March 3, 2004

WHEN IT COMES TO RUGS, LOVE 'EM OR LEAVE 'EM ADVISES CARPET ONE'S MISHKIN

Sandy Mishkin

By Lissa Wyman

When it comes to rugs, floor covering dealers should either love 'em or leave 'em.

After years of telling Carpet One retailers to get into the rug business,  Sandy Mishkin, president of CCA Global partners, is now singing a new tune.

"If you're going to do the category, do it right. You can't just set up a rug rack at the back of the store. 40 rugs is NOT enough ," Mishkin told dealers at the recent Carpet One convention in Houston.

"You need at least 150 rugs in prices from $500 to $1,000 to give the customer a sense of choice," Mishkin stressed.

Other factors contributing to a successful rug department include:

• A designated person to run the rug department
• A separate advertising budget for rugs.
• Investment in a sales training program for rugs.

"Rugs are a destination-oriented category, so let the customer know you're in the business," Mishkin said.

It's not just rugs.  "My advice would be the same for any category. Do it right or don't do it at all," Mishkin told rugnews.com in an exclusive post-convention interview.

"Most floor covering retailers tip-toe into the business.  They are setting themselves up for failure," he stated.

Space requirements are often an insurmountable obstacle for independent stores, which typically average  4,000 to 5,000 square feet.  "Let's face it.  Most specialty stores simply don't have the space to sell rugs well," Mishkin said.

"Unless a dealer can show a good assortment of styles, constructions and price points, they might as well skip the category entirely," he said.

That's the bad news.

The good news is that rugs offer floor covering retailers unique bottom-line opportunities, Mishkin told retailers.

• Margins averaging 50% to 60%
• Tie-in sales with other floor covering categories. "Every hard surface customer is a potential rug customer," Mishkin stressed.
• Color and design excitement.

Mishkin told rugnews.com  that his current aim is to make Carpet One's strong rug retailers even better, rather than asking every dealer to squeeze rugs into an inadequate space.

Carpet One has reduced the number of  core suppliers to seven or eight vendors. "We are developing focused assortments from fewer suppliers."  said Mishkin.

Carpet One is working in close partnership with the vendors to develop  exclusive programs such as

• Zip-Ship
• Sales Training
• Advertising
• Merchandising units
• Container shipments

Mishkin told rugnews.com that approximately 80% of Carpet One rug business is done by only about 20% of the stores.

Mishkin declined to discuss  dollar figures, but said rug sales are "less than 10%" of Carpet One total sales. " Whatever it is, it's not enough," he stated.

Rugnews.com discussed the state of the rug business with several Carpet One retailers attending the market.

When we asked Carpet One dealers about rugs, we often got a pained expression. Several dealers simply stated "We don't do well in rugs. Wish we could do more." Often they cited lack of space and low ceiling heights as hampering their sales efforts.

Others were eager to tell us about their success stories.

"I've been in the rug business for 30 years, and I love it," said Gary Deaton, president of Deaton's Carpet One in Jackson, TN. "I love rugs, and I've been determined to make it a success. We used to sell a lot of hand-made rugs, but now that there are so many outstanding designs in machine made rugs, we're doing more in that category. We've  increased both turn and dollars," he said.

Recently, Deaton added 9x12 racks to the selling floor. "We were amazed at the difference they made. Sales of large sizes increased significantly. If you show them, you sell them," he said.

The mother and son team of Frances and Bob Francavilla of Independent Carpet One, Westland, MI say they have a passion for rugs that keeps growing in intensity. "We're building a new store that will contain 1,500 rugs, " said Frances Francavilla. "My daughter and daughter-in-law are interior designers and they'll be in charge. We believe in doing this right."

Added John Hughes of O'Brien's Carpet One in Colorado Springs, CO, "We're very much committed to the rug business. It's a very important profit center for us. We devote the space to it and have a big selection in a broad price range."

Kirk Kerkochian,president of United Carpet One in Fresno, CA, said the company is converting 1,000 sq. ft. of space that will be devoted entirely to rugs. "We're creating a store within a store, and we've named Tina Ohanian to be the rug manager, with complete control over that department," said Kerkochian.

Al Sinclair, president of Alfred's Carpet One in London, Ontario, said the store recently made the commitment to do a more significant business in rugs. "We bought more inventory, put in more racks and committed to more space.  We opened a new 2,000 sq. ft. store adjacent to the main store. We're calling the new unit, The Rug Company,"  he said. We launched the new store about six months ago and it's working out very well," said Sinclair.