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Persian Rug Industry Changing, Sanctions Not Only Cause

by Rebecca Sanchez, Iranian Beat Reporter —

In the last decade, the Persian rug industry in New York has taken a severe hit, but rug company owners say the tightening U.S.-lead sanctions against Iran are only partly to blame. The struggling economy, a still massive inventory, and trends moving away from the traditional designs are the chief causes.

Darioush Yaraghi, regional manager of the rug and furniture giant Safavieh, says the local market has been dry for about 13 years, but not necessarily because of the sanctions.

“Whenever there is an economic boom, the rugs become more popular, and the last boom was with the dotcom bubble burst in the 1990s,” Yaraghi said.

In the 30 years since its inception, his family’s company has grown to distribute products across all 50 states, Canada, South America, Europe, and Asia.

Safavieh used to buy direct container rugs, which included massive quantities of handmade Persian rugs—more rugs than could be sold in a short period of time. Now, while they can no longer import, their inventory spans across 2.5 million square feet of warehouse storage space in Long Island.

A portion of Safavieh’s Persian Rug inventory on the second floor of their Broadway and West 20th Street location in Manhattan.

Similarly, Rodney Hakim, vice president of the Persian Gallery of New York, which has one of the largest inventories in the United States, says that his company’s stock was not recently imported.

“The rugs we deal in are antiques,“ Hakim said,  “and were exported from Iran roughly a century ago, so their current sale in the U.S. and Europe has no bearing at all on present day Iran’s economy.”

According to Yaraghi, the massive remaining inventory is also due, in part, to Persian rugs’ costly nature and to fluctuating trends in home décor. He says that, while the Persian rug remains a sort of status symbol for many who can afford it, the majority of consumers’ taste has shifted away from the classical look of the Persian rug and more toward plain, modern designs that are less expensive. Where Safavieh was largely built on its Persian rugs, today’s international company finds the rugs making up only about .75% of sales.

Still, for the few who can afford such flooring luxury, Yaraghi says, if anything, Western sanctions have made the rugs more appealing.

“They still have a beauty that you can’t compare with anything else,” he said. “The embargo is actually increasing rarity. It’s sort of becoming a Cuban cigar thing. There’s nothing wrong with a Dominican [cigar], but because you can’t have a Cuban, you want it more.”

This elevation in desire also changes the kind of customer that makes such an expensive purchase. Like the Cuban cigar, the Persian rug becomes not just a financial status symbol, but a cultural one as well.

Kevin Karagulian, a 15 year-long manager of one of Safavieh’s retailers, located on Broadway and West 20tth Street in Manhattan, says that these days the typical Persian rug shopper is not simply a wealthy passerby.

“The people who are buying these are aware of the detail and durability, and they buy them for the cultural significance,” he said.

But Koorosh Yaraghi, another member of the Yaraghi family and CEO of the Internet rug retailer, Rugs USA, pointed out that the prices of rugs have remained relatively flat.

“For the most part there is so much inventory of Persian rugs in the USA that the prices have not increased by much if any,” he said.

Store manager Kevin Karagulian points to the price tag on one of the company’s vintage Persian rugs.

On a global scale, Yaraghi says the trend shifts have made the embargo somewhat ineffective. Between the still plentiful assortments of rugs already in the States, a decline in American consumer interest, and the current state of the U.S. economy, Iran has found a larger market in the East—in places like Japan and Korea. He says the sanctions have also contributed to a kind of Persian rug black-market, whereby Iranian rugs are transported to Pakistan, re-labeled as “Made in Pakistan,” and then can be smuggled into forbidden countries.

“People do find ways to bring them into the country, this way or through Canada,” Yaraghi said. “But we don’t necessarily do that because we choose to go with the consumer trends.”

According to Iran’s Mehr news agency, Tehran exported approximately $600 million worth of carpets in the year starting March 2011, after the Comprehensive Iran Sanctions, Accountability, and Divestment Act, which President Obama signed on July 1, 2010, went into effect. The Mehr news agency says the industry expects to see export increases up to $1 billion by the end of the sales year, in March 2013.

While business in Iran seems to continue relatively unscathed, the Oriental Rug Importers Association, based in Secaucus, New Jersey, says that millions of U.S. dollars in revenue loss has been debilitating for Iran’s economy, affecting weavers in rural communities and small cities where carpet weaving is the predominant mode of income. In response to the hardening sanctions, the association released a statement appealing to the U.S. government to exclude Persian rugs from the prohibition on trading goods.

According to Hakim, one way that the sanctions are having an effect on the American Persian rug industry is by way of overseas restoration to antiques. He says that under these sanctions, his company can no longer export the carpets for maintenance.

“The best restoration services are currently offered outside the U.S., and at much better prices than what one would pay for inferior restoration work that is done here,” he said.

With all domestic economic considerations at hand, Yaraghi says he does not think the sanctions will do any considerable damage to the Iranian economy.

“The design will last,” Yaraghi said. “It is a classic that will never fade away. Time won’t wash that away. It is ingrained in our culture and the embargo won’t change that.”

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