Rugs Direct has navigated the dot-com era, Amazon, smartphones, social commerce and now artificial intelligence. Sharon Gautschi, Chief Merchandising Officer at Elevated Brands Group, shares insights that reveal valuable lessons for entrepreneurs about adapting to change, competing through expertise, using AI effectively and keeping customer confidence at the center of innovation.
Businesses often talk about “digital transformation” as though it is something a company completes and then moves on from. E-commerce demonstrates why that idea is increasingly unrealistic. Consumer behavior, technology, distribution channels and expectations continue to evolve, forcing retailers to rethink how they attract customers and help them make buying decisions.
Rugs Direct has operated through several major shifts in online retail, including the dot-com era, the rise of Amazon, smartphones, social commerce and now generative artificial intelligence. Each wave changed how shoppers discovered products and what they expected from retailers. Yet according to Sharon Gautschi, Chief Merchandising Officer at Elevated Brands Group, the fundamental customer need has remained remarkably consistent.
“I think e-commerce has required continual reinvention rather than one single moment of reinvention.”
Gautschi leads merchandising for Rugs Direct and Lightopia and has extensive experience in home décor and e-commerce merchandising. Her observations provide useful lessons far beyond the home furnishings industry. They show how entrepreneurs can adopt new technology, respond to changing customer behavior and strengthen their competitive position without losing sight of the basic problem their business exists to solve.
Key Takeaways
- Build around the customer problem, not the current technology. Platforms and tools change much faster than fundamental customer needs.
- Do not compete with giant companies solely on scale. Expertise, curation and specialization can be more realistic advantages for smaller businesses.
- Replace what customers lose when buying remotely. Better information, visualization and guidance can reduce the uncertainty created by online shopping.
- More options do not always create more value. Good merchandising helps customers eliminate irrelevant choices.
- Adopt technology only when it solves a real problem. AI should make an experience easier rather than simply making a business appear more technologically advanced.
- Treat product information as an asset. Detailed, accurate information increasingly serves customers, search engines and AI discovery systems.
- Use technology to support decisions, not automatically replace them.
- Avoid relying primarily on price. Expertise, service, trust and a distinctive point of view are harder for competitors to copy.
- Study what customers actually do. Searches, questions, returns and abandonment can reveal opportunities that planning alone cannot.
- Continual reinvention should improve how the company serves customers without losing sight of why customers need it.
Table of Contents
Lesson 1: Customer Needs Can Stay the Same Even When Technology Changes
One of the easiest mistakes for a business to make is defining itself too closely around the channel or technology it currently uses. Search engines change, social platforms rise and fall, marketplaces alter customer expectations and new technologies such as AI create entirely new ways to discover and evaluate products. A business built around one channel can become vulnerable when customer behavior shifts somewhere else.
What tends to last much longer is the underlying customer need. Rugs Direct’s business is not simply about selling rugs through a website. It is about helping customers find something that works aesthetically, practically and financially in their homes. Search engines, social media, visualization technology and AI can all become different ways of helping customers accomplish that same goal.
Gautschi describes the distinction clearly:
“What has remained surprisingly consistent is the underlying customer need. People want to find something they love, feel confident they are making the right decision and know the retailer will take care of them. The tools keep changing. That part really has not.”
For entrepreneurs, the lesson is to define a company primarily by the problem it solves rather than the technology currently used to solve it. LearningFromBigBoys has seen the same principle play out in very different industries. Our look at how an independent bookstore adapted to difficult industry conditions showed how changing the products, services and revenue streams around a business can help it respond to a shifting market without abandoning its core purpose.
Lesson 2: Smaller Companies Should Not Automatically Compete on Scale
When entrepreneurs study larger competitors, the natural impulse is often to imitate them. They may try to offer more products, advertise on more platforms, run more promotions or appeal to a broader audience. That can be a costly strategy when the competitor has far greater resources.
Gautschi argues that smaller retailers can compete differently. They may never match the assortment of the largest online marketplaces, but they can know their category exceptionally well and become genuinely useful to customers who are trying to make a decision.
As she explains:
“You probably cannot compete with the largest retailers on assortment or price, but you can know your category exceptionally well. Help people make decisions. Curate rather than simply accumulate products.”
That distinction between curation and accumulation is especially valuable for entrepreneurs. A store with thousands of products is not necessarily more useful than a smaller store that explains which products are best for particular customers, budgets or situations.
Specialty retailers can strengthen that advantage through buying guides, comparison charts, instructional content, detailed FAQs, videos and carefully organized collections. Rather than asking, “How can we offer as much as Amazon?” a smaller company may be better served by asking, “How can we help our particular customer make a better decision than Amazon can?”
PowerHomeBiz makes a related argument in its discussion of how entrepreneurs can maintain a competitive edge. Smaller companies can often compete through specialization, flexibility and closer customer relationships rather than attempting to duplicate the scale of much larger organizations.
Lesson 3: Find Ways to Replace What Customers Lose by Shopping Online
Certain products are naturally more difficult to sell online because customers traditionally want to inspect them physically before buying. Rugs are a good example. Color, texture, pile, dimensions and scale can all influence whether a rug looks right in a particular room, yet those qualities can be difficult to evaluate through a traditional product page.
Gautschi argues that online retailers need to compensate for whatever customers cannot physically experience. Rugs Direct addresses part of that problem through its room visualization tool, which allows customers to upload a photograph of their room and see how a rug might appear in the actual space. Accurate photography, specifications, descriptions and guidance about placement then provide additional information customers need to make a confident decision.
As Gautschi explains, technology alone is not enough:
“Good photography, accurate descriptions, detailed specifications and guidance about size and placement all matter.”
The lesson extends well beyond home décor. An apparel business can improve sizing guidance and show garments on different body types. A furniture seller can show dimensions in real rooms. A software business can provide demos or trials. A manufacturer can offer compatibility charts and installation videos. In each case, the entrepreneur should identify what customers lose when they cannot physically examine or test the product and then look for ways to replace that missing information.
PowerHomeBiz explores this issue from another angle in How Small Ecommerce Businesses Can Reduce Costly Product Returns, where detailed product information can help customers make better choices before purchasing.
Lesson 4: More Choice Does Not Automatically Create More Value
Large assortments can be impressive, but they can also make shopping harder. Once customers can no longer understand the meaningful differences between their options, additional choice may create confusion rather than value.
Gautschi puts the problem succinctly:
“More choice is valuable until the customer can no longer tell why one option is better for them than another.”
That is where merchandising becomes strategically important. Effective retailers do not simply place thousands of products in front of customers and expect them to figure everything out independently. They provide filters, curated collections, comparisons, recommendations and other tools that turn a large assortment into a manageable decision.
This becomes particularly important because customers do not always know the industry’s technical terminology. Someone shopping for a rug may not know the exact construction or fiber they need, but they can describe the real-world situation: a busy family room, two children, a dog and a need for something comfortable and durable. A good retailer translates that practical need into an appropriate set of choices.
The broader business lesson is that reducing choices can sometimes create more value than adding them. Entrepreneurs should therefore measure the quality of their assortment not only by how many options they offer, but by how easily customers can determine which option is right for them.
Lesson 5: Adopt Technology Because It Solves a Problem, Not Because It Is Fashionable
Businesses are frequently pressured to adopt whatever technology is currently generating attention. Today, much of that pressure surrounds artificial intelligence. The temptation is to begin with the technology itself and then search for somewhere to use it.
Gautschi suggests a much more practical standard:
“For me, the value of AI is not AI itself. It is whether it makes shopping easier.”
That principle is applicable to nearly any technology investment. An AI assistant that cannot answer useful questions may add complexity rather than convenience. A recommendation system that repeatedly suggests irrelevant products may make customers less confident. Automation that forces people to repeat information can actually create more friction.
By contrast, technology that helps a customer reduce hundreds of possible choices to a small group that fits a particular budget, style and practical need solves a recognizable problem.
Elevated Brands Group has been exploring this idea through Lightopia’s conversational AI shopping assistant, Ask Cleo. Gautschi describes an experience in which customers can explain what they need using natural language and receive recommendations tailored to real design problems.
For entrepreneurs, the starting question should therefore not be “How can we use AI?” It should be “Where are customers becoming confused, wasting time or abandoning the process?” Only then should the business determine whether AI—or another technology—is the most effective solution.
Lesson 6: Better Information Becomes More Valuable as AI Grows
One of the most consequential changes created by AI-assisted shopping is that product information increasingly needs to serve two audiences: the customer and the technology helping that customer discover products.
A person can sometimes infer useful information from photographs or branding language. AI systems depend much more heavily on the actual information available about a product. Dimensions, materials, construction, color, price, intended use, care instructions and other attributes can help these systems understand when a product matches a shopper’s request.
Gautschi explains:
“In a sense, we now have to merchandise for both the human shopper and the technology helping that shopper find us.”
That is an important change for entrepreneurs who have traditionally treated product descriptions as little more than marketing copy. Information now also functions as discoverability infrastructure.
For example, Google’s guidance on Product and Merchant Listing structured data encourages merchants to supply machine-readable information about products, including pricing, availability, shipping and returns. Detailed and accurate product data can therefore support customers directly while also making it easier for digital systems to understand what the business sells.
This is one reason PowerHomeBiz has examined whether traditional ecommerce SEO is changing as AI becomes part of product discovery. The emerging challenge is not simply ranking a page for a keyword. Retailers increasingly need to make their products understandable wherever customers—or the technology assisting those customers—encounter them.
Lesson 7: Good Technology Helps Customers Decide Rather Than Taking the Decision Away
There is increasing interest in AI systems capable of acting more autonomously on behalf of consumers. Yet more automation is not necessarily what every customer wants, particularly when the purchase involves taste, identity or other emotional considerations.
Home décor illustrates the distinction well. A customer may welcome technology that analyzes a room, suggests complementary pieces and keeps recommendations within a specified budget. That assistance can remove substantial work from the shopping process. But choosing what ultimately belongs in a home remains highly personal.
Gautschi expects technology to become increasingly sophisticated while still leaving an important role for human judgment:
“AI can become very good at narrowing choices, understanding constraints and showing us possibilities, but people will still want to make the final decision about what feels like them.”
That suggests a useful design principle for entrepreneurs adopting AI: use technology to improve customer confidence rather than automatically trying to eliminate the customer’s involvement. The most effective technology may be the system that helps someone reach a decision faster and with greater certainty, while still allowing that person to feel ownership of the choice.
Lesson 8: Price Is Easy to Copy. A Point of View Is Not.
Competing on price is tempting because customers immediately understand the benefit. The problem is that another company can usually copy the strategy.
If a retailer’s primary advantage is that it sells the same product for slightly less, that advantage can disappear as soon as another retailer lowers its price. Large marketplaces may also have purchasing power, logistics infrastructure and promotional budgets that smaller companies cannot realistically match.
Gautschi makes the problem clear:
“Price is very easy for someone else to copy. If your entire reason for existing is that you are a little cheaper, there will almost always be someone willing to go lower.”
The more durable opportunity is differentiation. A company can become known for a particular assortment, a deep understanding of a customer group, exceptional service or expertise in a complicated category. Those advantages require time, knowledge and organizational discipline, making them harder for competitors to reproduce overnight.
Gautschi’s conclusion is particularly relevant to smaller businesses:
“Especially for a smaller business, I would rather be memorable to the right customer than inexpensive to everyone.”
That is an important strategic question for entrepreneurs to ask themselves. If every competitor matched your prices tomorrow, what remaining reason would a customer have to choose your business? A strong answer points toward a genuine competitive advantage.
Lesson 9: Let Customer Behavior Challenge Your Business Plan
Entrepreneurs naturally spend significant time forecasting what customers will want. A business plan may predict which products will sell, which marketing channels will work and what features customers will value. Those assumptions are necessary when launching a company, but they should not become permanent beliefs once actual customer behavior becomes available.
Gautschi recommends paying close attention to what customers search for, which products they cannot find, what they return, what they ask customer service and where they abandon the buying process. Each behavior contains information that can reveal something about the business.
As she puts it:
“Those behaviors will tell you things that a business plan cannot.”
A frequently searched product that is not currently available may reveal an assortment opportunity. Repeated returns for the same reason could expose a misleading photograph or incomplete description. Recurring customer-service questions may indicate that important information is difficult to find, while consistent checkout abandonment could reveal unnecessary friction in the purchase process.
Smaller businesses may have an important advantage because they can often respond to these signals more quickly than large organizations. Instead of waiting for extensive research or a major redesign, an entrepreneur can continuously improve product pages, policies, assortment and customer service based on evidence generated by everyday customer behavior.
Lesson 10: Continual Reinvention Does Not Require Reinventing Your Purpose
Perhaps the most important lesson from Rugs Direct is that adaptation and consistency are not opposites. A company can continually change how it serves customers without continually changing why customers need it.
Online retail has already moved through several major eras. The early challenge was persuading consumers to buy online at all. Amazon raised expectations around convenience, selection and delivery. Smartphones changed where and when people shop, while social media increasingly connected inspiration with commerce. AI is now beginning to alter how shoppers research, compare and narrow their choices.
There will inevitably be another technological shift after the current AI wave. Companies cannot know exactly what it will look like, but they can prepare by developing the ability to adapt while maintaining a clear understanding of the value they provide.
That is why Gautschi’s observation that “the tools keep changing” matters so much. Businesses should be willing to rethink channels, interfaces, technologies and processes when customer behavior changes. What they should be much more reluctant to lose is a clear understanding of the problem customers trust them to solve.
The Biggest Lesson: Technology Should Increase Customer Confidence
It is easy for businesses to become so focused on innovation that innovation itself becomes the objective. The experience of Rugs Direct suggests a better goal: use innovation to make the customer more confident.
Visualization tools can make products easier to imagine in the home. Better merchandising can reduce overwhelming assortments to useful choices. Detailed product information can help customers and AI systems understand what a retailer sells. Conversational shopping tools can turn complicated searches into natural-language requests.
These innovations serve a common purpose when they work well: they reduce uncertainty.
Gautschi captures that philosophy in one of the strongest observations from the interview:
“The best technology will not take that decision away. It will make people more confident making it.”
For entrepreneurs, that idea extends far beyond e-commerce. Whether the business is adopting AI, developing a new website, adding products or introducing another sales channel, the central question should remain the same: Does this make it easier for the right customer to understand their options, trust our business and confidently choose us?
If the answer is yes, the technology is serving the business. If not, being newer or more sophisticated does not automatically make it better.
About Sharon Gautschi
Sharon Gautschi is Chief Merchandising Officer at Elevated Brands Group, where she leads merchandising for Rugs Direct and Lightopia. With extensive experience in home décor and e-commerce merchandising, Sharon is passionate about helping consumers create beautiful, well-lived homes and has played an integral role in how Rugs Direct approaches product discovery, online merchandising and the evolving digital shopping experience.
