A family rug business evolves into a high-tech resource for the home
By Andrea Lillo
While its history goes back a hundred years, Safavieh is a company for today, having evolved into a high-tech home furnishings company with a focus on logistics, product and serving the consumer, designer and retailer.
With its line of 40,000 SKUs, the company has expanded beyond rugs, and now offers full lines of furniture, lighting and home decor as well.
“We are all about merchandising, all about product,” said Arash Yaraghi, principal, Safavieh, which has worked with the design community since it launched in the U.S. 35 years ago. “We have everything to decorate the home.”
And more is to come, as the company has grown between 22 to 27 percent each year over the last few years, Yaraghi said. “We are poised for major growth.”
Their grandfather founded Safavieh in Iran 100 years ago next year, but when Arash and older brother Cyrus Yaraghi debuted Safavieh in the U.S., it was because they needed to earn a living, as the Iranian Revolution in the 1970s prevented them from returning to Iran.
“Forget about coming back,” their father told them at the time, Arash recalled to HFN. Arash was attending college in Cleveland, and Cyrus was in the U.S. visiting him. When Arash asked his father what they would do, his father replied, “I’ll send you some rugs. See if you can sell them.” Safavieh was based in Isfahan, Iran, at the time and an exporter of Persian rugs.
So the two young men decided to start their new venture in New York, and opened for business with a showroom on Madison Avenue in 1978. At the time, antique rug dealers inhabited the upstairs floors of the building.
“We knew we couldn’t compete with the dealers upstairs,” Yaraghi said, as the dealers had established networks. So the brothers thought, “Let’s take it from a different angle. We’ll work with designers.” At the time, there were few rug stores available for designers in the New York metropolitan area, so New York City was ripe for opportunity.
Coming at the business from a design point of view was appropriate for the company, as the name Safavieh is based on the name of the Persian dynasty Safavid, which ruled from the beginning of the 1500s to the 1700s and was an era of arts, architecture and culture in Persia, Yaraghi said.
With hard work, the Yaraghis thrived in New York. Seven days a week, the brothers sold rugs during the day, and then at night the two of them would deliver the rugs—a service that surprised their customers. “It was such a great service. People loved it—we were kids.” Eventually, the rest of the Yaraghi family, including three other brothers, joined Arash and Cyrus in the U.S.
And the New York store flourished, eventually growing to include furniture and other categories—and the company added more locations. Now, Safavieh has 10 retail stores in the New York metropolitan area, each measuring 50,000 to 70,000 square feet. But more than just selling product, the retail stores provide the company with the ability to test product and get feedback directly from consumers and designers, Yaraghi said. “They are lifestyle stores for the high-end consumer. They give us inspiration for everything else we do.” What designers want today, consumers will want tomorrow, he added. Furniture and accessories from other brands are about 85 percent of the retail business, while Safavieh rugs are the remainder.
The company expanded into the wholesale business in the early 1990s, and currently, rugs are about 70 percent in that division, but that’s changing. “Furniture is growing at a much faster rate,” Yaraghi said. “In two years, we’ll sell more furniture than rugs.”
Within its rug category, its handtufted business is strong, Yaraghi said, and along with handknotted rugs make up about 70 percent of the wholesale business. Safavieh stepped into the machine-made category eight years ago with indoor/outdoor rugs, and now offers other machine-made indoor rug lines as well.
Safavieh debuted its decorative pillow and bath rug lines in 2010, and last year, the company expanded into a number of new categories, including outdoor furniture, lighting and wall decor.
For its wholesale business, the company focuses on smaller items that are easily shipped—accent furniture, rugs, home decor and the like. “We scaled down product,” Yaraghi said. “We work around logistics.” Drop shipping is about 80 percent of everything it ships, Yaraghi said.
“We ship 10,000 pieces every day in the U.S.,” he said. To facilitate shipping, within the last few years it has added warehouse space in Savannah, Ga., Fontana, Calif. and Easton, Pa. in addition to its existing distribution centers in Pennsylvania and New York. With its growing market share in Europe, it also bought a 100,000 square-foot facility last year in Antwerp, Belgium, which will be up and running by September. In total, the company has 1,500,000 square feet of warehouse space and its own manufacturing facilities on three continents.
“Our niche is logistics. What do you need, and when?” Yaraghi said. Retailers are becoming more like marketing and promotion companies, dealing less with inventory, Yaraghi said, so Safavieh handles inventory and shipping. Safavieh is also in the last stages of upgrading its inventory management system with RFID [radio frequency identification], he said. “We will be adapting our technology for all of our customers—from the most primitive small mom and pop stores to the most sophisticated web retailers in the world,” Yaraghi has told HFN in the past.
Designers are still an integral part of Safavieh’s world, and its licensed portfolio now includes Martha Stewart and Ralph Lauren—its two largest licensed designers—along with Thom Filicia, Thomas O’Brien, David Easton, Suzanne Kasler, Jamie Drake and, debuting last month, Isaac Mizrahi.
While its licensed collections have focused on rugs in the past, that will change at Las Vegas Market, when Filicia—who has had a rug collection with the company since 2009—will expand into lighting.
All five Yaraghi brothers are still active in the business, along with five of their children. And though Arash and Cyrus Yaraghi no longer personally deliver rugs, Safavieh still offers Persian handknotted designs.