Market Basket Reveals Broad Trade-Up
March 6, 2006,
HTT STAFF REPORT
Home Textiles Today’s fifth annual review showed that Target, Kohl’s and Wal-Mart had all hiked prices by more than 20% in the entry-level tier of their assortments. Six of the nine retailers in the survey raised their opening price point market baskets.
In the high-end baskets, Target and Kohl’s were the boldest chains in testing top-price goods:
• Target up 32.2%
• Kohl’s up 20.7%.
Target managed to eclipse all other top-price-pushing chains even though its highest item price was the same as last year: $149.99 on a queen quilt. Kohl’s offered the single highest-priced item in the survey: a Laura Ashley Lifestyles branded queen bed-in-a-bag at $269.99.
Other retailers generally held the line on more expensive merchandise, with the top price market basket change at four chains — Kmart, JCPenney, Marshalls and Wal-Mart — ranging between 10% up and 10% down, year to year.
The top-tier basket dropped in price only at these three chains:
• Linens ’n Things down 13.6%
• Sears down 17.9%
• Bed Bath & Beyond down 24.4%.
Two of these retailers have struggled with merchandising focus relative to their competitors; they also were the most aggressive in slashing tags for opening price goods:
• Sears down 7.8%
• Linens ’n Things down 2.3%.
It should be noted that unlike the other stores, the market basket at Sears was impacted by ongoing sales events during the period of the survey, which means the average everyday prices for some Sears items could be expected to register somewhat higher than shown.
The spectrum of retailer price offerings, measured as the difference between highest and lowest priced items, was broadest at these three chains:
• Kohl’s, $266.00
• Bed Bath & Beyond, $247.00
• JCPenney, $243.01
and most compact at these three:
• Marshalls, $57.00
• Wal-Mart, $85.16
• Kmart, $113.00.
This latter result would indicate that Wal-Mart has plenty of room to test its plans to trade up in soft lines departments.
While price deflation has dogged the home textiles industry in recent years, this year’s Market Basket report gives some indication that prices are truly on the upswing — regardless of country of manufacture. Interestingly, the proportion of goods made outside the United States has increased substantially this year, even as the merchants press their upper limits on prices.
China surpassed the U.S. last year as the leading source of items in the survey; it is now becoming predominant.
In the 2005 Market Basket survey, the percentage of total basket items that originated in the U.S. ranged from 17% at Target to 53% at Kmart. This year, domestic sourcing ranges from just 3% at Target to 38% at Kmart.
At only a single retailer — Wal-Mart — did the share of market basket items produced in the U.S. increase over last year; the rise was from 25% to 31%.
The biggest drops in “Made in the USA” goods were seen at these two chains:
• Sears, from 47% to 23%
• Linens ’n Things, from 25% to 5%.
Among those producers based in the U.S., Springs continued its clear lead among the suppliers with the most items visible in the market baskets. Counting the opening and top price items together, Springs had 36 such products, nearly three times as many as its nearest rival, WestPoint Home, with 13 items. For recently troubled WestPoint, this was only about half the items it had totaled in last year’s survey.
For the annual Market Basket reports, HTT assembles a list of basic bed and bath items, then visits one store from each of nine of the top 10 home textiles retailers to find the lowest priced item and the highest priced item for each product on the shopping list. The No.10 retailer on HTT’s Top 50 Retailers ranking — Pottery Barn — was not included in the survey because its in-store assortment of bedding and bath products is too slight to make valid comparisons.
As in previous years, the market basket contains only items marked at everyday prices; sale and clearance goods are not added to the cart in order to establish a base line for EDLP.
HTT’s editors were unable to complete their shopping lists at several stores due to those retailers not offering any products in certain categories on the day they were visited. And in the case of Sears, multiple visits to the same store compelled a survey of the prices as posted; for various categories a sales event was in effect and the non-sale price could not be determined. Our decision to use the prices that were available is based on the priority to include this leading home textiles retailer in the Market Basket report.
While the market baskets are not representative of each chain’s “average market basket,” they do represent what a customer who shopped these stores in these markets — during the period between February 15 and February 27 — would have found if she were looking for either the least expensive goods or the presumed top-of-the-line products.