Price pressures plague suppliers
March 8, 2004-- Home Textiles Today,
Consistent with what the top five category players reported for their own financial results last year, the kitchen textiles industry experienced zero growth in 2003 when retail sales remained flat at $446 million.
Carrying the weight of the blame, suppliers say, was the continued slashing of retail price points for the same — and often better quality — products.
"There has been, and continues to be, a serious deflation in home textiles pricing. And, as a result of the downward pricing pressures, overall units are climbing slightly," said Harold Schierholt, president, Somerset, Ky.-based The Cecil Saydah Co.
"I believe that we are at the bottom of the volume pick-up-to-price-decrease scenario for good and better goods, and that we will see an overall increase in units in (better quality goods). People will step up to best quality due to continued price decreases and affordability," he said.
Clifton Buie, president, Laurinburg, N.C.-based Charles Craft, said he attributes this price erosion to the product category's biggest owner of market share — discount department stores, which nabbed 54 percent, or $241 million, of total retail sales for kitchen textiles last year.
In a far-away second place were mid-tier department stores, which occupied 16 percent, or $71 million. A close third were home textiles specialty chains, which took 15 percent, or $67 million, of total sales. "(A major discount department store chain) is forcing prices everywhere to go down," Buie explained.
Charles Craft, the fifth top kitchen textiles company, last year experienced a 5 percent sales decline to $18 million because it made a decision to exit the lower margin business and focus on high-end product, including its branded Pima cotton line.
"Prices have come down. We're feeling pricing pressures from retailers," Buie continued. "The number of unit sales is up, but the cost is down and retail pricing is down."
Added David Beyda, chairman, Lakewood, N.J.-based Town and Country Living: "Our industry needs more product development to get us the growth numbers we want. We need new brands, new designers, new merchandising concepts and new technologies. And retailers need to be prepared to look at retail price points in a different way as these developments come up."
Just as discounters push prices down, home textiles specialty chains seem to be giving more elbow room to differentiate product that carries a higher ticket. In 2003, this trend in part off-set the losses some suppliers felt at the mass-merchant level.
"(Home textiles specialty chains) aren't afraid of offering products at higher price points," said Frank Petronzio, president of Wyckoff, N.J.-based Anchor Home Products.
Nor are they timid with their kitchen textiles inventories, suppliers said. With their willingness to treat the category as a department of the store that is equally functional and decorative for the home, these retailers have helped create more consumer interest in fashion-oriented and seasonal kitchen textiles — most of which carry these higher price tags.
Where basic solids once dominated the category, prints now make up almost half of all sales — 48 percent versus solids at 52 percent — and licensed product generated more than one-fifth of sales — 29 percent versus 71 percent non-licensed.
Like Charles Craft, many companies maintained their status through such licensing and branding partnerships, especially with designer names.
Elrene launched its collection with artist Jonathan Adler; Town and Country Living partnered with Laura Ashley; Bardwil inked a deal with Dansk; Hedaya partnered with Claire Murray; Fallani and Cohn signed up with Pamela Scurry; and Avonhome partnered with Raymond Waites.
"I see the fashion side of kitchen textiles growing and building over the basics and solids," said Mark Siegel, president and CEO, New York-based Elrene Home Fashions, which is primarily a table linens company but has been offering seasonal kitchen textiles for the past 10 years.
Other companies focused on offering more fashionable looks in the place of solid colored basic goods.
Multiple category supplier and manufacturer Cecil Saydah's core product category is fashion kitchen textiles, which last year generated $48 million in sales, mainly at the mass-market level as well as some mid-tier and specialty stores. Its second largest category is table linens, worth $19 million, part of which coordinates to some kitchen products.
Newark, N.J.-based and family-owned and operated Tweel Home Furnishings, founded in 1910, has over the past five years experienced some of its most rapid growth, triggered in part by its expansion of fashion offerings in stand-alone and coordinate programs of table linens and kitchen textiles.
Proving there continues to be consumer interest in the kitchen as another room in the house to decorate, several rug companies over the past few months have jumped on the kitchen textiles bandwagon.
Burlington Rug Corp., Mohawk Home and Lacey Mills have all stepped up their kitchen rug offerings during the February Mini-market with seasonal mats.
Similarly, Ex-Cell Home Fashions introduced lotion pumps and metal wastebasket sets in Christmas designs that can be used for the bathroom or kitchen. "More and more customers asked us for (kitchen rugs), so we're pursuing it," said Pat Douglass, the company's general manager, tufted and printed area rugs.
Distribution Channels (in $millions)
2003: $444 million
Flat with 2002
|2003 %||2003 $|
|* Other includes home improvement centers, military exchanges and gift/home accent stores.
|1. Discount department stores||54%||$241|
|2. Mid-price chains||16||71|
|3. Home textiles specialty chains||15||67|
|5. Off-price chains||3||13|
|6. Warehouse clubs||3||13|
|7. Department stores||2||9|
|8. Single unit specialty stores||1||4|
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