentrated on moving that product while at the same time adapting and improving the customer experience with new digital tools, innovative videos, a new product launch schedule and cutting edge information. For example, we kept on top of the timing of back-ordered and custom product on our website so that customers had access to the most current ETAs.”

Kas Rugs also used digital means to move product, stay in front of its customers and prepare for the return of business.

“We have focused our efforts on our solid in-stock position by offering competitive in-stock promotions, trend videos showcasing our rugs, virtual product tours and an enhanced web presence,” said Kranthi Yarlagadda, president. “Through the closures, we have continued to keep in touch with our customers via our sales and customer service teams who were all working remotely. When people were ready to shop again, we offered promotions to help dealers of all sizes and in all distribution channels.”

Greg Jordt, senior vice president of sales for Harounian Rugs International, said from the outset of the pandemic, HRI leaned into being transparent with its customer base.

“When this first started happening, I was a proponent of we don’t know what we don’t know, so we need to go extra efforts toward communicating with our sales reps and customers,” Jordt said. “From Day 1, I’ve been very happy with what we’ve been able to do as far as constant communication with our sales reps and customers, weekly, with updates on what’s shipping, what’s not shipping, what’s delayed, what’s shut down. Every step of the way, our entire staff and our customer base was informed.”

Jordt said he receives reports frequently, which then get turned around to sales reps and customers. He said the result is a better understanding between vendor and retailer.

“We’re tracking our loom reports from India on a weekly basis. Turkey, it’s all machine-made; our Sunbrella production, we know where that is and what’s shipping when,” Jordt said. “All of that gets relayed to everyone. It’s all about communication.”

O’Keefe said Nourison reached out to its customers as a partner first, and as a resource second.

“In the early days of the pandemic, our message was we don’t want to sell you anything, just realize we’re here for you if you need us,” he said. “To a degree, that’s still the message, but what we’re finding now is there’s a pent-up demand and our customers don’t just need us to be there but they need us to have stuff for them and to execute.”

Momeni’s messaging focused on being a reliable partner through it all. Ali Momeni, vice president of operations, said being a reliable partner in this instance meant providing its customers all the data they needed.

“For a lot of customers, selling a rug is not a problem; shipping a rug is not a problem. Providing that data on an accurate time level to the customer so they have all that information without calling or emailing or following up is what we always work toward; to provide the fastest service,” Momeni said. “We’re in the shipping business, so we’re experts at that. I think right now, data is becoming more and more important. In terms of supply chain, we’re investing in the technology infrastructure to get that data to the customer expeditiously.”

Tiwari said Surya’s breadth of product made sure that it would have something that its customers need when they need it. After all, he noted, as consumers are spending more on furnishing their homes, retailers need inventory.

“We’re very wide; we have duplications and substitutions. We have some collections with 30 rugs and some are similar from a merchandising point of view, so if one is out of stock we have 10 others that are in. Our customers have benefited from our wider portfolio. We’re taking some big steps to keep things flowing at a faster rate,” he said. “I never like the word new. I like what’s relevant. If my new is not relevant for you, why does it matter? Even before COVID, if you look at our showroom, nothing says ‘new’ openly. New doesn’t mean anything if it’s not applicable to you. Today, stock is the most applicable.”

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