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Li & Fung USA hitting home

Now that Li & Fung USA has tucked two of the most well-known home textiles brands into its portfolio, the American division of the Hong Kong-based global trading company is positioning itself to become an aggressive player in the home business — on a global basis.

The U.S. division said it is close to finalizing a deal on the license for the Cannon brand, which it may launch in more than one country simultaneously.

"There's demand offshore already," according to Rick Darling, president of Li & Fung USA.

As is the case with the other former Pillowtex brand Li & Fung landed licensing rights to this past January, the product development and trading company's Cannon license encompasses sheets, decorative bedding, coordinating window treatments, quilts, non-filled throws, decorative pillows, bath towels, terry tub mats, shower curtains, bath accessories, terry wraps and robes, beach towels, kitchen towels, table linens and accessories.

The Cannon license — which covers the Cannon Royal Family sub-brand as well — also includes tabletop categories, Darling said. The brands are owned by Official Pillowtex LLC, a consortium that successfully bid on the assets of the defunct Pillow Corp. mill last October. Both brands are managed by Group 3 Design, a brand development and marketing group.

Li & Fung will now build out a Cannon product development, sourcing and merchandising team. Group 3's role with Cannon and Royal Velvet will be "to set the tone" across hard lines, soft lines and product licensees, Darling said.

Li & Fung also plans to explore new alternative distribution channels for Cannon, including possibly supermarkets and home centers. Cannon Royal Family will be positioned between Cannon and Royal Velvet. Cannon prices will fall "right in the heart of mass-market pricing," while Cannon Royal Family will be set at a mid-tier opening price point, Darling said.

Cannon brand products will reappear at retail in fall 2005, although a full iteration of the brand won't arrive until the following year, Darling said. "The shelf space that existed for Cannon has been replaced," he acknowledged. "The issue will be the proper reaching of that consumer. We think the brand has a lot of breadth."

To reach that consumer, the marketing effort will be directed at them rather than the trade.

"We need consumers to come into the store and say 'Where is the Cannon? Where is the Royal Velvet?' We are focused heavily, heavily on winning the consumer — not on the shelf space," Darling said.

He knows such a strategy flies in the face of current retail practice — at least as far as non-luxury home textiles brands are concerned. He also scoffs at the notion that the relentless focus of the big three mass merchants — Wal-Mart, Kmart and Target — on developing their own captive brands might make Cannon a tough sell.

"Our argument will be that we have built a very compelling consumer brand," he said.

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