Loss of Major Players Creates Room in the Kitchen
March 7, 2005,
New York — The kitchen textiles industry more or less held its ground in 2004, gaining a modest 1.8 percent in sales to $560 million.
Sales by sub-category also held steady. Kitchen towels remain the product mix driver at 50 percent of the total business, with $280 million in sales.
While sales, distribution and product mix percentage rates did not experience much shifting compared with prior years, there was plenty of change beneath the numbers.
In 2004, the supply chain fragmented, with private label products capturing more of the shelf space and direct importing activity by retailers increasing.
Emblematic of that shift was the disappearance of three major suppliers from the landscape within the past six months.
First, Somerset, Ky.-based Cecil Saydah Co. — which in 2003 ranked as the third largest U.S. supplier with $48 million in sales for kitchen textiles — called it quits when it put the company up for sale in the summer and finished selling off all parts by the fall.
Glenoit LLC bought out its rug and part of its kitchen textiles businesses and Town and Country Living acquired some key account programs in kitchen textiles and table linens.
Soon afterward, by yearend, domestic manufacturer and longtime category player Laurinburg, N.C.-based Charles Craft announced it was exiting the business in the face of fierce competition from importers and was redirecting focus toward its yarn and craft businesses. The company for a long time held the number five spot of the list of top U.S. suppliers, with $18 million in sales in 2003.
Most recently, the number one spot became vacant when Burbank, Calif.-based Barth and Dreyfuss of California, which last year reported $65 million in category sales, sent home its staff to begin the liquidation process late last month.
These vacancies no doubt have posed opportunities for not only the major players, like Town and Country and Glenoit that stepped in and took over pieces of the lost businesses, but also helped smaller companies make strides. Wyckoff, N.J.-based Anchor Home this year expects to experience up to 12 percent growth in sales based on programs with new retail partners at the mid-tier department store and specialty chain levels.
The vacancies offers opportunities to a host of overseas suppliers stepping in to capture retail-direct business.
“With the absences of Cecil Saydah and Charles Craft last year, other sources like us here began getting looked at more seriously. And it's happened with some of the major customers,” said Frank Petronzio, owner and president of Anchor Home, which was originally founded more than 25 years ago as a supplier of fabric kitchen appliance covers, but has since expanded into kitchen textiles and table linens coordinates.
“I think what is happening is those of us here are being strengthened by the absence of others,” Petronzio continued. “And we need to focus on our reason for existence — do our jobs better.”
On that same note, while no one argues that direct importing has altered the category and the way retailers procure it, surviving U.S. suppliers insist it's possible to manage the business.
“I think companies in our industry need to have consistent and balanced management teams that understand the ups and downs of our marketplace and the real challenges that are out there,” said David Beyda, chairman, New York-based Town and Country.”
Dan Harris, vice president, marketing and product development for Des Plaines, Ill.-based Revere Mills, agreed with Beyda but also singled out other impacting issues.
“It's a reflection of the changes in our industry,” he said. “It's the lessening of importance of the printed business, the direct importing by some retailers and, frankly, the mismanagement of these companies.”
Harris added that while all home textiles companies must be “very cost effective” in operating their businesses to compete and survive, the case is especially true for kitchen textiles suppliers “because it's a pennies business. There isn't any room for mistakes here.”
While keeping their errors to a minimum, some suppliers have found new methods to remain relevant to their retail customers. And in some cases, it's meant reinventing themselves.
Those with one foot overseas — specifically, sourcing operations and manufacturing partnerships in China, India, Pakistan and elsewhere — have developed direct importing services for retailers. Avonhome and Town and Country are just two of the suppliers now offering this service.
“We have a significant direct importing business — we play that field,” Beyda said. “It's important to play at the direct importing level as well as the domestic level to create more innovative product and add value.”
Braintree, Mass.-based Avonhome not only offers to ship orders directly to some of its retail customers — it has expanded its business model into a “Style.Lab” which licenses its own designs to stores, regardless of product category.
“Our approach is to not only sell product, but also our concept and designs,” said George Kouri, president. “It's how we remain relevant to the supply chain.”
Merchandise Mix (in $millions)
|% of total||2004 sales|
Distribution Channels (in $millions)
2004 Total: $560 million, up 1.8%
|% of total||2004 sales|
|*Includes home improvement centers, military exchanges and gift/home accent stores.
|Discount department stores||58%||$324.8|
|Home textiles specialty chains||15||84.0|
|Single unit specialty stores||1||5.6|