Vendors Toughen in Tabletop/Kitchen
April 6, 2009,
Who's more likely to be wearing the chef's hat and hostess' apron these days? Instead of the staff at the neighborhood restaurant, it's cash-strapped consumers who are embracing home cooking with new warmth.
This persistent trend has given kitchen textiles and table linens suppliers an edge over some other home textiles category vendors. That's not to say the kitchen and dining room suppliers enjoyed expansion last year — but the drop-off in their business was not as severe.
In 2008, industry sales dropped for both categories — 5.4% in kitchen textiles and 8% in table linens — to $565 million and $755 million, respectively.
Additionally, home textiles specialty chains dipped significantly in market share in each of these product categories, mainly the effect of Linens 'n Things liquidating and exiting the market. This segment of distribution decreased by a stunning 30.7% to $62.15 million from $89.7 million of total kitchen textiles sales, and by 20.9% to $162.3 million from $205.2 million of total table linens sales.
The only distribution channel performing worse during the year was the department store segment in table linens. The share at upstairs chains declined by 38.6% to $30.2 million from $49.2 million of total category sales.
Still, vendors managed to exude some optimism.
"Although we saw a major contraction in the business due to the bankruptcies of many regional and national retailers, I think the overall decreases might not be as steep as other industries or product categories," said Bryan Siegel, chairman and ceo of New York-based Elrene Home Fashions, which in 2008 was the second largest table linens supplier with $72 million in retail sales and the fourth largest kitchen textiles supplier with $25 million at retail.
By his own estimate, Siegel said that in 2008, the overall market contracted 11% for table linens and 12% for kitchen textiles.
"In times like this, where the trend is to stay home and save money, for as little as $20 someone or a family can have a new and fresh decorator look for their kitchen or dining room," he continued. "Elrene has benefited tremendously by positioning our offering as value with fashion designs. Our coordinates over multiple products including tablecloths, placemats, kitchen towels, oven mitts, and pot holders have been very strong."
The discount department store channel drove the 2008 table linens business, and even pressed volume upward by 3.5% to $271.8 million. The same channel continued to dominate far and away kitchen textiles sales, occupying 61% of the total share, or $344.65 million, where year-to-year volume was essentially flat.
Suppliers are not surprised by these results.
Continuing to directly aid sales of kitchen textiles and table linens is thought to be the more significant roles food and consumables are playing in retailers' merchandise mix. Food is driving and/or encouraging sales at Target, Wal-Mart, Costco, the dollar store chains and even pharmacy-anchored operators such as Fred's — but also at unexpected venues such as Williams-Sonoma. That upscale, six-nameplate retailer reported this during its fourth quarter and yearend earnings call recently. Dave DeMattei, group president, Williams-Sonoma, Williams-Sonoma Home, west elm, said last month that the company is "expanding its prepared food assortment, which has been a highlight with customers recently."
Mid-tier department store chain Kohl's is attracting emerging foodies not so much with food itself as with its Food Network licensed merchandise. Last year Kohl's expanded this exclusive program in response to strong shopper buy-in. The addition of celebrity chef Bobby Flay to the platform in summer 2008 "helped food prep outperform the rest of home," Kohl's president Kevin Mansell noted. He emphasized, "The one piece of home that outperformed the category was the Bobby Flay line."
In much the same way, 2008 was "a needle-changing year" for New York-based Town & Country Living, said Judi Alexander, vp of licensing and marketing. The company last year retained its position as the dominant player in both table linens and kitchen textiles, with $174 million and $73 million in sales respectively. Among the top five category players, it was the only one that posted growth last year — 3% — thanks largely to increased placement for its new Disney juvenile placemat and kitchen coordinate collection.
"As design, quality and product development got better and better in the discount arena, shoppers saw that they could decorate for the holidays and their spaces outdoors — which has become a huge trend — but at more at value prices," Alexander said. "We have a great business in the [discount] channel. It is growing for us as we get into new licenses and brands, and everyone is paying more attention to that now. We want to be where the consumer is shopping, and that's at discount, with some [department and specialty] retailers shutting down last year."
In some cases, branded goods stirred up new business without emphasizing price-value.
Bardwil Linens' upscale Lenox table linens collection — which marks its 10th anniversary this year — for holiday has shown remarkable consistency as a "very big and important" business, one that "grows every year, and continues to grow," said Nancy Kristoff, president of sales and marketing.
"It is the power of the brand that the consumer still really wants," she continued, adding that this also holds true for Bardwil's Lenox kitchen textiles collection, which launched three years ago and is now being tripled in size. "We're seeing the same customer response translate here, too."
Licensing is one way suppliers are able to raise their visibility among retailers who otherwise are exploring direct-import activity.
Innovative and high-tech performance features are an additional point of differentiation for kitchen textiles suppliers seeking to overcome tough market conditions. "What we've seen as far as a switch is the printed business. Fashion prints are declining," said Fulton Allen, president of the consumer products division of Griffin, Ga.-based 1888 Mills. In 2008, the company tied with Elrene as the fourth largest kitchen textiles supplier, also posting $25 million in sales. 1888 last year unveiled its Clorox Fresh-Care branded line of antimicrobial utility kitchen towels that feature a patented coating that binds household bleach to textiles made of cotton. The program launched first at Wal-Mart and later rolled out to other retailers.
"If people are going to spend a dollar, they want to spend it on something that performs. They want function," Allen said.
What's true for kitchen towels is also true for kitchen rugs, as experienced by New York-based Ex-Cell Home Fashions, the fifth-largest table linens company in 2008 with $10 million in sales. The company's $10 kitchen accent rug offerings have become the highlight of its current assortment. Ex-Cell's Glenoit Rugs division has expanded its assortment of value-priced performance rugs — such as heavy-weight engineered tufted berber rugs with nonskid backings.
"These make up a higher percentage of our overall number of [category] sales," said Debbie Powell, vp merchandising. "People are looking for the most value but with some trend. They won't buy an item just because it is pretty anymore. They want it to be pretty but they want it to last and serve a purpose."
But performance doesn't always have to come at a price, said Elissa Vogt, vp, marketing, West Conshohocken, Pa.-based John Ritzenthaler Co.
"As long as you can offer the consumer a product with benefits, they are still willing to pay," she said. The company, which in 2008 ranked as the third largest kitchen textiles supplier with $64 million in sales, concentrates on mid-tier and specialty retailers mostly. And among those channels, Vogt added, "We don't see our retailers expanding their opening price points. They are keeping their same good-better-best mix."
Kitchen towel sets and kitchen textiles sets — "those of which are not necessarily opening price point" programs — have recently become a more important part of John Ritzenthaler Co.'s line. Offerings of this nature include improved quality; added-function styles like slightly larger and heavier-weight kitchen towels; and a range of constructions, including solid terry, print, and basket weave. Such sets, available with two pieces or more, range in price from $5.99 to $9.99.
2008 total retail sales: $755 million down 8% from $820.5 million in 2007
|* Other includes home improvement centers, military exchanges and gift/home accent stores.
|Discount department stores||$271.8||$262.6||3.5%|
|Home textiles specialty chains||162.3||205.2||-20.9|
|Single unit specialty stores||15.1||16.4||-7.9|
2008 total retail sales: $565 million down 5.4% from $597.4 million in 2007
|* Other includes home improvement centers, military exchanges and gift/home accent stores.
|Discount department stores||$344.65||$346.7||-0.6%|
|Home textiles specialty chains||62.15||89.7||-30.7|
|Single unit specialty stores||5.65||5.9||-4.2|
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