June 17, 2014,
You can add one more item to the long list of things home textiles industry does contrary to the way most American — indeed global — businesses operate.
Fifteen years ago the giant monopolistic entity known as “the mills” dominated the bedding and bath industry. Then, through a combination of greed, arrogance, insularity and just general lack of imagination, the mill structure started to unravel. When the quotas came off overseas supplies of sheets and towels in the early 2000s, the system totally disintegrated.
In its wake came a largely fragmented network of smaller suppliers, many based in Asia but a fair number set up on this side of the Pacific, all drawing their product from China, Indian and Pakistan. Put together the ten largest suppliers and they still wouldn’t equal the old yearly output of just a single American mill.
In the meantime, the business world was moving in the other direction, consolidating and concentrating business in fewer and fewer hands.
Consider these chilling statistics. The top four airlines control close to three quarters of American air travel. The top five banks have nearly half of the country’s banking assets. Pending mergers in communications will make behemoths like A&TT and Comcast even more dominant in wireless, Internet and satellite transmission.
And while the pace of consolidation in American retailing has slowed, it comes after a period where so much business has become concentrated in so few hands that there really isn’t too much more merging and purging possible.
much more merging and purging possible. In the meantime, the supply side of home textiles plods along, hopelessly outnumbered by its customer base and without the financial, operational and organizational assets that come from scale. What growth is occurring is largely the result of trading market share rather than any conscious effort for the big to get bigger.
Will that ever change? I don’t know. Over the past few months, I’ve been involved in an above-average number of conversations with vendors looking to explore strategic acquisitions within the industry. So far, none of those efforts have shown results.
But if and when they do, the enlarged companies that come out of the other side of the process are likely to look very different than the largely southern-based, family-run, manufacturing-centric mills that existed before.
These new giants will likely be Chinese and Indian based. They will own manufacturing but will not control the entire production process from start to finish. They will be global in scale since that is the only way to be truly competitive in the international marketplace. And they will not restrict themselves, but will offer a full range of products, stretching beyond traditional soft home offerings.
A new monopoly — at least one like the old one — has its drawbacks, as history has shown us. But unless the home textiles industry starts to bulk up around a few powerhouses who have the might to drive the overall business, the category as a whole will suffer and continue to slide backwards comparable to other consumer products.
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