Dec pillow suppliers feeling squeezed
February 25, 2002,
The decorative pillow category is feeling the effects of retailers demands for more "value-oriented" product that features added embellishments and better constructions, as well as low price points.
"Retailers are looking for more and more, whether it's lower price points or rebate programs. But there is definitely more and more pressure for suppliers to come to the table with an added something — you have no choice but to offer some kind of incentive to capture that business," said Corey Faul, president, Portland, OR-based Newport.
Decorative pillow price points have fluctuated for several years now, many suppliers claim. Most recently the trends are to the extremes, some said — extreme value for better product with price points as low as $6.99 for a cotton-back tapestry pillow by New York-based Windham Weavers ranging up to $29.99 for an Italian chenille with some embellishment by Richmond, VA-based Ashford Court.
Jeff Jacobs, vp and general manager of textiles and global sourcing for Sugar Valley, GA-based Mohawk Home, conceded that some of the biggest volumes of sales are done on $9.99, $12.99 and $14.99 product, and in better retail channels at $19.99.
Al Whiten, senior vp, American Mills, the holding company that owns Griffin, GA-based Fashion Pillows, said: "We've been on this trend now for the past three or four years, of retailers wanting better goods at better, lower prices. The volume of decorative pillows which the Wal-Marts and the Kmarts of the world sell, that $7.99 and $9.99 pillow, wraps up a huge percentage of the entire business."
What Montgomery, AL-based Riverdale used to sell for $21.99 "now has got to be at $19.99," said Cheryl McLain, vp, marketing and merchandising. "In 18-inch novelty tapestries, price points have definitely gone down."
However, for Ashford Court, which specializes in more upscale decorative pillows, the company is enjoying what it sees as an upswing at retail for the more expensive, $29.99-plus products.
"We've always tended to be a higher-priced line, and the people we sell continue to do very well with our higher price points," said Amy Bell, design director and executive vp.
Added Neil Zuber, president, Ashford Court: "Then there's a part of our line that retails for $9.99. The trend has been to lower the price points, and it has been [that way] for a while now. Last year this time you couldn't get low enough. But that trend is shifting. Now, the $19.99 and $29.99 product is flying out the door."
As price points remain competitive and product quality and fashion are taking a more central role, suppliers are going overseas more and more — essentially to India and some also to China — to get their wares.
Mohawk Home, traditionally a domestic manufacturer, is steadily increasing its importing efforts in all categories — particularly decorative pillows. Jacobs said, while the company still does "a tremendous amount of tapestry pillows domestically, as well as domestically constructed pillows using imported fabrics," it has increased its imported decorative pillow business from 13 percent to 15 percent in 2001 to as much as 20 percent of the entire category in 2002.
"Importing is definitely growing for us, and the reason is because the products we're importing unfortunately cannot be produced here competitively — appliqués or embroideries on fleece, wool or denim, high-end specialty fabrics like silk and burnout velvets or products with a lot of embellishments, for example."
Similar to Mohawk, Fashion Pillows had always been a domestic manufacturer, until recently.
"We are in a growing mode in sourcing, and every season we source more and more product," he said. "Now we're at 10 percent to 15 percent imported for our dec pillow line, and it's all primarily from India. Basically, you need to take an American idea to them, but they'll manufacturer just how you want it and need it."
Many suppliers source from India and China because manufacturers in both countries are able to replicate and build on concepts that American suppliers present to them.
"We provide India with the design direction, our layouts and, in a lot of cases, the fabrications, and they are very good at executing what we want," Jacobs said. "China is a very similar situation."
Vivian Acerbo, vp, marketing, New York-based Louisville Saydah Home Fashions, considers India and China "our best sources. They have the best pricing and they really know how to execute our designs."
Howie Mallow, executive vp, Windham Weavers, added, "I like the quality and details and workmanship that come out of India and China for decorative pillows."
While most suppliers are in agreement when it comes to importing, there seems to be a split on which retail channels merchandise the decorative pillow category the best.
Mohawk Home is experiencing growth at all levels of retail, from mass through department stores, but most notably through its Goodwin Weavers gift division, Jacobs said.
New York-based Ex-Cell Home Fashions' Bally Fauder, vp, decorative pillow sales, noted that many departments are getting smaller in specialty and department stores. "The mass market is becoming more focused on this business and consequently doing more of it," Fauder said. "Stores seem to be focusing on improving their basics business now. Fashion goods are becoming more in-and-out promotions than part of the core assortment."
Ashford Court's Zuber attests that department stores "have basically abandoned this business," and that mid-tier stores are picking it up.
Louisville Saydah's business is best served at the specialty level, Acerbo said. "They have a lot of interest in the category and the right fashions and new designs in stock," she said. "A customer goes there to shop for accessories, and that's what dec pillows are." On the decline, she said, are discounters, "which have reduced their space to the category."
Faring best for Fashion Pillows are catalogs and specialty stores. "They are doing well because they are able to offer better goods and show deeper discounts to the consumer," Whiten said.
Many retailers have initiated the margin-crushing practice of reverse online auctions. While the activity has not taken flight as of yet for the fashion-oriented side of decorative pillows, many suppliers said, some are preparing for the worst.
Mohawk Home has not been invited to participate in any auctions exclusively for decorative pillows, but it has already taken part in one for a decorative pillow-and-throw combination program, Jacobs said.
"No one has approached us to auction just pillows, but should they we will certainly participate because obviously it will be our only opportunity to get that account," Jacobs said.
Ashford Court "doesn't play in that arena," Zuber said. "I think it will quickly die out. I believe you get what you pay for in life. You can't make it at that price at that same specs."
Windham Weavers has not come across an auction invite nor does it plan to participate should one arise, Mallow said.
"How can we auction it off?" he asked. "Either they like our pillow designs or not. They are buying the design. It's not about auctioning."
While many suppliers haven't been forced to participate in retail auctions, several have been impacted by added shipping requirements.
Mohawk Home has been asked to be "very close partners with several of our biggest accounts," Jacobs said.
Whiten observed that in Fashion Pillows' case, retailers are "very, very specific on all markings on our cartons and require that we send them all of our information in advance in order to calculate any rerouting involved. Things like that make the process more complicated."
Riverdale is irked by some retailers' attitude that suppliers should become their "partners."
"Shipping requirements are always changing for suppliers," she said. "And many of them we don't like. We have become partners with our customers in paying for their new EDI systems."
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