Beach Towels: Bright Designs Combat Commodity Status
June 5, 2006,
New York — In the same way parents take chances by planning summer outdoor parties for their kiddies, beach towel suppliers take big risks each year as their wares hit store shelves during this season of volatile weather.
The business of selling beach towels has never been easy. This past year was no different in that respect, only in that more storms brewed as a result of changes in global importing. While the wrong weather alone can dampen the season, it has been the ever-evolving importing climate that has contributed to a lackluster forecast for the industry.
This year's sans-quota status set the stage. It has stirred an increase in retailer direct importing activity in the category, particularly by the discount department store chains. There has been an influx of cheaper product at cheaper retail prices, which has contributed to price erosion. Suppliers vying for shrinking shelf space are forced to come up with more “bells and whistles” on product that can hardly boast better price points in order to remain competitive. And retailers continue to be too hurried as they stock shelves with the goods only to mark them down and clear them out just as the summer heat starts to sizzle.
Still, despite these obstacles, suppliers estimated that the industry remained about flat from the prior year, which according to Home Textiles Today research is $100 million in retail sales.
Retail distribution has not shifted much since the prior year, either. Discount department stores continue to own more than half of the business at about 55%, and also dominate in the direct sourcing activity compared to other channels. Mid-tier department stores occupy about 15% of total retail sales. They are followed by home textiles specialty chains and warehouse clubs, each of which take home about 10%. Department stores only claim about 5% of the business. The remainder is split evenly between off-price chains, 2.5%, and catalogs, 2.5%.
Of these channels, suppliers said the cost-sensitive discounters contributed most to the driving of price points down to commodity levels. Kinder to the category have been mid-tier department stores and catalogs, which offer better qualities and price points — understandable, based on their customer demographic.
“There is no bottom to the market in this commodity business, it seems,” said Kurt Hamburger, president and managing director, New York-based Espalma by Cobra. “It's like a war out there.”
Added Greg Clairmont, vp of marketing and global sourcing, New York-based Karsten America, the U.S. arm of manufacturer Karsten Brazil: “The beach-towel segment continues to be commoditized as both vendors and retailers push down prices consequent of excess supply in the marketplace.”
To combat that, he said Karsten is differentiating itself “through what we're known for — product quality, technical capabilities and design — which go hand in hand with innovation.”
Karsten is also building strategic alliances abroad to meet price competitiveness in certain cases, and supporting it with domestic distribution. “The competitive advantage we have is the strength of our manufacturing mill [in Brazil] supporting our efforts. And we're leveraging those strengths with our offshore strategic alliances, working with them in delivering the best quality while being mindful of retail price points.”
Pembroke Pines, Fla.-based Hilasal USA does not import from emerging Asian-based manufacturers. It instead relies entirely on its own mill in El Salvador, at its company headquarters.
That said, in the past year Hilasal said it has seen a complete turnaround in its fiber reactive printed and its dyed sublimation prints on jacquard beach-towel sales at the mid-tier department store level because of improved design and product quality, explained Larry Price, director of U.S. sales.
“Our '05 to '06 year-to-date same-store retail sales in fiber reactive printed towels at our mid-tier department stores are up 18% after we had three down years in fiber reactives,” he said. “This is a positive trend for us and our customers.”
In design, Hilasal went for a “much friendlier” animal look, making its sea creatures and wild animal interpretations “furrier and fuzzier looking,” he said. And in quality, the company is now employing a higher definition design process with its dyed sublimation printing on jacquard blanks.
“The dyed sublimation is a more three-dimensional look,” Price said. “Design is the key in this business.”
As better qualities of beach towels like softer ring spun varieties have begun coming out of Asia post quota, Brazil — long a source for high-quality beach towels — is being forced to develop improved qualities and sharper designs to stay competitive and justify its inevitably higher price points.
“We are all the time investing in design to be able to offer the fashion and good quality in terms of brands, and better resolution of design,” said Betania Landeira Waldrich, sales manager, Buettner Home Textil of Brazil. The company also operates a showroom in New York.
“It is not just a matter of quality by itself but the design and colors,” she continued. “This is something all of the Brazilians are trying to improve in order to stay competitive.”
For example, Waldrich said, Buettner boasts “very clear and realistic” imaging on its printed towels.
“When you are talking about prints, resolution is important,” she said. “To create beach towels for Disney and its theme parks in Florida, you have to have a very strong resolution to make their images very real. And we have the technology for that. Our engraving and printing machines are very modern and we can achieve this type of quality.”
Design is important, but not the whole package, said Eric Vergucht, sales representative for New York-based Dohler USA, the American branch of Dohler in Brazil. He said today's customer expects “more than just a beach towel” from a beach towel purchase.
“You have to have related items and other types of items,” he continued. “Becoming more important are sales of beach towel-related items like beach backpacks, coordinating canvas bags, beach blankets, beach chaise covers and pool towels.”
Many companies have long been creating these extras, but more and more these added-value pieces are positioned not so much for added sales but as vehicles to avoid price erosion.
“We're just trying to maintain our price points,” Vergucht explained.
Des Plains, Ill.-based Revere Mills International Group specializes in promotional and moderate price point jacquard, fiber-reactive and cabana stripe beach towels. But another new category it is involved in that is “growing explosively,” said Dan Harris, vp of marketing and product development, is the “Hoody” line of terry chaise lounge and beach chair covers and beach towels. The design idea is to feature a hood on the towel for wearable comfort and for slipping over the back of a chair.
Such new concepts are selling well especially when wearing the right name, said Salo Grosfeld, president, Miami-based J.R. United.
“Rather than calling them beach towels we call them pool and patio towels, and we're having a lot of success with it,” he said. “About 35% of the U.S. population lives in areas where the weather is warm — California, Florida, Texas — so why wouldn't we want to sell pool and patio towels to them? These people spend thousands of dollars on lawn chairs. Don't you think they want to throw a nice towel on top of them?”
Distribution Channels (%of total)
|2005 total retail sales: $100 million|
|(unchanged from 2004)|
|Discount department stores||55%|
|Mid-tier department stores||15.0|
|Home textiles specialty chains||10.0|