Mid-line stores win bigger share
February 17, 2003,
Mid-priced chains, like Kohl's, and specialty chains, like Bed Bath & Beyond, continued to boost their market share in bedding last year, as department stores saw a continuing erosion of their base.
These were some of the findings of The Facts: Bedding, annual exclusive research conducted by Home Textiles Today. The study was conducted among a broad variety of bedding manufacturers, covering a dozen sub-categories in bedding, and accounting for the overwhelming bulk of the segment's sales to U.S. retailers.
Available data do not yet permit an accurate estimate of the segment's total sales for 2002. However, the U.S. Department of Commerce's preliminary Personal Consumption Expenditures Report of semi-durable home furnishings, which includes home textiles, suggests sales may have improved by as much as 2.97 percent for the year. If that estimate were to hold, the bedding segment's total retail sales might have risen to nearly $6.7 billion — the same as in 2000 — recovering from last year's dip to $6.5 billion.
According to the HTT study, the big winners for 2002 were linens specialty stores and mid-price chains, which include Sears and JCPenney, as well as merchants like Meijer, Mervyn's and Stein Mart.
Although each of those trade classes garnered a 1 percent rise over 2001, from 14 percent to 15 for the specialists and from 20 to 21 percent for mid-price chains, those gains are significant in a multi-billion-dollar industry that continues to show retail staying power. Arguably, it appears the bedding category is becoming more important to the merchandise mix at many stores.
"The story for some of those is that they've had great growth," commented Tom Muscalino, president of Dan River's Home Fashions Division. "[The mid-price and specialty stores'] same-store sales generally outperformed their peers, and you would expect the home category to participate in that growth."
Perhaps the biggest factor in driving the growth of the mid-price retail channels is the rapidly accelerating number of stores in operation. Kohl's rapid pace of openings over the past couple of years offers one of the best examples of that trend.
On the discount side, however, the sheer number of retail doors was not enough to give the category a blip, either positively or negatively. Moreover, the closings of hundreds of stores by bankrupt chains, like Kmart, or liquidated companies, like Ames, strongly suggests that the discount sector has seen dramatically improved per-store productivity gains, which prevented a decline in market share.
"It's not surprising," Muscalino said. "They've shown some growth, but in some cases that growth is because of expansion into other, different categories like food."
The bedding market share for department stores dropped two percentage points from the prior year, in keeping with that segment's continuing struggle to reinvent itself.
"I think the department stores' credibility is zilch. Their costs, their procedures, their methods and their relationships with suppliers have to be totally changed," said Leo Hollander, chairman and ceo of the Boca Raton, FL-based Hollander Home Fashions. "I'm surprised they've fallen that little."
Hollander felt mid-price chains, discounters and specialty stores will gradually increase their share at the expense of department stores.
"Quality and value. That's what stores like Costco and Sam's are all about," Hollander said. "Everyone sees the quality and value those stores represent."
|Distribution Channels, share||2002%|
|* Other includes home improvement centers, furniture stores, military exchanges and gift/home accent stores.
|1. Discount department stores||36%|
|2. Mid-price chains||21|
|3. Home textiles specialty chains||15|
|4. Department stores||12|
|5. Off-price chains||5|
|9. Warehouse clubs||1|
|10. Single-unit specialty stores||1|