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Deflation still shading window

Deflation left its mark on sales in the soft window category last year, depressing overall retail volume by roughly 2.6 percent.

However, 2004 so far looks promising for the business, suppliers said. Several department stores are flirting with window again after a long absence; window is escalating in the mass market; and big box specialty retailers continue to build on the business.

At the moderate and upper-moderate levels of retail, "All of the massive price-point reductions have taken place already," said David Kahn, president and CEO of Croscill Home.

He added that since there has been no large-scale window manufacturing based in the United States for the past few years, the category ran ahead of some other home textiles products in making the transition to global production.

"One of the positive aspects of window is that the shift to sourcing feels more stabilized than in other areas of home textiles," he said.

In the mass market, deflation is still a factor, suppliers said. However, because of the sheer number of new store openings the channel generates each year, the business is clipping ahead. Discount department stores now account for 32 percent of the sales volume in soft window compared with 39 percent for mid-price retailers.

The mid-price sector is lead by JCPenney, which claims to own 30 percent of the country's total window business (hard and soft). However, according to many in the industry, the sheer velocity of Wal-Mart store openings is putting the discounter within reach of Penney's soft window volume.

But the business at discount is not simply a matter of ballooning real estate buoying up bottom-of-the-barrel price-point goods, according to Wendy Keryk, vice president of sales at Victoria Classics.

"When you get to the mass market level, you see two very important directions," she said. "The mass market is continuing to feed the price-sensitive consumer, but it's also pushing the envelope at the other end on better prices and constructions."

Keryk pointed to the arrival of true silk blends in the mass market as an example of the latter.

"There is still some price compression out there, but at the same time they are absolutely offering extraordinary value," she added.

The fact that Federated, May Co. and Dillard's are experimenting with window again is seen by many as a positive for the category.

"Not to be in window is illogical if you're in the home textiles business," said Carl Goldstein, senior vice president of S. Lichtenberg. "I would venture that in the home textiles department — in terms of profitability — window has got to be the No. 1 or No. 2 category."

What's helping to drive the window business overall, several suppliers agreed, is the leveraging of sourcing to offer "custom quality" at ready-made pricing.

Said Frank Foley, president of CHF Industries, "What consumers used to think of as a $1,000 window can now be had for $200. And there is a range at opening price point level for every potential consumer in the marketplace."

Victoria Classic's Keryk also links the broadening interest in window to the current decorating trends for the living room/great room.

"Window is still tied to the explosion of the area rug market," she said, adding that where consumers have peeled back "warmth" from the floor by forsaking carpets, they are restoring it to the room on the windows. "And with all the decorative hardware available now, people can have more fun decorating window," Keryk added.

CHF's Foley noted that even made-to-measure and customer window have become available at incredible values, "so that consumers who used to decorate once every 20 years now see new alternatives they could never image a few years ago."

In terms of construction, texture is leading the way in window, according to Lenore Ritter, design director of Zorlu.

"I would put 'texture' in capital letters — that's how important it is," she said.

Laces are moving away from the traditional into retro and geometric looks, she added. Embroidery on net continues to be very strong.

"There's still room for heavier draperies. Appliqued looks (now showing for the European market) will probably be pasteurized for the U.S. Will it stay in the line forever and ever? No. But it's the sizzle that sells the steak," she said.

Looking ahead, Lichtenberg's Goldstein doesn't see a potential slowdown in housing starts hurting the category.

"As interest rates go up and (with) high gasoline prices, (people) tend to stay home. The least expensive way to redecorate any room is in window," he said. "As far as I'm concerned, we're going to see growth in 2005. So far, for 2004, we're having very good growth. I think we're going to be fine."

Distribution Channels (in $billions)
2003: $3.75 billion
-2.6% Decrease over 2002

2003 % 2003 $
1. Mid-price chains 39% $1.463
2.Discount department stores 32 1,200
3. Home textile specialty chains 20 750
4. Department stores 3 113
5. Home improvement centers 2 75
6. Single unit specialty stores 1 38
7. Off-price chains 1 38
8. Variety/closeout 1 38
9. Direct-to-consumer 1 38


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