The U.S. division of Kaleen Rugs & Broadloom celebrates its 25th anniversary and shares major milestones.
DALTON, Ga. — Kaleen Rugs & Broadloom, once known largely as a source for hand-tufted area rugs, expects 2021 to be a banner year, and the company’s COO Monty Rathi says the U.S. division is reaping the benefits of recent expansion into new area rug and broadloom categories.
In fact, as Kaleen celebrates 25 years in business here in the U.S., Rathi reflects on how recent strategic decisions have not only boosted sales in the past three years, but also poised the company for future success.
COO Monty Rathi, left, runs Kaleen's U.S. side of the business, while his brother, Radhe Rathi, serves as CEO in
India for MRT Family Holdings, parent company of Kaleen Rugs.
Founded more than 50 years ago in Mumbai, India, by Rathi’s parents, the company now has three production facilities in India, opening a new state-of-the-art facility in Panipat about 12 months ago. Today, Rathi runs the U.S. side of the business, while his brother, Radhe Rathi, serves as CEO in India for MRT Family Holdings, parent company of Kaleen Rugs. The company has invested substantial resources in developing its latest area rug and broadloom assortments set to debut at the upcoming High Point Market in an expanded showroom.
Kaleen expanded its Panipat, India, facility from 50,000 to 300,000 square feet, adding eco-friendly features such as
solar power and water recycling.
“2021 is going to be strong. We already have surpassed our numbers, and will outpace 2019 numbers no doubt, and will even outpace 2018,” Rathi tells RugNews.com in an exclusive interview. He adds that while 2020 was rife with challenges due to the COVID-19 pandemic and shutdowns, the company still witnessed a rebound for the third and fourth quarters of last year and business has been barreling ahead due in large part to several product gambits.
“COVID did impact our inventory and our supply chain, which was more unpredictable. Our product flow was not as consistent as it was before the pandemic. That affected our growth a bit, but we already had committed to inventory in late 2019, and the growth we saw at the end of second quarter 2020 onward was remarkable. We have learned how we could keep up with the supply chain, and we are carrying more inventory now to make sure our 2021 and 2022 won’t be impacted by more disruptions. We really had to rethink our supply chain.
“For 2021, area rug revenues are going to be strong, but we have seen strong neck-and-neck growth in both rugs and broadloom,” Rathi explains. “Machine-made is going to be the key, no doubt about it. Our outdoor rugs are at the top in terms of units, while in terms of dollars, it’s our hand-tufteds.”
Shivkishan Rathi, Monty and Radhe Rathi's father, founded the family business more than
50 years ago in Mumbai, India.
MACHINE-MADES A BOON FOR BUSINESS
Kaleen revamped its outdoor rug assortment in 2019 moving production out of China, and focusing on trendy,
fashion-driven designs.
Changes in the marketplace over the past decade, and a desire by many of Kaleen’s retailers to offer consumers lower priced rugs, prompted the company to enter the competitive indoor machine-made category. The rapid expansion of Kaleen’s machine-made offering is impressive given that the company, historically a go-to for quality hand-tufted area rugs, pivoted in 2017 introducing Tiziano, its first indoor machine-made area rug collection woven in Egypt. And in 2019, it had to move its outdoor rug production from China, resulting in a comprehensive re-evaluation of its outdoor program, which basically had to be re-built from scratch.
“Originally Kaleen was known for hand-tufted and hand-loomed rugs, and our biggest advantage was, is, and will be quality. We don’t cut corners on quality and that has made us pioneers in the category, and a go-to source in the industry. Most of our competitors have really gone after machine-mades and they have neglected hand-tufted, which is now an advantage for us because we are gaining market share in the hand-tufted space.”
In addition to continually introducing new designs and collections to its tufted assortment, Kaleen has been aggressively rolling out new machine-made rugs. It made an initial push in the machine-made indoor category in 2019 with three new collections, followed with major launches in subsequent years.
The machine-made indoor Trinell collection by Kaleen features distressed classic motifs in trending color combinations.
“Our retailers know about our quality. Even with our machine-mades we aren’t going after the lowest-priced rugs,” Rathi explains. “Our biggest launch in indoor machine-made rugs was in 2020, when we brought 10-plus collections to market, and in 2021 we introduced about nine indoor machine-made collections. That really put Kaleen Rugs back on track— back on the rack.”
Today, as a category, hand-tufted counts for about 65 percent of Kaleen’s rug business, with the remainder attributed to machine-mades. And, within the machine-made rug category, Kaleen has found success in its revamped outdoor rug assortment.
Kaleen remains committed to its tufted business rolling out new designs in two of its most popular tufted collections,
Marble (MBL03, shown) and Chancellor.
“Our outdoor business, which is all machine-made, is about 20 percent of our business,” Rathi said. “After we left China, because of high tariffs and supply chain issues, we had to start all over. We saw that prices for outdoor rugs were dropping, so we decided it was better to get out of China. It was the perfect time and we moved into Turkey and Egypt in a quick and big way. So, by 2020 we had 15 percent of sales in outdoor and this year we are moving toward 20-plus percent -- the numbers are growing like crazy now.”
The company’s latest outdoor collections are fashion driven, with trending designs in a range of color-drenched palettes. For instance, its popular Sunice collection, woven in Egypt of polypropylene, offers Boho and globally-inspired designs and continues to see line extensions. Likewise, Ostinata, introduced this year, features textured lines and curves in bold geometrics and abstracted looks. These multi-color designs are machine-made in Turkey of 100 percent polypropylene.
“In machine-made, we didn’t want to go after the day-to-day rugs, and the only way we could differentiate with our outdoor rugs was to offer fashion and that’s what really put us on the map,” Rathi says. “We are the kings in outdoor machine-made and leading the industry -- we have the best assortment.”
Kaleen revamps its outdoor assortment taking a fashion approach to its lineup. Shown, SYP02
HAND-KNOTTED STRATEGY RIPE FOR GROWTH
Kaleen debuted its new LUXE by Kaleen brand earlier this year for its high-end, hand-knotted area rugs. Shown SIR04
And while Kaleen has always offered a hand-knotted assortment to its clients, 2021 was a turning point in the company’s approach to the category with the debut of a new upscale label and innovative solutions for customers.
“A major milestone for us has been the LUXE brand by Kaleen, which is high-end hand-knotted,” Rathi explains. “LUXE is only targeted to brick-and-mortar stores and a few high-end e-commerce sites, for example Bloomingdales online.”
The response at High Point to LUXE, which was rolled out in April, was “really really good. Our customers loved the brand and they like that it is brick and mortar only.” Of the two debut collections for Luxe, the all-wool Ali features seven classic geometrical floral patterns and middle eastern designs in a jewel-toned color palette. In weave, this range is hand-crafted by skilled artisans who create textured Afghan-inspired hand-knotted rugs using age-old techniques on traditional looms. Each rug is open backed, allowing it to be moved easier, and hand-serged and hand-finished. In contrast, the sun-washed oversize patterns of the Sikri collection are hand-knotted of a fine imported wool and cotton blend, and also finished by hand with an open back.
“In our LUXE, we also do custom sizes — we carry 15 by 50 foot rolls roles in India, and we can do any custom size with delivery in 120 days,” Rathi explains. “With the much larger homes today, customers want odd sizes and the problem with hand-knotteds is you cannot get them quickly. The lead time is causing delays and frustration on the consumer side. We are trying to reduce that gap with an innovative product. We are already selling to those retailers, all it takes is to solve a problem for customers — and that opens up the doors.”
Kaleen is actively targeting the high-end hand-knot market with its new Ali collection. Shown, ALI04
Kaleen’s new LUXE signals a focus on the high-end of the market, which has seen major growth during the past year as homeowners upgrade their interiors.
“Today, people have money and if they have a million-dollar home they don’t want machine- made rugs, they don’t want to put a $300-$400 rug in their homes,” he says. “They would put it outdoors, but not inside. They want beautiful rugs inside and now the hand-knot rugs coming out of India have great value. It is not what it used to be back in the old days when the cost was $40-$60 a square foot. Competition is changing that price point and making it more affordable.
“I want to make our hand-knots as affordable as possible for all customers. I don’t want to target just the high-end, I want our hand-knots to be in reach of everyone possible.”
Rathi adds, “We are trying to get into the high-end market now. Since we already are selling broadloom to high-end retailers, all it takes to sell them rugs is to develop good new product. I am confident that we will be very strong in the category in the coming years.”
BROADLOOM INNOVATIONS BECOME REVENUE DRIVER
Kaleen developed its machine-made Hook & Beam brand specifically for the hospitality market.
Broadloom sales also have been booming at Kaleen. The company entered that market in 2015 with a selection of three all-wool collections, and in the past two years has rolled out two brands —Pure Life, an all-natural hand-made broadloom program, and Hook & Beam, an assortment of machine-made designs —to further differentiate its offering.
“For two years we have been heavily focused on broadloom — our broadloom business has been growing like crazy. It has become a large portion of our business now in terms of dollars,” Rathi says. “We wanted Kaleen to grow organically as a company. That is one of the reasons we launched our new brands: Pure Life, Hook & Beam and LUXE.”
Developed in 2020, Pure Life is 100 percent free of chemicals, all natural and pet- and kid- friendly as well. Earlier this year, Kaleen debuted its new machine-made Hook & Beam program. “This year we launched Hook & Beam, which is a combination of hand-made and machine-made constructions, and that has been a major investment for us back in India. The line will give us an opening for distribution in the commercial and hospitality industry.”
Kaleen created a jacquard for Hook & Beam on a 4m-5m loom, and also developed a Wilton-type product which is both hand-made and machine-made, and priced about 15 percent lower than typical Wilton broadlooms. Finally, Kaleen devised a new way of producing a circular knit product that it anticipates will offer an entry into the hospitality market.
Kaleen's all-natural Pure Life program resonates with consumers seeking natural product. Shown, Trinidad
“Hospitality will take about three years to fully recover from the COVID crisis and return to 2019 numbers, so we entered the market at the right time. When we started broadloom in 2015, we grew from zero percent: we had ten styles that we launched and now we have 500-plus styles. Broadloom has experienced the fastest growth in our history — broadloom has become a significant portion of our business.”
While Rathi remains bullish on rug and broadloom sales for 2022, he does expect demand to level off and plateau at some point. “The question is when. "But with the new products we are coming out with in broadloom and rugs, and a new celebrity program we will debut early in 2022."
Still for the remainder of 2021, he says, "We are looking forward to the end of the year at High Point. We remain optimistic and are looking forward to some great sales from customers returning to market. We are excited to share new additions to our Hilary Farr lineup, which will continue her story of sustainability. Also, we are debuting our new, larger showroom, with a whole new look, and showing off our custom rug line for the first time."