Here Comes More ... of Less
April 7, 2011,
NEW YORK - As the home textiles industry gathers this week in New York for the spring edition of market, it won't be new colors, constructions or collections that will be the prime topic of conversation.
Remember the old saying about location, location, location? This week it's price, price and price.
That pricing pressure is top of mind at market comes after a virtually unprecedented period in which prices only went in one direction: down. At the same time, product quality was also going down, b u t as long as they were in tandem nobody seemed to notice much.
But this is different: Product quality continues to deteriorate, but now the cost of buying that product is on the rise.
And the big question this week is how far ... and how much?
The reasons behind all of this are well-known. Cotton has nearly tripled in price over this time a year ago and as the mainstay of sheets and towels, it is having a huge impact on costs. Polyester, the other main component of home textiles products, is also escalating as oil prices spike following the revolutions and turmoil in the Middle East.
The laws of supply and demand also are coming into play. An ever-more-hungry middle class in China is buying consumer products, like textiles, at a faster and faster clip. In the meantime, factories making textiles in China are shutting down or moving into more lucrative and sophisticated product categories.
Add in crop shortages, Pakistani politics and a few other factors, and you have a perfect storm of pricing pressure.
And the answer across the board seems to be to offer less ... for more.
Home Textiles Today editors surveyed a broad cross-section of executives in the industry on what all of this means and got an equally as broad array of possible scenarios. All of it is speculation - some of it educated, some more far-fetched - but it's quite likely that some of the following things are going to happen.
The thread-count war is probably over. In an era when you could find 800, even 1,000- count sheeting in just about every distribution channel, old standbys like 180s, 200s and even 250s became has-beens. Now when more threads mean more cotton, we are likely to see a return of lower thread-count sheets with the premium weaves becoming more exclusive again.
All-cotton sheets, the backbone of the business for a generation, will almost certainly lose market share to blended constructions. But while this is an obvious solution to sky-high cotton prices, it is not a panacea: Polyester is going through its own costing issues and the core all-cotton customer is not going to take to blends all that easily.
Top-of-the-bed products, such as comforters, spreads and duvets, will most likely go on a diet, losing a few inches here, a little sewing detail there. Fills will also be a little lighter, no doubt.
On the bath side, lighter and smaller towels will become a fact of bathroom life. Again, coming after an era when bigger was better and towels approached gargantuan sizes and weights, there is plenty of terry-ground to give up but eventually the consumer is likely to notice they aren't drying off quite as quickly as before.
Certain higher-cost constructions, be it wovens, complex prints or even specialized products like fiber-reactive prints, will become less prevalent in the marketplace. Again, these types of products will recede to the better end of the market, where they once exclusively lived many years ago.
It won't just be product construction and specifications that will be impacted. The very process of buying is likely to change. Retailers may end up deliberating less on making their buying decisions to lock in prices when they believe they are most advantageous. The days of endlessly waiting out suppliers for lower prices may be ending.
Quality control, which, depending on who you are talking to, may have been more window dressing in the first place than many are willing to admit, and could become less of an element of the sourcing process. If there's very little quality to check, it may not take much of an apparatus to do so.
Where products are actually made could change. Not that this means wholesale return to domestic manufacturing, something that would require enormous capital investments for which there is little appetite. But some U.S.-based cut-and- sew renaissance is a possibility as is renewed interest in NAFTA-country manufacturing in places such as Mexico and the Caribbean. Cutting shipping costs and times is one way to control costs.
How many of these things will actually take place, when - and how long they will last - remains uncertain. The industry has been through crisis - both real and imagined - before and seminal changes in a business this large and this fragmented on the supply side are rare. It's only usually in hindsight that it becomes clear what actually happened.
But it's fair to say that rarely has the American home textiles industry had to face such a daunting array of challenges and one way or another, it's going to mean a fundamental change in the nature of the products the industry sells and the way it which it sells them.