In my metropolis, our downtown avenue is dotted with both retail and professional space. Retail-wise, it’s pretty typical: corporate coffee, frozen yogurt shops, restaurants, etc. Right now, we also have at least four rug stores (or “galleries” as they like to call them) on the main drag. When I walk past these rug shops and peer inside, I never see anyone buying or any transactions occurring. One rug gallery has two guys that stand there and look bored to tears. Then there’s this huge rug gallery downtown. That place is enormous and I usually see five guys in that shop (doing what, I don’t know.) Did I mention that this shop also has at least two customized VW Beetles with their logo emblazoned on them sitting unused parked outside? Plus, I’ve never seen a single soul enter one of these shops in my half-dozen years in the area. Then I look at my anecdotal evidence: In my ten years in this area (~$100K combined income), I’ve only met one person with an imported rug. And where I live, retail leases are some of the most expensive in the world (in the $10K-$20K/month range depending on size). Any idea what’s going on with the rug stores or what keeps them afloat? I’m convinced something illegal is afoot (money laundering, organized crime, smuggling), but I’m prepared for the Straight Dope. Merci.
These places are funny. There’s a few of them where I live too, and I don’t think Madison is exactly the Mecca of imported rugs.
My conclusion is that the markup on a single rug is sufficient enough that they only need to sell a few to make it profitable enough to hire guys to stand around and do nothing. Simialr to a jewelry store. Ever notice how fricking many of those there are? I’m betting it’s a combination of an unusual product that is hard to get somewhere else (improted rugs or jewelry), a product that is “exotic” enough to charge high prices for, and a product that if you have the connections and are part of the network, isn’t really that expensive to buy wholesale.
I’m guessing that a lot of the people who buy expensive rugs also don’t buy in person. I bet these stores do a lot of sales via brokers/decorators/builders and whatnot.
No cite, but a friend of mine from India said that the price of Persian rugs in the countries where they are made is incredibly low in terms of US dollars. If you are in the import/export business you can do quite nicely by buying them for “X” and selling them here for “50X” or whatever.
I think some of those places also do a good side business in cleaning rugs, I don’t think somebody with a $10,000 handmade Persian rug is going to call Rug Doctor.
I lived next to a Persian and Oriental rug import gallery when I was little. Although the owner had “regular” business hours, many (most) of his clients made appointments. Rarely would we see people in the gallery during business hours.
He would also come to your home with photographs of the rugs so you could shop from home.
Mr. Dulkerian was very cool and answered all my endless and, I’m sure, immature questions. He also had a beautiful Afghan Hound. When my mom moved to New York, he gave a her a small but gorgeous Persian rug. I’m hoping to inherit it someday.
I attended one of those “going out of business” rug auctions and actually bought a few. Based on the prices that the rugs were selling for, and knowing that the auctioneers weren’t planning on losing money on the deal, I developed a rule of thumb that if you divide the “actual” retail price on the tag by about 7, you’d get something that was far enough above the dealer’s cost that he’d be happy to sell you the rug. That is, if you were looking at an area rug maybe 3x4 and it was labeled $1400, the auctioneer would let the bidding start at $200.00. I sort-of verified this by looking up the cost of comparable rugs on E-Bay.
I still don’t know (and don’t want to know) * exactly * how bad I was reamed on my rug purchases (I’m happy with them, and that’s good enough), but with profit margins like that, a small family business can probably make their nut by selling two or three large rugs a month.