Beach Suppliers Look for More in the Mid-Tier
Cecile Corral -- Home Textiles Today, May 30, 2005
New York —The beach towel business has weathered several years of late-arriving summers, extended rainy seasons and unseasonably cool temperatures, and suppliers said they expect sales growth this year to remain relatively flat.
It is a business many find hard to track in terms of overall retail sales. The U.S. government does not offer a breakout of the beach segment among towel shipments and imports. But several suppliers offered HTT their estimates, which most agree average approximately $100 million in retail sales, although a few peg the figure between $150 million to $200 million.
Discounters own the greatest market share in the category, suppliers report, roughly 60 percent of total sales. These are also the retailers that participate in the highest level of direct sourcing, which in the beach towel industry makes up an estimated 60 percent of total sales, versus 40 percent for supplier-provided product.
The mid-tier department stores grab the next largest chunk of sales — 15 percent. Warehouse clubs and home textiles specialty chains each claim 7.5 percent of sales. Department stores make up 5 percent, off-price chains generate 2.5 percent and catalogs and other venues, like Web retailers, account for 2.5 percent.
Unlike other seasonal goods that typically have more predictable performances because they center on set holidays, the beach towel category is almost entirely dependent on favorable summer forecasts.
And such has not been the case over the past few summers.
“For beach, there is no specific day of the year. It all depends on the weather,” said Salo Grosfeld, president, Miami-based J.R. United. “But the reality is that beach should be considered a year-round business. Even at Christmas, people could give beach towels as gifts.”
Admitting that, realistically, most retailers would shy away from offering beach towels all year with the exception of regional stores in warmer beachside markets, many suppliers agree that peak months for the category are March through July.
“In the perfect world, we could ship in March, and then (retailers) could mark the towels down May 15 and be done with it by the end of July 4 weekend, in time for back to school,” offered Larry Price, director of U.S. sales for Hilasal USA. “But the trend lately has been to get into beach earlier — January and February — and be out by June. And that isn't working well because the weather has killed beach and (markdowns) are starting in March and continuing through June. It's much too early.”
In agreement is Larry Martineau, divisional vice president, sales and marketing for Foothill Ranch, Calif.-based Venus Home, which this year for the first time entered the beach towel category. “For the most part retailers put them out too soon,” he said.
Traditionally, the category's best-selling months have been, in order, June, then July and in third place, May, Martineau said.
This year, in the New York region, many retailers have already put their beach towels on sale, “and it's still cold outside,” said Eric Vergucht, an independent U.S. agent who works with Brazilian supplier Dohler. “In March, you could already find towels on sale and there was still snow on the ground. Many retailers are getting them on the floor in January and as a result marking them down too soon.”
As a result, price points for the cheaper towels are plummeting at the discount store level, driving many suppliers to the mid-tier department stores where better product can sell for relatively better prices.
“This whole category was just tanking — you could hear the flushing sound. Everybody went after this business and went after it in terms of dollars and it became a 'how low can you go' scenario,” said Gretchen Dale, director of design and marketing, New York-based Loftex USA. “Last year, it went rock bottom and what we've got now is a 10-pounds (per dozen) towel at $43.88. So now we have to go back up.”
Price noted that sales of jacquard beach towels are “trending down” and are becoming more of a commodity product at the discount level. As a result, mid-tier department stores and specialty chains are “retuning to fibers, larger sizes and heavier weights,” he continued.
The mid-tier department stores and specialty chains are looking to differentiate themselves from their discount store counterparts through design, said Alison Rearer, product manager, New York-based Karsten America. “They are looking for more sophisticated looks and are becoming less novelty-driven,” she continued. “And they don't want the typical color palette. (At these stores we are) seeing more muted tones, and they are more designer license driven.”
Discounters remain the most competitive at price points, placing heavy focus on low retails such as $4.99 end-cap 34-by-64 styles, “that offer perceived value with design, but not necessarily with weight,” Rearer added.
But she and others agree the channel has recently become more receptive to incorporating better quality, heavier weight and larger size varieties into its mixes. “More and more of the discounters are starting to trade up,” Rearer said.
Added Dale: “The discount stores have started to focus on middle to better beach towels. (One discount department store), for example, has a fabulous jacquard embellished beach towel.”
The middle-range quality velour stripes and solid jacquards, for example, are a growing segment, said Dan Harris, vice president, marketing and product development, Des Plaines, Ill.-based Revere Mills.
“It's a great middle ground,” he said. “The qualities we are seeing out of Pakistan and India have gotten better and are becoming more successful.” In addition, he continued, promotional fiber reactive varieties from China and promotional jacquards from India and China are “still doing well at promotional price points and low margins.”
On a related note, suppliers are also implementing strategies to improve merchandising at the store level, such as creating pictorial hangtags that show an image of the designs of larger-size beach towels that are typically folded on shelves.
“The vendor needs to do better with packaging aids like hangtags that show the customer a picture of the towel,” Rearer said. “Beach towels still go in the towel department. But some front-of-store exposure is helpful, especially in seasonal displays where they are merchandised with beach chairs and other impulse items.”
Another logical area for improvement, said some suppliers, is the swimwear department.
“The fashion quotient of beach and its seasonality make it intrinsically more closely allied to apparel than to home, so typically, apparel-driven retailers seem to understand beach better; they display it better and this drives sales positively,” argued Michèle Picciotto-Sinai, president, New York-based Michele Sinai Inc. “If the sun doesn't shine, people don't open their pools and don't think of buying summer things. It's very much like summer clothing. We are not terribly inclined to buy summer clothes until the weather gives us signs of the season's turning.”
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