Retailing San Francisco: Small, Smart, Sustainable

| January 7, 2013 | 0 Comments

[A version of this article, edited for space, was published in January, 2013 in Volume 33, No. 4 of Rug News andDesign Magazine.]

San Francisco Style

When we asked Kassin Laverty, founder and Executive Director of Interior Design Fair in San Francisco, whether there was a San Francisco Style in interior design – and if so, what its characteristics were – she mentioned the following.

  • We’re a city full of innovators and entrepreneurs who share bikes and cars and reject corner offices; we want places that are personal and comfortable, and can house a great dinner party.
  • We don’t want things that are so expensive or so perfect you can’t touch them, or rooms no one ever goes into.
  • San Francisco style is all about being good looking and smart; i.e., clever uses of space; a friend’s art over the mantel, an old floor repurposed as a new headboard.
  • We also love anything with light and color to combat those foggy gray days.

A Market in Flux

Chris Walgren at Nomad Rugs (San Francisco) noted that the bay area is fortunate because of “the influx of people associated with the tech and social media companies. They’ve brought a lot of younger people into the area with good jobs, helping all kinds of retailers.”

Renee Cocke at Krimsa (San Francisco) talked about this too, saying there were “lots of towers going up in San Francisco. Lots of dot.com tenants. They only buy one rug, but want and will pay for the perfect rug. They like the hip/Tibetan look.” But she also said that San Francisco was “a transitional city. People move on. Go from a city apartment to the suburbs. A lot of people only stay for a couple of years. That’s one of the things you have to take into consideration when suggesting a rug to them.”

Rug retailing is also in flux. Bruce Good at The Oriental Carpet (Menlo Park) said that “in the bay area there seem to be fewer and fewer rug dealers. There’s less competition. It’s the smaller guys, under $1 million annually, who are closing. We’ve been in business in the Palo Alto / Menlo Park area for 30 years. I think that’s what’s saved us.” Renee Cocke not only commented on “the shrinking pool of fine rug stores,” but described it as a challenge – rather than an opportunity – for the rug stores that remained. “Lots of the rug business is going online,” she added.

Rug Stores and Their Customers

Rug stores help their customers find the right rug. As Renee Cocke put it, “Customers have an idea what they want, from things like magazines and Pinterest and design shows on TV. Our job is to find them something that’s similar, but better quality. They want a rug that’s different, unique, but in style. I watch the design shows on TV so I’ll know what customers will come in wanting.”

Todd McMechen at Abbey Carpet of San Francisco said that some of the most beautiful houses he’s seen were done by homeowners who were not designers. “They’re working off magazines and TV shows, but they have a genuine talent for design. They can come to our store and shop without needing a decorator’s license. Our job is to help them realize their visions. We help them find what they need.”

That ability to find what the customer needs – the “sourcing” function – is increasingly valuable to the customer as the designer/client paradigm evolves. As Todd McMechen put it, “Houzz.com has changed everything. You can search ‘gray and butter’ and Houzz pulls up hundreds of images of gray and butter room designs. With sites like Houzz, and catalog shopping, the role of the designer has been de-mystified. Designers used to be the people who knew where to get what you couldn’t. Now you can find it yourself. Everyone can design now.”

What People Want

Bruce Good at The Oriental Carpet said that the biggest trend is “customers going contemporary. Customers are looking for simple designs that are easy to work with.” He mentioned Tufenkian rugs, and those that he imports from Nepal. He could only speculate about what was drawing customers to more contemporary rugs. “It may be age-related, or may just be a style trend. Or it may be that customers are all starting at Crate & Barrel and Pottery Barn, where they see furniture and accessories with simple forms and designs.” But he thinks the trend is being led by consumers rather than vendors. The rugs he’s seeing at shows like Atlanta all look “behind the curve. Those who are doing the new stuff are all going to Pakistan and India, getting rugs done in new simple designs and easy colors.” He mentioned Art Resources, Azad, and Mehraban.

Courtney Kahn at California Carpet (San Francisco), who also thinks the vendors are following rather than leading the market, said that “one bright spot is the move to tone and texture. Rugs with one color or a few closely related colors. Subtle.”

Chris Wahlgren at Nomad Rugs, who specializes in tribal rugs, typically with rich saturated color, also said that there was “much more interest in modern rugs, especially among younger people.” He said that the west coast north of Los Angeles “likes tribal / classical Heriz rugs with color,” while customers in Los Angeles favor “more decorative rugs with softer colors.” He mentioned Art Resources as a source for both classic and modern/minimalist rugs.

Todd McMechen at Abbey Carpet of San Francisco commented that “San Francisco is a small city. The northern part is affluent. There’s never any new construction, houses are a finite size [i.e., relatively small], and can be kind of dark. Customers are looking for lighter rugs with less dramatic patterns. Like tone on tone. Fewer of the wild and crazy rugs. In the city there’s an odd sort of esthetic – not a lot of big pattern, not a lot of darker color. But a lot of my customers have second homes in Napa/Sonoma that have a totally different look. More ‘edgy.’ More pattern, color, and contrast, and darker colors.”

Another thing that Bruce Good mentioned was that people seemed content to spend $4,000 to $8,000 on a rug and use it for a few years, then move on, rather than spend more than $10,000 and keep it. Renee Cocke agreed that customers were more inclined than formerly to see rugs as shorter-term possessions.

Sustainability

San Francisco is a city where it’s basically illegal for a supermarket to give a customer a plastic bag, where food scraps are collected by the city and composted rather than tossed into a landfill. According to Siemens, the German industrial conglomerate, San Francisco is the most sustainable among the 20 largest cities in the US. And Siemens would know; they make a lot of equipment for reducing pollutants and treating waste.

So how is sustainability playing out in the rug stores in San Francisco? This is how many retailers we spoke to who said they had customers coming into the store talking about sustainability: zero. How is that possible?

Tom Giorgi at Giorgi Brothers thinks it’s because, when people are considering rugs and furniture, “they’re thinking wool, cotton, wood, leather – all natural,” all sustainable. There’s nothing there to punch the sustainability button. Renee Cocke at Krimsa agreed. “Sustainable/green is not such a big thing. Our rugs are all hand-knotted, natural. There’s not much of a sustainability issue there.”

Patrick Wohlgren at Nomad Rugs said he thought it was a matter of education. “Customers just don’t know that a tufted rug is held together with glue, and what’s more, a glue that can release gasses. Consumers just don’t think about that.” So he brings up the subject.

Todd McMechen at Abbey Carpet said that some customers did have concerns about sustainability. At Abbey Carpet they are big wool proponents. The store is the largest wool house in San Francisco, possibly in all of northern California. They can often sell customers on the idea of using wool rather than nylon and other synthetic fibers. That’s because they purchase wool remnants that they can offer at more than 50% off the original price. At that price they are, if not as cheap as the synthetic fibers, at least price competitive. And when the prices are competitive, customers will usually buy the wool.

The lesson was that it’s the retailer who needs to start the conversation. Bring up the subject of sustainability. Talk about wool versus polypropylene. Talk about natural versus synthetic dyes. What San Francisco retailers have found is that if you do start that conversation, you’ll find your customers will choose a sustainably produced rug over a rug produced from finite resources, and they’ll pay a premium for it.

But the retailer has to get the issue on the table. You can’t wait until your customer does, because your customers don’t know the issue is there.

We noticed that there was a tendency for the retailers we asked about sustainability to move from sustainability to related issues. One of these was child labor. Courtney Kahn at California Carpet said that “consumers do sometimes ask about sustainability. It helps the story to tell a green story. The salespeople usually bring it up.” She added, “people are concerned about where rugs come from – child labor – recyclability.” Renee Cocke also said “customers are more aware of and concerned about child labor” than they are concerned about sustainabililty.

The jump from sustainability to child labor speaks to the common factor of social responsibility – that the exploitative use of other people, especially children, and the consumption of finite resources, have costs that the user does not pay, but that make us all poorer. But still, sustainability and child labor are in fact two distinct issues, and it was a little surprising to see the almost immediate move from one to the other.

The other issue that was conflated with sustainability was health. The connection here is more immediate. The petrochemicals whose use is unsustainable are the petrochemicals that give off gasses that many customers believe are hazardous to health.

Todd McMechen, discussing the merits of wool as a sustainably harvested resource, segued immediately to the research that suggests that wool actually cleans the air by absorbing noxious gasses. He went on to note that there were “lots of issues, even with wool. What’s in the backing? What’s in the glue? Is it water-based or does it incorporate accelerants? What’s in the dyes?” But in the next breath he returned to sustainability, commenting on a new fiber made from corn, and the Earthweave rugs made in Georgia that are not only 99.99% chemical free, but also sustainable, being made of wool on a hemp backing, glued a with water-based glue (which he commented smelled a bit like a barnyard until they were well-aired).

The issue of the chemicals in the rugs, and what effect they may have on your health, isn’t a sustainability issue, at least not as far as production goes. But, like sustainability, the health issue is part of the larger complex of “green” issues. They’re linked in the customer’s mind, and it’s not surprising that McMechen should talk about them almost in the same breath.

Two Surprising Conversations

Two of the retailers we spoke with, Courtney Kahn at California Carpet and Todd McMechen at Abbey Carpet, had things to say that we hadn’t heard before from retailers. This may have been because they’d both spent some time outside the rug industry.

Courtney Kahn, the Director of Merchandising at California Carpet, spent years at Bloomingdale’s in New York before taking a job at The Gap. That is, she has years of experience in a retail environment in which color, pattern and design change rapidly, and success is very much a matter of having the latest thing to offer.

She says the biggest problem with the rug market is the rugs. The different vendors’ rugs are too much like one another. Turnover is too slow. There’s not enough new product. Most of the colors are boring. “The industry is run by men,” she points out. “It needs a female perspective.

Interestingly, while she gives the industry as a whole low marks, she singles out individual companies only to praise them. She says Surya probably does the best job, that their rugs are the most “trend-wise, market-right.” The Calvin Klein line from Nourison is “right on target.” She praises Feizy for “taking traditional designs, making them more contemporary, and using fresh colors.”

When it came to her specialty, merchandising, she was equally outspoken. “Presentation is a problem,” she said. “The rug racks do nothing for the rugs.” She sets up vignettes within the store. She urged rug retailers to “tell a story.” She talked about pulling together a group of rugs that were from different vendors but had common design elements, saying “Make a collection. Consumers get it right away.”

It’s easy to forgive the industry for being less innovative than the clothes industry, once you understand some of the economics. But Courtney Kahn understands the economics. She just feels that the economics shouldn’t make us so quick to lose sight of “the excitement gap” between the rug industry and, for her, the fashion industry. Note too that although she hasn’t (yet) been able to come up with a real alternative to the rug rack, that hasn’t made her lose sight of the fact that displaying rugs on racks is, in her view, both uninspired and uninspiring.

Todd McMechen agreed with some of the things that Courtney Kahn had said, noting that field colors only changed about every 10 years or so, and that the carpet mills were “tepid about change,” usually running three years behind. But what was really surprising about the conversation we had with him was what we ended up talking about.

Although Abbey Carpet was founded 50 years ago, in the same location, by Todd’s father Chuck McMechen, Todd has not spent all his life retailing rugs. He only went to work for Abbey Carpet a few years ago after spending years doing things like marketing, for dot.coms, products that did not actually exist, at least not yet. So he came to the industry as an outsider by career but an ultimate insider by birth.

The surprising thing we talked about was design – something carpet stores supposedly don’t understand, and so can’t use effectively to close sales. And it wasn’t even rug design we were talking about. It was interior design in general.

It wasn’t surprising that he mentioned that his father and he knew all the designers in San Francisco. Or that he noted that the store is “heavily invested” in design, to “keep current, keep contemporary.”

The surprise was his fluency with the language and theory of interior design, and that he could riff about it for an hour. He mentioned three different designers by name, and houses that each had done. (For the record, Ken Fulk, Stephen Schubel , and Ron Mann.) He said things like designers “make things pop” using “abstract conceptualism,” and “design genius has to do with manipulating the expectations of the audience.” He talked about a group of older designers who “create timeless designs independent of trends.”

To be healthy enterprises, brick and mortar rug and carpet stores need to sell rugs with higher than median price tags. A big part of that customer base consists of designers and – this is important – people who are not designers but are design-aware and design-fluent. To sell to these customers, retailers need to get smart about interior design. They need to be able to speak the language. That’s what the new – Internet, big box – rug market means for brick and mortar retailers.

The conversation with Todd McMechen was evidence that rug and carpet retailers not only can reinvent themselves for the new market, but are in fact in the process of doing just that.

Building Traffic

Bruce Good at The Oriental Carpet has tried a variety of things to build traffic, including advertising in upscale luxury home magazines. But most customers find his store on the Internet, and now all his advertising budget is going into building his web presence. He has a new website, and he’s hired someone to find the words that will bring people to his site when they do a Google search like “hand knotted rugs San Francisco.” He said he “used to be buried, 100th on the list, and I don’t even think there are 100 dealers of handwoven rugs in the bay area,” but now he’s always in the top three.

The goal is to bring people into the store, not sell rugs online. He’s fine with competition, but isn’t interested in getting into a duel with one dealer in the Midwest and another in the South over who has the lowest price for a particular rug.

Chris Wahlgren at Nomad Rugs says that traffic in his store is the result of the fact that he’s in a good neighborhood – one that supports local merchants – in a good retail strip. His space has a gallery section where he’s shown the work of visual artists, with the concept of showing the paintings or prints or photographs together with the rugs as “art next to art.”

His outreach is also focused on the Internet, with his website being the most important source of new business. Ninety percent of his inventory is up on his website. He also does a little with Google ad words. He was advertising in neighborhood newspapers but no longer does.

Renee Cocke at Krimas also said her location was important to building her business. Krimsa is in a location that a lot of people walk by, and some just stop in. For that reason, she puts a lot of thought into her window displays. New customers also come in after hearing about the shop from friends. Her walk-ins are usually amazed at the handmade rugs, but surprised by the prices; converting them into customers is a matter of educating them about rugs. Most of her sales are to people who have bought from her before. She used to advertise, but realized all the home magazines already had 15 rug stores in them.

Todd McMechen at Abbey Carpet commented that, with the store in the same place for 50 years, the word of mouth was amazing. “We’re very well known in what is in fact a small city. We have customers whose grandparents bought their rugs here.” Abbey Carpet participates in a for-charity show house in which a lot of their customers and clients are involved.

Please send comments and criticism to jack.maier@rugnewsanddesign.com


[A version of this article, edited for space, was published in January, 2013 in Volume 33, No. 4 of Rug News andDesign Magazine.]

Category: About Rugs, About Rugs, Sustainability, We Care

About the Author ()

Jack Maier has worked as researcher, writer and editor for a number of business publishers. At Rug News andDesign, he reports on the retailing sector of the rug industry. Because of his extensive experience in business research he also reports on quantitative data relevant to the industry.

Leave a Reply

Your email address will not be published. Required fields are marked *