The pressure's on...write, and be right
September 19, 2003-- Home Textiles Today,
New York — As suppliers waited with their order books open ready to write, retailers were headed to market with their pencils sharpened for another reason.
With high hopes that the economic morass is finally behind them, merchants shopping the fall market were walking a tightrope, trying to balance mostly conservative inventory positions against the need to merchandise aggressively in the fourth quarter and well beyond.
Those competing demands — further confused by a home textiles industry in flux and consumers sending mixed messages about their spending moods — have done nothing to clarify retailers' forecasts. Of course, that will necessarily complicate the lives of suppliers trying to anticipate their customers' every move.
Pillowtex is gone. At the same time global suppliers have surrounded — literally — the marketplace. That's given retailers more leverage to cut their deals than ever before, and they know it. Yeet, the merchants also know they're under more pressure to make their own numbers than anytime in recent memory.
"There's no doubt business has been improved, beginning in late June, July," said Charles Chinni, executive vp, gmm, home, fine jewelry and family footwear, JCPenney. "August was very much improved. We're very excited about the current trend."
The short-term effects from the tax rebate checks were positive, but even without them the environment is recovering, he added.
"We're looking forward to a good holiday season — not the best — but a good one," Chinni explained. "It's better than how we started the year." Inventories are conservative, he said, and within planned limits.
This market is a reflection of three things, Chinni said: improving positive trends, looking for newness to build assortments, and continuation of global sourcing and how that will affect companies.
"We see the fourth quarter continuing to be the same — we think it will be very good," said Alan Gladstone, president, Anna's Linens. "We see rebate checks being spent. People's mindsets are better. And we have easier comparisons for November, December and January."
Abundance of deals
He added, "Our inventories are heavier than planned, but we're taking advantage of opportunistic purchases. There's an abundance of deals out there."
Jeff Jones, senior vp and general manager of Sears' The Great Indoors, added, "There's been a rebound in the economy over the past six months." People may not buy new houses but [they] will fix up old ones instead, he added. "In domestics, I don't see why there shouldn't be strong growth over the next 18 to 36 months."
But retail numbers over the summer were mixed, pointed out Steve Goldberg, president, Brylane Lifestyle Group. Still, "there's no question that the customer is gravitating to value," he said.
Goldberg felt the fourth quarter will be challenging and while "cautiously optimistic," he noted that the company's business is already up against last year's numbers. "We have confidence in what we're doing because we continue to evolve our strategy," he said.
However, in terms of inventories, Brylane will make sure it has enough stock to fill orders. "If we all learned one thing in the direct market business, it's that the customer expects inventory to be available and is intolerant of back orders," Goldberg said. So the inventory plan is aggressive.
At Domestications, a more ambitious quarter is planned, said Jim Whitehead, vp, merchandising. "It doesn't blow the doors off," but it is still more than before. "We expect it will be not as challenging as the previous few quarters."
Ups & downs
The cataloger's inventories will be kept very conservative, Whitehead said, because it found that when they were reduced the company's fill rate went up a couple of points.
"Overall, we're quite excited," said Kent Larsson, executive vp of marketing, Big Lots.
Though inventories are conservative, it has the necessary open-to-buy to allow it to react, he added. The October time frame is when the most opportunities pop up, he said, after retailers and others cancel orders.
Barbara Pizzella, vp, gmm, Sears, expects fourth quarter sales to do well, adding that the national retailer is well positioned with some of its exclusive brands, including Lands' End and Whole Home. For Q4, some of the hot items will be cold-weather products.
"We're focusing on our strengths — bed, bath and window," said Chinni. "We're enjoying very good increases, and there are opportunities in fashion top of bed and cold weather products, which are very strong and continue to do well." Its second area of focus is gifts, which enjoyed a nice improvement in the last few years, and it will capitalize on housewares and decorative accessories for holiday.
For Big Lots, the goal at market is simple. "If it's a brand and it's a closeout, we're there," said Larsson.
Joann Rosenberg, senior domestics buyer for Big Lots, added, "My goal is to see as many people as possible."
She added that Big Lots' holiday assortment will climb by 15 percent to 20 percent this season, and it's "chasing the more elegant business."
The retailer's table linen category is trading up, she said, and holiday damasks will be offered for the second year in a row. The store will offer cloths with mitered corners in a third of its units, as well as others with beads and velvet.
"It was underdeveloped before," she said.
Big Lots' Larsson added that this marks the second year of a more coordinated table assortment. "It did well but there is still more potential" to be realized.
In fall bedding, Big Lots predicts a good flannel business. Bedding will also trade up, replacing poly/cotton sets with jacquard sets. A "great" throw assortment will include velvet rayon, update chenille, and fleece.
Impulse & margins
At Anna's Linens, in addition to looking for new, basic assortments for spring, some categories will grow. Decorative accessories, such as pillows, throws and candles —with their higher margins and impulse appeal — are continuing to ramp up, Gladstone said. Currently his weakest business is juvenile. There hasn't been a hit since Spiderman, and though Nemo is hot, it's not as big, he explained.
For the catalogs, a lot of the legwork has been done already and market is a place to see trends and directions.
"Market's not an event for us," said Goldberg. Instead, market is a time to meet new vendors and observe. But "as far as extent of product development, we are ahead." For fall, "We have some interesting surprises for customers; we're not doing anything fancy, however. For us it's about product and design."
It also just launched its Brylane Home Wishes catalog of gifts and décor, bringing the total of home titles to three, which will enable the company to leverage its brands in the future.
For Domestications, with so much of its assortments proprietary, most of the merchandise is set through summer '04, Whitehead said, though some holes in late spring and summer remain. However, market is a good place to see what the directions are for fall '04.
Pillowtex will also be on buyers' minds, and Domestications was in the process of adding Royal Velvet sheets when Pillowtex went under, Whitehead said, and obviously the retailer is waiting to see what happens to the brands. Domestications had the Royal Velvet towel program, but it wasn't very big and has already been phased out.
"I bet 80 percent of Pillowtex's business has already been replaced," said Chinni. "Pillowtex will be behind us by market."
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