Copyright © 2007 Rugs Direct
Talk about the largest floor-covering retailers in the country, and one name that may not immediately come to mind is Rugs Direct. But the multi-channel retailer has quietly become one of the industry's major players via the Internet, catalogs and its brick-and-mortar stores in Virginia.
Rugs Direct is a true success story in every sense of the word. David Craig, CEO, launched the business in 1999 with wife, Kim, who served as vice president, and Randy Kremer, president.
After being in the floor-covering industry for many years, Craig is well aware of the challenges inherent in running a successful retail flooring operation. "It's a labor-intensive business with tight profit margins," he said. "It's a business where you can be 'held hostage' by the installers. If you do everything right and an installer makes a mistake, all your profit is gone."
He realized there had to be a better way to sell floor covering without the installation component. He also saw an opportunity to bring the art of selling flooring into the 21st century. He kept thinking about the Internet. "I said to myself, 'There has to be something I can sell via the Internet that doesn't have to be installed, is easy to ship and not breakable.' One thing that fit that bill was area rugs."
So the idea of Rugs Direct was born and the small startup began selling area rugs via the Internet. Growth was a slow process. "We started off with revenues of a couple thousand dollars per month back in the late '90s, then to a couple hundred thousand a month, and then within the last few years the business has exploded to where it is today," he said, adding that he attributes this growth to the company's aggressive marketing plan, development of proprietary software and the growing level of comfort consumers have with online shopping. That and the fact the typical consumer today is time-starved. "We see more and more people turning toward the Internet to help their time management and do their shopping," he said. Kremer added, "We are developing advanced software solutions in order to differentiate ourselves in the marketplace. The goal is to provide consumers with a pleasant and rewarding shopping experience."
Rugs Direct now sells between 12,000 and 15,000 items per month with the average order of about $375, according to Kremer, whose background lies in software development. The volume is not by accident; the company does an excellent job of creating new software solutions and then marketing the benefits to the consumer. "We receive about 170 million hits a month on our website," Kremer said. "We mail out several million catalogs per year -- we try to have a catalog in the mail at least every month, and we are planning to open several more brick-and-mortar retail locations as well. That completes the true multi-channel retail experience."
Pricing is the same no matter what channel the consumer chooses to engage, according to Kremer. "The consumer who goes to the Internet, catalog or the retail store will see the same prices at each," he said. "We try to have a good representation of what we carry online in the stores. But because we have 70,000 items available at rugsdirect.com, it's impossible to put everything in a retail showroom or catalog. That's the advantage of our multi-channel model. If you can't find the rug you're looking for in our catalog or one of our stores, you're most certainly going to find it online. And our proprietary software systems will make it easy to find," he added.
Among those thousands of items are a number of exclusive lines. In addition, there are private-label area rugs and the company is designing its own rug line. "We are working with some of our premier manufacturer partners to bring those products to market very soon," Craig said.
While manufacturers may have been skeptical eight years ago, today they see Rugs Direct as a true partner. It currently offers rugs from more than 60 suppliers - including all the big names in the industry. "We carry Karastan and Mohawk, to name a few," Kremer said. "But instead of offering only a few of their top-selling designs, we make a manufacturer's complete line available. This is one of our major strengths - representing the gamut of a supplier's area rug collections as opposed to just a few products. With our unique software systems we can present everything to our customer quickly and easily, and help her search through thousands of area rugs to find the one that will look great on her living room floor. We're not limited by shelf space."
Kremer and Craig see the future of Rugs Direct as one full of opportunity. Without reservation, Rugs Direct seeks to become the specialty retail leader in area rugs. "Our goal is to gain a 10 percent market share of the entire area rug retail segment," Craig said. "We will continue to leverage technology, invest in innovative software solutions and aggressively market Rugs Direct to the rug-buying public to achieve that goal," concluded Kremer.
To visit the main Rugs Direct website, please click here.
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