Suppliers and stores finding gold in kidbiz

Michele SanFilippo, Staff Staff, November 3, 2003

NEW YORK – Juvenile bedding and bath suppliers report business is up as retailers increase their penetration of the category or refine their focus.

According to research by HTT sister publication Kids Today, the top five juvenile suppliers (Dan River, Springs, Crown Crafts, WestPoint Stevens and CHF) sold roughly $426.2 million in wholesale infant and juvenile products in 2002, a 4.4 percent increase over 2001. Moreover, the tween and teen segment of the population represents an estimated $200 billion in disposable income with a $300 billion influence on family spending.

Wal-Mart's Melissa Berryhill explained why the segment constitutes an important part of that company's business. "The juvenile customer is shopping with their parents in all different categories in our stores, and we would like them to choose Wal-Mart for their decorating needs," said Berryhill, corporate communications.

The company has stepped up its efforts to promote the category by "keeping fashions fresh and new for the customer, and coordinating patterns between bedding and bath to offer multiple room choices," she said.

The world's largest retailer deems 'tweens and teens as the most lucrative part of the segment. "Many teens and 'tweens have their own money to spend and definite fashion tastes," said Berryhill. "They are important to us because their next step in life is to become a shopper all on their own, and we want their number one store choice to be Wal-Mart."

In fact, attention to juvenile has picked up across the mass market, according to several suppliers.

"We know sales are up. We see that where they had been shrinking space on the retail floor, it has actually grown to prior levels in many cases," said Tom McCaffrey, director of juvenile and specialty brands for Springs Industries. "We can tell that there is a re-emphasis of space dedicated to the category at mass levels. At the specialty level, retailers are trying to capture this category with lifestyle vignettes and destination concepts.

"Differentiated product is driving this trend, and we see retailers expanding into percale, cotton and jersey sheets and offering more alternatives for top of bed."

WestPoint Stevens' Steve Hoffman noted that "slowly but surely a little more space has been dedicated to juvenile on a mass-market level." He pointed to the evolution of sophisticated, upscale looks at popular price points such as Seventeen, a JCPenney exclusive, and CosmoGirl, a captive brand at Sears.

"Wal-Mart does a really nice job with its Home Trends for Kids, which includes novelty bed and bath patterns to wall borders, bath accessories, shams, sheets, comforters and quilts," added Hoffman, vp marketing services and licensing. "Target's Restore and Restyle department offers ready-to-assemble small furniture and accessory items like hooks, knobs, rugs and decorative pillows. Both take off on one design theme and execute it from top to bottom, which really works for consumers."

Juvenile leaders continue to be Bed Bath & Beyond, JCPenney catalog, Pottery Barn Kids and Wal-Mart, said Sandy McNeil, president-fashion bedding, Hollander Home Fashions.

"Juvenile bedding placement by pattern is up about 20 percent, but sales are up 5 percent," she said. "We do know that updated basics — solids in fresh substrates — are doing well. Maybe that is where the parents are going since it is a safer bet. I also see interest in alternative fabrications — sheers, silks, shine, but there is price resistance that make these elaborate pieced looks prohibitive."

Catalogers generally have shown greater alacrity in reacting to trends in juvenile merchandise, said Gary Walfish, president, Lawrence Home Fashions, where juvenile sales have been growing 14 percent to 19 percent per year over the past five years.

"They quickly get out of a slower selling [design] and change gears faster than a retail store when it is time to switch to a new pattern," Walfish said. "They have an advantage over the retail, and they use it well so they stay closer to their customers' needs."

PB Kids, The Company Store and other catalogers have shown chain retailers how fashionable, focused and coordinated juvenile bed and bath can be. "I think the driving force is coming from specialty retailers, who are in tune enough to focus on all segments of juvenile," said Joseph A. Franco, vp, Jay Franco & Sons.

"Price points and thread counts are both going up," he added. "You can't have teenagers on 180-count sheets anymore because they know what they want and are more sophisticated than that."

Or can you? While suppliers generally agree on which retailers do the best job with the category and point to the growing practice of cross-merchandising soft and hard goods to boost sales, opinions split on the subject of better price points and constructions.

"My prediction is that there will be 250-count sateen sheets for kids in about 18 months," said Vincent DeRosa, president, Whisper Soft Mills.

He pointed to Pottery Barn's influence in driving up juvenile standards as well as Target's private label Restore and Restyle multi-category cross-merchandising concept.

"The beauty and creative juice behind the kids' area is that you have a constantly evolving customer, but price is most important in this segment," said Dan Hammer, executive vp, home fashion, Dan River. "It's the risk-reward theory. The folks that have invested the money advertising and merchandising to shoppers in this segment are the ones being rewarded with their business right now."

CHF Industries' Joan Karron also sees limited tolerance for price point extensions, noting retailers' resistance to moving from 180- and 200-count percale to all-cotton juvenile sheets.

"We believe there is a magic ceiling of $99 for twin and full comforters," said Karron, executive vp. "But it's not about the thread counts anymore, it's about better quality, fashion, innovation and products that entice and compel customers to buy something new."

Although upmarket retailers demonstrate a higher degree of interest in better constructions, "price points in general are driven or being forced down to try to compete with the masses," said Vasso Unks, marketing director, PJ Kids, which carries 220- and 240-count all-cotton products in its assortment.

"Even the better retailers are requesting better pricing, but they still want the quality. It seems that specialty retailers and manufacturers are carving out their niche to capture that segment of the marketplace," Unks said.

"Price points continue to hold or erode — there is little response to increasing price points: $49.99 to $59.99 for a twin mini set (comforter and sheets); $59.99 to $69.99 for a full is magic," said Hollander's McNeil. "The only request for better substrates are from catalogs, where higher-end is the bottom line."

WestPoint Stevens' Hoffman noted that price points on licensed product "have been locked in for some time now." Non-licensed products live and die by their fabrications.

"As the industry comes up with more intricate and elaborate cut and sews from overseas, and quotas come off in January 2005, price points could edge up in this arena," Hoffman added. "There is movement toward better thread counts in non-licensed products."

Price variance in licensed goods depends entirely upon the heat being generated by the property, said Stanley Mieszkowski, vp sales and marketing, Northwest Company.

"A hot license you don't have to price break. It will sell at any price point," he said. "When it comes to juvenile throws, sales are up by more than 10 percent. Licensed throws are doing very well at the various different retail levels."

At all levels, suppliers said, retailers continue to innovate. In addition, retailers outside the traditional chain-store structure also have begun to embrace the category.

FAO Schwartz recently partnered with PJ Kids to set up a Room To Dream boutique featuring bedding and furniture in its flagship Manhattan store. The company has also incorporated the bedding into all of its stores as well as its Zainy Brainy units, PJ Kids' Unks said.

"Many retailers are figuring out this is a ballooning segment in the marketplace," Unks added. "It has provided many retailers like department stores and full-line furniture stores something to add to the mix to drive up the sale or to entice the consumer. It also allows those types of stores to reinvent themselves instead of becoming potential dinosaurs."

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