Multi-packs push towels; soak up kitchen textiles sales
Cecile Corral -- Home Textiles Today, March 3, 2003
It's all about price. Department stores tacitly surrendered market share in kitchen textiles last year while variety/closeout operators and off-price chains gained in the category, exclusive research by Home Textiles Today revealed.
Despite the category's increasing maturity, which encouraged eroding price points, retail sales of kitchen textiles managed to increase 1.4 percent last year to $446 million.
"The Facts: Kitchen Textiles," updated and published annually by HTT, provides a forecast and analysis of the industry segment, including shifts in sales and market share. (See methodology on page 15.)
In addition to the statistical analysis, subsequent interviews with manufacturers provided additional depth, complementing the raw data. For example, suppliers commented extensively on the disposable characteristics of the segment, an aspect that undoubtedly aided the gain in sales.
Salo Grosfeld, president, Miami-based J. R. United Industries, said the kitchen textile business remains inert because "people consider kitchen towels like throwaways."
"The way you cook and clean in your kitchen doesn't change," he said. "Even when you move into a new house it doesn't change, unlike bedding and towels. In a new home, people have more rooms or they just want a whole new look and they spend on new bedding and towels. But it's not the same in the kitchen."
While sales growth has been modest, at best, the research findings show an underlying trend that appears to confirm continuing price erosion, as pointed out by Harold Schierholt, president, Los Angeles-based Cecil Saydah Co. He noted that dollar sales have remained almost stagnant but estimated that units have increased "by 8 percent to 10 percent."
"What that tells everyone is that we are all moving more units at lower prices," he explained.
Schierholt cited the market's "deflationary effects" — manufacturing overcapacity, decreasing cotton prices and the decline in import quotas.
Some of the biggest proponents of aggressive pricing in kitchen textiles are the discount department stores, which continued to grab by far the largest chunk of total revenue for the category — $205 million, or 46 percent, a share unchanged from 2001.
More than half of Burbank, CA-based Barth & Dreyfuss' kitchen textile business is consistently done in the discount channel, according to Tom Orr, executive vp, merchandising.
"Nothing has changed [at the discount level]," he said. "We haven't changed or lost market share there. It remains the same. The only thing driving volume down is prices."
Harris said that last year when the quotas were eased and manufacturing costs fell, Revere Mills used the savings to improve its offerings with heavier-weight towel blanks and fabrics and better fill for oven mitts and pot holders. "We put all that money back into the product but kept our prices the same, and it really helped us," he said.
Also, sales of multi-packs have proliferated at discount stores, he noted, as well as those already sold through warehouse clubs. The trend has only added to the promotional nature of the business.
That appears to be a reason department stores have largely walked away from the business, or at least reduced skus.
Department stores lost two market share points, sinking from 6 percent to 4 percent, while recording sales last year of $18 million. Off-price chains, rose one percentage point to a 6 percent share and $27 million in sales. Variety/close-out stores rose to a 7 percent market share with $31 million in sales.
Frank Scalice, executive vp, New York-based Town & Country, said that he has noticed that "department stores continue to get out of this business. Some bought our KitchenAid program, but not much else. If you have a really great brand, sometimes that helps you get more placements, and differentiate yourself more."
Grosfeld disagreed. "Licensing doesn't really work in kitchen textiles. It may get you another dollar at retail, but it's not significant because the customer sees kitchen towels as throwaways. They don't last more than, maybe, six months, so the customer doesn't want to spend a lot on a nice kitchen towel."
All the same, licensing took 20 percent, or $89 million, of total sales.
New York-based Elrene Home Fashions is now seeing its core business, which includes licensed programs with Wolfgang Puck, Nautica and Villeroy & Boch, "going through the moon," with a 32 percent hike over last year during the same January and February period, said Mark Siegel, president and ceo.
sales in $millions
|2002 %||2002 $|
|* home improvement centers, military exchanges and gift/home accent stores.
|1. Discount department stores||46%||$205|
|2. Mid-price chains||20||89|
|3. Home textiles specialty chains||13||58|
|5. Off-price chains||6||27|
|6. Department stores||4||18|
|7. Single unit specialty stores||1||4|
|9. Warehouse clubs||1||4|
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