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Quilt biz evolves in pursuit of margin

The good news is that two years into its explosion at retail, the quilt category seems to have avoided a repeat of the boom-and-bust cycle it experienced in the early '90s, after which it all but disappeared from stores. Now a factor in every channel of retail, the category has carved out its shelf space and become a planogram perennial.

The bad news — at least from a supplier's standpoint — is that the field is becoming increasingly crowded.

Some of the multi-product suppliers that jumped into quilts as an add-on business during the category's rapid growth phase have recently awakened to quilts' potential as a classification business. Meanwhile, some of the leading quilt sourcers are now pushing more aggressively into adjacent categories, looking to position themselves as total home suppliers.

Each segment is attempting to tuck a foot into the other's shoe in response to the pressures that beset all maturing categories — a mandate to build more value into existing price points and the drive to create sets or coordinate products to build the average ticket.

Roaming the right range

Down in the trenches at retail, the momentum in the quilt category belongs to the specialty chains. The boxes continue to offer consumers the biggest spread in terms of quality and price point — stocking everything from basic $39.99 quilt mini-sets to fashion quilts that hit the $249.99 mark. Specialty stores are responding to suppliers that pack more bells and whistles into existing price points and tend to be the most design-driven among the retail channels, suppliers said.

Although the core of the channel's business is generally being done in the $79.99 to $129.99 range, suppliers said, specialty stores are finding the sweet spot around $99.99.

But that doesn't mean they're driving all of their assortments toward the middle.

"They're geared toward the higher end," said Jane Bognacki, vp, Sunham Home Fashions. "They have the customer traffic, and they have the customer trained to respond to higher standards and better looks."

They've also largely commandeered upper price points away from department stores, which in the aggregate are still plumbing a narrower price spectrum, generally $79.99 to $129.99. Here, too, $99.99 is the winner, suppliers said.

But while department stores are looking to layer in more quilt-in-a-bag business to boost their value proposition, some high-end department store resources see department stores opening to the possibility of pursuing an upper-tier classification business in quilts.

"Quilts continue to be very, very strong for us," said Patsy Pollack, president and ceo, Donna Karan Home, which is now looking at classification businesses in a number of areas as it prepares to launch into a key item program in the fall.

Ralph Lauren Home is now pursuing quilts as a classification, said Joe Granger, vp, bed and bath.

"We think the pricing has bottomed out, and consumers are looking for quality again," he said.

Lauren Ralph Lauren quilts retail at $199 on queen — which the label considers "an upper-middle range, but with a lot of value built into it."

On the opposite side of the retail street, mass market chains are still groping for a way to drop below the $39.99 mini-set, suppliers said, and have expressed little to no interest in pushing beyond the upper end of $59.99.

"I thought it had bottomed out, but someone told me recently that they'd been offered a price of $11.50 [wholesale] for a printed mini-quilt set. So maybe we haven't hit it yet," said Janie Leonard, national sales manager, PHI. Still, she said, "They all wish the bottom was there. They'd like to make more margin, too."

Catalogers continue to influence consumer purchasing behavior. Because consumer-direct retailers such as Pottery Barn and Company Store are holding their price points, retailers in other channels are encouraged to pursue better-price-point goods that offer similar design features, but at a lower cost that reinforces the chains' value position, suppliers said.

Catalogers are also helping to broaden consumers' design expectations, said Vince Tavani, executive vp, sales and marketing, Keeco.

"Consumers see Crate & Barrel and Ikea carrying more modern designs, and then they go out into the stores looking for those designs," he said.

Fabrication moves to the fore

While embellishments remain important in adding value to quilts, there's only so much ribbon embroidery a designer can tag onto a piece before it goes over the top. Suppliers are now enhancing quality by pulling non-traditional quilting fabrics into the mix. Currently, the emphasis has been placed on texture — suedes, microfibers, satins, silks, corduroys, jacquard chenilles and tufted designs.

"Growth is coming from unique fabrications, patterns and designs," commented Nelson Chow, vp of sales at C&F Enterprises. "Most retailers are trying to step up to better quality, especially in the moderate to upper area."

WestPoint Stevens recently narrowed its focus in quilts to strike a clearer distinction between price/value classifications, using fabrication as the differentiator. WPS has positioned its Martex brand quilts for the mid-tier, with trend-driven patchwork designs that hit a $79.99 to $139.99 price point. Its Grand Patrician-branded quilts, positioned to retail above $140, feature better fabrics such as satins, silks and brocades.

"For Grand Patrician, we've added more detail, more hand embellishments," said Jonathan Orr, vp of bedding design.

The biggest shift apparent to Spring Industries this year has been retailers' interest in non-traditional looks, said Nancy Webster, senior vp, creative development.

"Heretofore, our success had been in the very nostalgic, heirloom designs. However, what we placed at market and sent to style-out were upscale in design and fiber content. We're seeing not only a response to piecing of the fabrics, but also to designs where stitching becomes part of the pattern," she said.

The China Syndrome

While SARS has halted most travel to China in the immediate term, retailers and manufacturers in general agree that the epidemic does not yet pose a threat to supply lines. Trouble will only arise should the situation fail to improve over the next four to six months, the consensus holds.

The headline-grabbing threat of SARS has temporarily pushed the looming question of 2005 and the elimination of quota to the side. Few now seem to think the bottom will drop out of pricing in 2005, although a temporary blip may be likely. Any drop could potentially be counter-balanced by the cost of raw materials, several suppliers said. China-watchers have also pointed to the country's rising standard of living as another gradual price-inflater.

Finally, there is the matter of how quickly China itself can shake off the quota culture.

"The Chinese government makes a lot of money on quota," Leonard said. "We think quota could be replaced by some kind of duty the Chinese government imposes. Prices will stay close to where they are, and, over time, they'll wean themselves off."

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