There’s a busy section of Chicago Avenue near downtown Evanston that’s lined with six different rug stores, all within less than a mile of one another. When Andy Rasmussen was a graduate student at nearby Northwestern University, he walked down this stretch often.
“It was always strange how many Persian rug stores there are and how they occupy so many opposing storefronts on one of the main streets in town,” Andy says.
So he wrote to Curious City with a question:
Why are there so many rug stores in Evanston along Chicago Avenue and how do they all stay in business?
This phenomenon, of similar businesses being located near one another, is not unique to the rug stores on Chicago Avenue. In fact, economists have a term for it — clustering.
“It refers to a geographic concentration of businesses that are related, so they can be related in terms of the product that they offer, and also the relation may be through supply chains, or they may be related through a university affiliation,” says Maija Renko, associate professor of entrepreneurship at the University of Illinois at Chicago.
Renko says clustering can actually be good for business, particularly for higher end goods like imported rugs. In fact, some of the rug stores on Chicago Avenue in Evanston have been in business for nearly 100 years.
So Curious City spoke with Evanston rug store owners and small business experts about why clustering helps draw in a steady stream of customers and how these businesses benefit from being in such close proximity to one another.
How did rug stores end up in Evanston?
The first thing you need for clustering to occur is a prime location, Renko explains — a place where businesses strategically locate.
In the 1890s, Evanston had a reputation for being an up-and-coming suburb, drawing in wealthy homeowners. As the area began to develop, it caught the attention of skilled rug merchants looking to sell home furnishings to new residents.
Entrepreneurs like Oscar Isberian, an immigrant from Armenia, opened one of the first rug stores along Chicago Avenue in 1920. His grandson, Sarkis Tatosian, says that once Oscar Isberian Rugs was a success, others followed.
“A couple of established dealers were here, and then more and more came, and it became like a district,” says Tatosian.
Kris Hartzell, an architectural historian and director of facilities, visitor services, and collections at the Evanston History Center, says another reason why early rug stores popped up along Chicago Avenue was because the area was home to — and developed for — warehouses.
“Part of the reason the rug businesses went there was because for those big rugs, they need big storage space.” Hartzell says.
Today, Evanston remains a prime location for the rug business. According to many rug retailers on Chicago Avenue, access to parking and Evanston’s proximity to the city of Chicago and North Shore suburbs have made a positive impact on business.
And given Evanston’s sales tax — which is slightly lower than Chicago’s — Moe Jamali, owner of Connoisseur Oriental Rugs, says for a large luxury item like a rug or car, it makes a difference.
More stores draw in more customers
It might seem counter-intuitive to set up a rug shop right across the street from five or six of your competitors, but Renko says one of the challenges for small businesses is trying to attract customers and build a reputation.
Carney Minasian, co-owner of Minasian Rug Company, says he doesn’t mind the nearby competition.
“The competition helps because people want to come to an area where there’s rug stores,” he says. “This is the mecca for rugs — this street.”
Renko says businesses can also benefit economically from clustering.
“If you locate your business within an existing cluster that customers already know about, you immediately have this reputational gain from it. People end up knowing about your business without you having to invest that much in advertising.”
For specialty items like rugs, generating foot traffic is key to attracting customers who rely on their senses — like sight and touch — to inform their purchase, says store owner Minasian.
“You can tell more from feeling and handling it than you can from just looking at it,” he says. “Some are real dry, some are real lustrous, some are silky. And so, you know, you judge a rug as much by feel as by looks. How do you do that online?”
Renko says clustering also forces shop owners to differentiate in their products. By doing so, businesses provide more retail options to consumers, ultimately generating more foot traffic while serving an array of tastes, interests, and needs.
“I mean we all have rugs … but that’s kind of where it stops,” says Minasian. “Everybody’s niche is different.”
Some of the shops on Chicago Avenue, like Eli Peer Oriental Rugs, specialize in traditional and antique rugs, while others, like Minasian Rug Company, offer more modern, contemporary rugs, including one inspired by a design by well-known architect Zaha Hadid.
The perks of having your rug shop near another one
Some studies have shown that clustering leads to long-term growth and economic sustainability. Renko says shop owners can benefit in a cluster by sharing everything from specialized knowledge about rugs, to skilled workers, and even a customer base.
“Do we share resources? Yes. If someone ran out of pad or something, we give them pad. We help each other. We just do,” says Emily Rabjohns, whose grandfather founded Oscar Isberian Rugs.
When a customer tried to use fake checks to purchase a rug at his store, Sarkis Tatosian, the current owner of Oscar Isberian Rugs, went around to the other rug store owners to warn them about the fraud.
There’s another way this sharing of resources can play out, he adds. The success of his grandfather’s business helped create opportunities for other entrepreneurs. For example, Carney Minasian’s grandfather first went to work at Oscar Isberian Rugs to hone his sales skills, before establishing his own business just blocks away.
Because of their long-standing relationships and friendly competition, Minasian of Minasian Rug Company, says when a customer comes into his store for a particular rug that he might not carry, he refers them to one of the other nearby shops.
“[The businesses] play off each other,” he says. “A lot of them use us because they say, ‘Go down there and see what their prices are, and I’ll beat ‘em!’ That happens a lot. We know that. And that’s okay.”
An uncertain future
While rug shops along Chicago Avenue have survived on reputation and benefited from clustering, their future remains uncertain. For some store owners, changes in the market and even their own family structure have left them wondering if they’ll have to relocate or close down shop.
Renko says that consumers have been moving away from investing in home furnishings for years. She draws parallels between the rug and furniture industries, where she says people used to buy things, thinking they would last for decades.
“People are just not generally willing to invest as much anymore. Because the thinking is that, ‘Well, I’ll have this piece for a couple of years and I’m going to replace it maybe because the style or maybe because it doesn’t last.’”
Jamali has observed those changes in the market. “Young people aren’t interested or have knowledge in rugs,” he says.
In addition to changes in the market, rug businesses along Chicago Avenue are also facing change within Evanston. About 30 years ago, Jamali and his business partner bought property on Chicago Avenue to sell rugs. He says today, property taxes are increasing and that’s making it tougher for businesses to stay.
Paul Zalmezak, economic development manager for Evanston Department of Community Development, says the building that houses Connoisseur Oriental Rugs is for sale and that developers have expressed interest in turning it into condos. A few other rug stores nearby have closed up shop in recent years.
“The real estate and properties themselves have land values that exceed the profits of business,” he says.
Carney Minasian, who is the third generation in his family to run Minasian Rug Company, says he’s concerned about something else — there won’t be anyone to take over the family business.
“Between my brother and my sister and myself, there are 10 kids between the three of us,” he says. “Some of them are in artistic fields like fashion design and photography, they’re all on the periphery. But none of them have come to us to decide: ‘We want to be in the business.’”
Sarkis Tatosian says the seven children between him and his three siblings have spent summers working in the store. And while they haven’t pressured their children to take over, he hopes at least one of them will.
“Maybe they’ll come into it,” he says. “We’ll see. But we don’t want to push them.”
More About Our Questioner
Andy Rasmussen lives in a co-op in Hyde Park and works in the Computer Science Department of Chicago Public Schools.
He says he doesn’t know very many people who own Persian rugs but he has “been curious for a number of years about the density of those Persian rug shops on Chicago Avenue in Evanston.”
He came out with Curious City to meet some of the shop owners and learn more about how they stay in business.
“I was most surprised by the artwork, and the detail, and the layers to the business that you don’t think about when walking out on the street,” he says. “And stepping on a stack of 40 rugs is fun.”
Bashirah Mack is a freelance reporter, multimedia producer and former intern at Curious City. Follow her at @msbmack.