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Window Industry Worked Hard to Stay Flat

Anthony Guerra, Staff Staff -- Home Textiles Today, June 13, 2005

New York—A continued deflationary trend in the soft window business during 2004 saw retailers moving more lower-priced items for largely the same overall dollar amount, as the size of the business at retail remained flat at $2.6 billion.

"It is no secret that the amount of finished goods coming in from offshore drove prices down," said Barry Goodman, vice president of national accounts with Montreal-based Commonwealth Home Fashions.

Frank Foley, CEO of New York-based CHF Industries, said business was especially slow at retail in the back half of 2004. "I think both wholesale and retail pricing was down, so either the units were flat or slightly up, but total retail dollars and wholesale dollars were down," he said.

In terms of their pieces of the overall pie, the still-leading mid-price chains segment grew from 39 to 40 percent; the discount department store category increased its share from 32 to 33 percent; and the direct-to-consumer channel grew from 1 to 2 percent. Heading in the other direction, home textiles specialty stores dropped from 20 to 18 percent; and department stores fell from 3 to 1 percent.

The great driver of mid-price channel performance was Plano, Texas-based JCPenney, as the country's market-share leader in window turned in a solid year. Elsewhere along the retail spectrum, vendors pointed to Costa Mesa, Calif.-based Anna's Linens as a hard-charging up-and-comer in the specialty store segment.

In 2004, retailers continued to try and build margin by cutting out the domestic middleman and working directly with offshore factories, which didn't always boost overall sales.

Though not good for U.S. suppliers, Foley said the trend is here to stay. "(Retailers going direct) happened in 2004, and there is no indication it will decrease. I think retailers, by and large, don't fully understand the mathematics in the window business. It's different than the rest of their businesses, but this could change over time. (In window) inventory turns a lot slower, so if you are going to capture all the retail sales dollars, you have to have your shelves full and you have to be stacked up behind that and really on top of the mechanics of that business."

Goodman said retailers going direct didn't necessarily mean a windfall for the consumer last year. "Direct importing by retailers hasn't brought the retail prices down — they just made more money," he said.

In addition to more retailers going direct, mergers and acquisitions affected the retail landscape. "The fact that the retailer pool continued to shrink has probably been the largest hurdle for us," said Barbara Tippin, vice president of sales and marketing with The Oxford House Collection.

With fewer retailers to woo, it became even more critical to have the right product with the right look. When it came to selling window merchandise, price may have been king but fashion and quality still got a seat at court. Embellishments in 2004 trended toward casual, though unique top-treatments still reigned as the differentiating factor most likely to catch a buyer's eye.

Distribution Channels
2004 Total: $2.6 billion (no change over 2003)

in $millions % of total 2004 sales
*Other includes warehouse clubs and military exchanges
Mid-price Chains 40% $1,040
Discount Department Stores 33 858
Home Textiles Specialty Chains 18 468
Home Improvement Centers 2 52
Direct-to-consumer 2 52
Department Stores 1 26
Single Unit Specialty Stores 1 26
Off-price Chains 1 26
Variety/Closeout 1 26
Other* 1 26


2004 Pattern

Sheers 34%
Solids 30
Jacquards 21
Prints 11
Lace 4


2004 Construction

All Synthetic 75%
Cotton-dominant Blend 11
All Cotton 7
Other/Blend 7


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