1. food and drink
2. food and grocery retailers
3. convenience stores

in-depth: floor covering
T H I S
W E E K
RETAIL: Polo is riding into Kohl’s with
a new line of home merchandise under
the Chaps label. Page 8
NEWS: The winter show circuit has
been unusually robust so far. What’s
behind it? Page 10
TRENDS: Did you catch what was
brand new at Ambiente in Frankfurt?
We did. Page 13
HOME FURNISHINGS NEWS
|
A M A C FA D D E N P U B L I C AT I O N
|
$10
|
hfnmag.com
|
F ebruar y 2 6 , 2 0 0 7
STATE
the home industry’s only comprehensive statistical pro-
file shows retail sales up a modest 2.5 percent with major
O F
HFN
EXCLUSIVE
T H E
appliances and housewares leading the way. see top story,
INDUSTRY
pages 16-17, and individual reports in the market sections.
Home Furnishings by Category ($ in millions)
3
GMM Mania:
4 Big Stores
Change 4 Big
Home Chiefs
By Barbara Thau
NEW YORK–Four of the industry’s
biggest retailers are in the process
of changing their top home merchant, impacting a whopping $40
billion worth of sales.
This month, Wal-Mart named
Beth Schommer senior vice president and general merchandise
manager of home, and Doug Wurl
was named vice president and
GMM of home for both Sears and
Continued on page 8
Container Store
Plans to Stay as
‘Yummy’ as Ever
By Sharyn Bernard
2006
2005
% Change
Furniture, lighting & home decor
$74,001.53
$73,174.27
1.1%
Textiles
$20,210.46
$19,767.06
2.2%
Major appliances
$19,539.62
$18,236.37
7.1%
Housewares
$17,373.23
$16,651.88
4.3%
Tabletop
$4,968.76
$4,847.83
2.5%
Rugs
$4,620.06
$4,567.48
1.2%
$140,713.65
$137,244.89
2.5%
Total
THE HOME PAGE
C O PP E LL ,
Texas– Don’t
expect wholesale changes for
The Container
Store.
That’s what
Kip Tindell,
chief executive
officer, said last Kip Tindell
week following
the innovative retailer’s announceContinued on page 6
N
E
W
S
P A
P
E
R
top story
Homing In on the Problem
By Michael Rudnick
textiles Channels of Distribution
Other 3%
Home improvement Department
stores
centers 8%
16%
Catalogs 4%
Other 2%
Home improvement Department
stores
centers 8%
16%
Catalogs 4%
Mass
merchants
& clubs
43%
Specialty
stores
26%
Mass
merchants
& clubs
45%
Specialty
stores
25%
Retail Sales
2006
% change
2005
($ millions)
$20,210.46
2.2%
$19,767.06
rugs Channels of Distribution
Other 1%
Department
Home improvement
stores
centers 11%
15%
Catalogs 7%
Specialty stores 7%
Other 2%
Mass
merchants
& clubs
38%
Home improvement
centers 11%
Department
stores
16%
Mass
merchants
Catalogs 7%
& clubs
37%
Specialty stores 8%
Furniture stores
& chains
Floor covering
11%
stores 8%
Furniture stores
& chains
Floor covering
12%
stores 9%
Retail Sales
2006
% change
2005
($ millions)
$4,620.06
1.2%
$4,567.48
furniture, lighting & home decor Channels of Distribution
Department
stores
Mass
7%
merchants
& clubs
16%
Specialty
stores
20%
Furniture stores
& chains
48%
Other 5%
Home improvement
centers 4%
Other 4%
Home improvement
centers 4%
Specialty
stores
21%
Department
stores
Mass
11%
merchants
& clubs
12%
Furniture stores
& chains
48%
Retail Sales
2006
% change
2005
($ millions)
$74,001.53
1.1%
$73,174.27
NEW YORK–House-for-sale signs tend to translate to dollar signs in home
furnishings retail, so as housing in 2006 slowed, home goods dollars followed.
Retail home furnishings sales crept upward 2.5 percent last year, falling behind
the 2005 2.9 percent increase and paling in comparison to the 6.3 percent overall
retail sales increase for 2006, according to the National Retailers Federation.
The slowdown in home sales last year had a spillover effect at home furnishings retail, said Mike Niemira, chief economist with the International Council
of Shopping Centers. New home purchasing drives
STATE
home goods-buying behavior, particularly in regard
to bigger-ticket items, such as furniture. The 2006 of the industry
housing slowdown was most evident in new home
sales, which fell about 17 percent to nearly 1.1 million units from about 1.3 million units for the prior year, according to the U.S. Department of Commerce.
Furniture, lighting and home decor was the softest-performing category
tracked by HFN, with a little more than 1 percent sales gain. The sector was
partially dragged down by upholstered furniture, which fell into the red with
a 2.5 percent sales decline.
“Furniture had been through a particularly long cycle of housing ups—people had
time to furnish their [new] houses. Now, there are no major new trends in housing,”
said Ken Wasik, managing director at Houlihan Lokey Howard & Zukin.
The upholstered furniture industry last year suffered higher foam costs,
lower-cost imports and weakened consumer confidence, which may have led it
to refresh existing pieces with accent pillows or slipcovers.
Wasik attributed the upholstered furniture sales decline to a shift away from
the high end and toward casual furniture. “People are not putting money into
upholstering high-end sofas,” he added.
This high-end furniture departure has helped fuel top-line gains in casual
furniture, which led the furniture sector with a 7.4 percent sales increase for
the year, nearly doubling its 2005 gain.
A major reason for this casual furniture increase lay outside the four walls
of the home. The growing trend toward the transformation of backyards and
patios into centers of living boosted outdoor furniture performance.
Casual furniture gains may have negatively impacted overall furniture sales,
as casual items generally have a lower average ticket than their higher-end
counterparts. “With the move to casual living, we are back to long replacement
cycles at lower price points,” Wasik said.
Another category impacted by the casual shift was the tabletop sector, which
recorded a 2.5 percent gain for the year. Wasik said that the shift toward casual and away from upstairs tabletop has dragged down the average ticket in
the category. The casual movement helped to spur the increase in housewares
dinnerware and stainless-steel flatware, as well as a focus on casual, boxed barware, modular serveware and anything that can be interpreted as useful for
home entertaining. Sterling silver was the most notable victim to the growing
casual trend last year as its sales dropped 10 percent.
Textiles, which underperformed the total average home goods gain with a
2.2 percent increase, was also impacted by the casual decorating trend. Wasik
said higher-end drapery sales have slumped and the aforementioned slowdown
in furniture reupholstering contributed to overall textiles weakness.
Rugs recorded the second-lowest gain at 1.2 percent. The sector took a hit toward the end of the year that many didn’t see coming and still can’t explain.
The full year was marked by rapidly rising oil prices that affected the cost of
raw materials for those in the synthetic rug arena. Many had to raise prices and,
According to HFN’s State of the Industry Report, as housing sales slowed in 2006,
HFN / February 26, 2007
hfnmag.com
top story
total home furnishings | Channels of Distribution
Other*
10%
Department
stores
Mass
Home improvement 13%
merchants
centers 9%
& clubs
Catalogs 1%
24%
Supermarkets/
drugstores 1%
Specialty stores Furniture stores
& chains
17%
25%
Other*
Department
10%
stores
Home improvement 15%
Mass
centers 8%
merchants
Catalogs 1%
& clubs
Supermarkets/
22%
drugstores 1%
Specialty stores Furniture stores
& chains
17%
26%
even though prices per barrel have now tapered off, manufacturers have said
they have not felt that wane in their raw material cost as yet and have, therefore,
not yet been able to readjust their own altered pricing. Even so, some executives admitted to being rather baffled as to the cause of the drop-off in consumer
spending for their product in the fourth quarter of the year. Most, naturally, are
hoping that trend turns abruptly back to the positive and have noted positive
winter markets lend to the idea that hope will actually be realized.
Major appliances, despite being a larger-ticket category historically tied to
home sales, had a strong year, thanks to a continued focus on kitchen remodeling. “As the kitchen becomes a major hub of the household, it is still an affordable luxury to have high-end appliances,” Wasik said.
Kitchen remodeling is moving in an upstream fashion, as consumers upgrade to stainless steel, french-door/bottom-freezer refrigerators and mass
premium cooking appliances.
Refrigeration, which was the number-two performer among white goods
with a 5.5 percent increase, stood to benefit from the premium push. Higherend french-door and bottom-freezer models are replacing the opening and
midprice-point traditional top-freezer and side-by-side units, said Tim Kavanaugh, director of marketing and merchandising at LG Electronics. “Bottom
freezers have a higher average ticket than side-by-sides. Any growth in that
[bottom-freezer] category boosts dollars,” he said.
The major appliance standout, room air, logged the highest gain of any home
goods category at 32.5 percent, thanks to a hot summer in 2006.
Housewares was another bright spot among home goods with a 4.3 percent
sales increase for the year, compared with 3.9 percent in 2005.
In spite of the many challenges facing the housewares industry, manufacturers are still finding pockets of growth, primarily through new-product development and innovation, and are still able to make money at it by keeping a
careful watch on their costs.
The irons category provided a prime example of what innovation can do for
sales growth. Irons were the only one in all of the housewares segments to post a
double-digit sales boost in 2006. According to Ehsan Alipour, president of Oliso,
unit sales of irons were virtually flat last year compared with 2005, but innovations and new technologies drove the trade-up business in this category.
Among the items found in the kitchen, the kitchen tools/gadgets sector
topped $1 billion in sales in 2006 and recorded more than 7 percent in sales
growth in the process. The trade-up trend evident for all of housewares was
particularly important to pushing growth in this category. “There’s a shift in
our society toward more cooking at home and toward more gourmet cooking,”
said Chris Grace, president of Grace Manufacturing.
Floor care also benefited from a trade-up trend, evident in the higher-end
push in stick and handheld vacuum cleaners, which recorded a 5.3 percent
sales increase. Relatively pricey performance-driven models like Dyson’s new
$150 Root 6 hand vac, its first entrance in the category, and fashion-forward
units such as Dirt Devil’s Kone designed by Karim Rashid, helped to drive consumers to spend-up in a category historically relegated to commodity status.
Home goods manufacturers may not see major sales windfalls anytime soon,
as they find themselves in the midst of a housing slowdown hangover—the
six- to nine-month furnishing lag tied to home sales, Niemira said. He said that
while he believes “the housing weakness has worked its way through and we
see some stabilization, it doesn’t mean home furnishings will pick up. This will
take a pickup in housing demand.” — David Gill, Jennifer Quail, Andrea Lillo,
Nancy Meyer and Allison Zisko contributed to this report.
Retail Sales ($ millions)
2006 $140,713.65
2005 $137,244.89
% change
2.5%
tabletop Channels of Distribution
Supermarkets/
drugstores 2% Other
Catalogs 2% 5%
Department
stores
Specialty stores
19%
31%
Supermarkets/
drugstores 2% Other
Catalogs 2% 6%
Department
stores
Specialty stores
18%
31%
Mass merchants
& clubs
41%
Mass merchants
& clubs
41%
Retail Sales
2006
% change
2005
($ millions)
$4,968.76
2.5%
$4,847.83
housewares Channels of Distribution
Department
Other 10% stores
Home improvement 10%
centers 8%
Mass
Catalogs 2%
merchants
Supermarkets
& clubs
9%
48%
Specialty
stores
13%
Department
Other 9% stores
Home improvement 10%
centers 8%
Mass
Catalogs 2%
merchants
Supermarkets
& clubs
10%
49%
Specialty
stores
12%
Retail Sales
2006
% change
2005
($ millions)
$17,373.23
4.3%
$16,651.88
major appliances Channels of Distribution
Retail Sales
2006
% change
2005
($ millions)
$19,539.62
7.1%
$18,236.37
furnishings products followed, leading to a smaller uptick than last year
hfnmag.com
February 26, 2007/ HFN the markets textiles
Material Gains for the Year
By Christine Bockelman
hard window coverings Channels of Distribution
Catalogs 6%
Other 2%
Department stores 2%
Catalogs 6%
Other 2%
Department stores 2%
Home
improvement centers
34%
Mass
merchants
& clubs
16%
Home
improvement centers
32%
Specialty
stores
40%
Mass
merchants
& clubs
20%
Specialty
stores
38%
STATE
Retail Sales
2006
% change
2005
($ millions)
$4,541.24
2.0%
$4,452.20
Curtains and drapes Channels of Distribution
Home
improvement
Catalogs centers
2% 4%
Department
Specialty
stores
stores
25%
22%
Bedroom
of the industry
The bedding category posted mixed results, with some
great gains and a few big losses. Bed pillows grew about 7 percent, from $983 million to $1.05 billion, despite challenges related to imports and price compression.
One vendor said “building consumer awareness and encouraging higher frequency
of purchase” were the two biggest problems facing the industry. Balancing quality
and value “for both manufacturers and retailers based on the large influx of direct
Continued on page 20
sheets Channels of Distribution
Catalogs
3%
Home
improvement
centers
5%
Other 1.5%
Catalogs 2%
Specialty
stores
20%
Department
stores
27%
Specialty
stores
20%
Mass merchants
& clubs
47%
NEW YORK–It was a solid year for the textiles industry, as retail sales grew about 2.2
percent, from about $19.7 billion in 2005 to about $20.2 billion in 2006. The previous
year, the industry’s growth was less than half that number, or about 0.8 percent.
The upswing was led by the bed-in-a-bag, comforter and bed pillows segments,
which performed well despite of overseas competition. Bedspreads, which one vendor said are “beginning to be perceived as dated-looking,” and down-filled comforters, which are struggling to compete against cheaper non-down alternatives, showed
the largest decreases in sales.
The big turnaround story of the year, though, was curtains and drapes. The category went from being last year’s worst performer, with a 7.5 percent loss in sales, to
posting a modest 3.6 percent increase in sales this year.
Other 1%
Catalogs 2%
Department
stores
10%
Mass merchants
& clubs
66.5%
Mass merchants
& clubs
45%
Department
stores
10%
Specialty
stores
20%
Mass merchants
& clubs
67%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$2,790.90
3.6%
$2,693.92
($ millions)
$2,499.86
1.3%
$2,469.00
bagged bed ensembles Channels of Distribution
down comforters Channels of Distribution
Catalogs Other
1% 3%
Specialty
stores
20%
Department
stores
31%
Catalogs Other
1% 3%
Specialty
stores
20%
Department
stores
31%
Mass merchants
& clubs
45%
Other
Catalogs 5%
10%
Department
stores
30%
Specialty
stores
25%
Mass merchants
& clubs
45%
Other
Catalogs 5%
10%
Department
stores
30%
Specialty
stores
25%
Mass
merchants
& clubs
30%
Mass
merchants
& clubs
30%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$1,460.47
5.0% $1,390.92
($ millions)
$473.42
-7.5%
$511.81
The rate of sales growth increased about 2.2 percent in the industry in 2006 to $20.2 billion
18 HFN / February 26, 2007
hfnmag.com
the markets textiles
Material Gains for the Industry in 2006
comforters (non-down) Channels of Distribution
Other
Catalogs 1%
6%
Department
stores
Specialty
22%
stores
21%
Other
Catalogs 1%
6%
Department
stores
Specialty
20%
stores
18%
Mass merchants
& clubs
50%
Mass merchants
& clubs
55%
Retail Sales
2006
% change
2005
($ millions)
$1,637.59
5.0%
$1,559.61
bed pillows Channels of Distribution
Catalogs Other
1% 1%
Specialty
stores
19%
Continued from page 18
imports” was another challenge. Mass merchants continued to be the go-to place for
bed pillows, followed by speciality and department stores.
Other basic bedding also performed well, with mattress pads totaling about $592
million, up 3.7 percent from $571 million in 2005. Vendors cited innovation as one
of their biggest issues. Mattress pads “continue to be commoditized and we must
innovate our way out of that downward spiral,” said one vendor. While mass merchants and clubs continued to dominate sales in this category, followed by department stores, sales at specialty stores grew to capture 21.5 percent of the market.
Sales of down comforters were down a painful 7.5 perSTATE
cent, the second annual loss in the category, as the price
of down continued to increase and customers increasingly of the industry
purchased non-down alternatives. The price of down “will
continue to be a factor going into 2007, and this is driving the average consumer, who
is price sensitive to the down alternative comforters” one vendor said. Sales of nondown comforters grew 5 percent, from $1.55 billion to $1.63 billion, but the category
wasn’t without its own concerns. Vendors cited “competition” and “coming up with
new innovations first” as challenges. Down comforters sold equally well at department stores as at mass merchants and club stores, with each group capturing 30 percent of sales, while non-down comforters largely sold at mass merchants and clubs.
Sheets continued their steady climb in sales, growing about 1.3 percent from
about $2.46 billion to $2.49 billion. Vendors voiced frustration with the “ridiculous
Continued on page 22
bedspreads Channels of Distribution
Catalogs Other
1% 1%
Specialty
stores
18%
Department
stores
22%
Mass merchants
& clubs
57%
Department
stores
23%
Mass merchants
& clubs
57%
Other
Catalogs 2%
10%
Specialty
stores
12%
Other
Catalogs 2%
10%
Specialty
stores
10%
Department
stores
36%
Department
stores
39%
Mass merchants
& clubs
39%
Mass merchants
& clubs
40%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$1,052.76
7.0%
$983.89
($ millions)
$364.38
-8.0%
$396.07
mattress pads Channels of Distribution
Catalogs Other
3% 2%
Specialty
stores
Department
15%
stores
25%
Catalogs Other
3% 3%
Specialty
stores
21.5%
quilts Channels of Distribution
Department
stores
22.5%
Mass merchants
& clubs
50%
Catalogs Other
5% 2%
Catalogs Other
5% 2%
Specialty
stores
18%
Mass merchants
& clubs
55%
Department
stores
26%
Specialty
stores
19%
Mass merchants
& clubs
49%
Department
stores
28%
Mass merchants
& clubs
46%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$592.64
3.7%
$571.68
($ millions)
$491.94
-2.0%
$501.98
20 HFN / February 26, 2007
hfnmag.com
the markets textiles
Material Gains for the Industry in 2006
kitchen textiles Channels of Distribution
Catalogs 4%
Other 1%
Specialty
stores
36%
Catalogs 4%
Other 1%
Department
stores
13%
Specialty
stores
37%
Mass
merchants
& clubs
46%
Department
stores
10%
Mass
merchants
& clubs
48%
Retail Sales
2006
% change
2005
($ millions)
$556.85
2.5%
543.27
table linens Channels of Distribution
Continued from page 20
thread-count game” but said the “customer [is] slowly recognizing that thread count
being higher doesn’t necessarily mean nicer sheets.” They also said the trend toward
cotton sheets is continuing. The majority of sheets, 66.5 percent, are still sold at
mass merchants and clubs. Sales at specialty stores were flat.
Sales of bagged bedding ensembles grew 5 percent, from $1.39 billion to $1.46 billion, after a few years of relatively flat growth. Quilts, however, took a slight hit, with
sales down 2 percent to $491 million from $501 million in 2005. Mass merchants
and clubs grew their share of the market about 3 percent, and remained the most
popular place to purchase quilts. Department stores and
specialty stores followed.
STATE
After a flat year in 2005, bedspread sales fell dramati- of the industry
cally, about 8 percent, from $396 million to $364 million, as
customers gravitate more toward duvets and comforters. Mass merchants and club
stores sales grew 1 percent to about 40 percent of the total, and remained the strongest overall. Department stores followed closely, capturing 36 percent of the sales.
Bathroom
It was also a mixed bag for the bath business. Sales of towels rose 2.5 percent, from $2.22
billion to $2.28 billion, but bath accessories took a 3.3 percent hit, with sales dropping
from $329 million to $318 million. Shower curtain sales decreased about 2.7 percent.
Despite the gains, vendors say that the towel market is “confusing” for the consumer. There are “too many choices and too many price points. Every other day there’s
bath towels Channels of Distribution
Other
3%
Department
Catalogs
stores
7%
17%
Other
3%
Catalogs
Department
7%
stores
18%
Catalogs
2%
Other
7%
Other
5%
Department
Catalogs
stores
2%
14%
Department
stores
16%
Specialty stores
22%
Specialty stores
19%
Mass
merchants
& clubs
36%
Specialty
stores
37%
Mass
merchants
& clubs
34%
Specialty
stores
38%
Mass merchants
& clubs
56%
Mass merchants
& clubs
57%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$644.04
4.0%
$619.27
($ millions)
$2,282.82
2.5%
$2,227.14
shower curtains Channels of Distribution
Catalogs
2%
Other
4%
Catalogs
1.5%
Department
stores
16%
bath accessories Channels of Distribution
Other
4.5%
Department
stores
18%
Specialty stores
21.5%
Specialty stores
23%
Mass merchants
& clubs
55%
Catalogs 4%
Other 1%
Catalogs 3%
Other 1%
Department
stores
9%
Specialty
stores
26%
Specialty
stores
28%
Mass merchants
& clubs
60%
Mass merchants
& clubs
58%
Mass merchants
& clubs
54.5%
Department
stores
10%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$503.01
-2.7%
$516.79
($ millions)
$318.53
-3.3%
$329.51
22 HFN / February 26, 2007
hfnmag.com
textiles the markets
another sale,” said one vendor. Mass merchants and clubs
owned about 56 percent of the channels of distribution
pie, followed by speciality stores and department stores.
Bath accessory vendors continued to face increases in
the cost of raw material and currency devaluations. Other
challenges included “redundancy in design selection,” “margin
erosion” and “the never-ceasing
push to maintain proper levels
of inventory in an ever-changing fashion-driven business.” Although they lost 2 percent of the
market to speciality stores, mass
merchants and clubs continued
their stronghold here, with 58
percent of sales. Specialty stores
captured 28 percent and department stores lagged behind with
9 percent.
Shower curtain sales dipped
due to pricing challenges, and
vendors said it’s difficult to find
new cloths and prints prices
“that will not exceed the sweetspot retail price points of $9.99
to $14.99 for vinyl and $29.99
for fabric.” Eroding price points
and deflation continued to be
issues, as well. The majority of
shower curtain sales, 55 percent, were at mass merchants
and specialty stores.
with the “chargeback dilemma.” Mass merchants and
clubs sold 47 percent of all curtains and drapes.
Despite slow housing starts, sales of hard window coverings also increased. The category grew about 2 percent,
from $4.45 billion to $4.54 billion. Once again, specialty
stores reigned, capturing 40 percent of the market’s overall sales, a 2 percent increase from last year. Mass merchants and clubs lost about 4 percent of their sales, giving
up 2 percent of the market to both specialty stores and
home improvement centers. n
Kitchen
The kitchen industry finished
for the second year in a row on a
positive note.
The sale of kitchen textiles
saw a modest increase of 2.5
percent, from $543 million to
$556 million. The channels of
distribution pie remained relatively the same, with mass merchants owning 46 percent of the
pie, and specialty stores and department stores following.
Table linens showed about 4
percent sales growth, to $644
million. Industry executives
cited “managing your inventory level to ensure good in-stock
positions” a challenge for the
category. Mass merchants and
clubs, and speciality stores, each
owned about 35 percent of the
channels of distribution pie, followed by department stores.
Window Treatments
Soft window coverings came
back in this category, after suffering a 7.5 percent sales loss in
2005. Hard window coverings
had been winning more buyers
with advertisements in shelter
magazines, and new products,
such as window coverings that
filtered out harmful light.
This year, sales of soft window
coverings grew 3.6 percent, from
$2.69 billion to $2.79 billion.
Still, the category is challenged
hfnmag.com
February 26, 2007/ HFN 23
the markets floor covering
handmade area rugs Channels of Distribution
machine-made area rugs Channels of Distribution
Other 1%
Catalogs
8%
Catalogs
10% Department
stores
Home
16%
improvement
centers
14%
Mass merchants
& clubs
Furniture
20%
stores
& chains
Flooring
20%
stores
20%
Home
improvement
centers
15%
Furniture
stores
& chains
18%
Department
stores
23%
Mass merchants
& clubs
19%
Catalogs
12%
Catalogs
13%
Department
stores
16%
Home
improvement
centers
21%
Department
stores
15%
Home
improvement
centers
20%
Mass merchants
& clubs
19%
Furniture
stores
& chains
20%
Flooring
stores
17%
Other 1%
Mass merchants
& clubs
20%
Furniture
stores
& chains
20%
Flooring
stores
11%
Flooring
stores
11%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$1,080.68
-2.5%
$1,108.39
($ millions)
$1,633.71
2.7%
$1,591.28
Coming In for a Soft Landing
By Jennifer Quail
NEW YORK–Executives in the floor covering industry have
been open about a fourth quarter that was less than pleasing. Many saw sales drop, a bit unexpectedly, and are hoping
things will pick up again with the onset of the new year.
Combating that from the retailers’ point of view was a
positive business in the area of hard flooring. At winter
markets, vendors noted that while retailers’ business
in soft flooring may have slipped slightly or stayed flat
for the year, their hard flooring business was up and it
was helping keep their mood lighter when they headed
to shows in January and February.
Handmade Area Rugs
The hand-tufted segment of this category was in the hot
seat last year, growing more quickly than its hand-knotted
cousins and increasingly showing a higher level of quality. question of who, in fact, will actually make these rugs
Executives have noted factories becoming “more in the future. The prevalence of younger generations
sophisticated in the way they make hand-tufted rugs. of weaving families wanting to step beyond the family
They’re constantly improving the technolbusiness and do such things as go to college
STATE
ogy and getting better detail, so the value is
and work in business and varied profesconstantly improving,” one vendor said.
of the industry sional markets is taking a slow, steady toll
Last year continued with the problematic
on the overall availability of the product
oil prices for the synthetic market and manufacturers of and the talent available for the future of the category.
hand-tufted wool rugs wisely took advantage, bulking
“There are fewer people willing to make hand-knotup their assortment and design variety and garnering a ted rugs,” said one executive. “China will start making
good portion of the midpriced market in the meantime. less and less. India will continue to make them, but the
While some in the business maintain that a well-made prices will go up.”
synthetic rug is a better buy than a lower-end wool prodIn an effort to draw more consumers into the handuct, the fact remained that when consumers were faced knotted category, some vendors made the move to comwith the two choices in the stores, the idea of wool often missioning product with fewer knots per inch, a look
won them over.
that not only brought the price down, but often also
For the hand-knotted segment, there remains the
Continued on page 26
While sales in various rug categories slipped or stayed flat, hard flooring was up
24 HFN / February 26, 2007
the markets floor covering
Sales Come In for a Soft Landing Among the Various Segments
Continued from page 24
lends itself to the trend for traditional designs with a more casual presentation that
has prevailed in the marketplace of late.
Machine-Made Area Rugs
The hurdle here, of course, was the ever-escalating cost of raw materials as caused
by the meteoric rise in the price of oil. While vendors spent many months trying not
to pass along any of the added cost to their dealers, many eventually had to make the
move, raising prices as fairly as they could. Even though the
STATE
oil costs had stopped shooting skyward, most who had instiof the industry tuted wholesale cost increases had not yet felt the positive
effects in their raw material costs by year’s end and, therefore, had not yet seen the opportunity to bring prices back to pre-oil-drama rates.
With Georgia serving a massive chunk of this business in the manufacturing regard, some believe its contribution will only increase in the coming months.
“Domestic production should increase in 2007,” according to one executive, who
added imports would consequently decline. “More companies are now locating in
Georgia,” he said.
And while the Georgia business is a healthy and growing one, those companies
bringing much of their goods in from overseas are not necessarily anxious to leave
lower-cost labor any time soon.
The synthetic business also saw a boost that should continue coming in the way of
advancements in the area of indoor/outdoor carpeting and rugs. Products currently
available are a world away from the solid-colored, mild-on-the-details product of just
a few years ago. Last year brought outdoor area rugs in multiple colors with very
detailed designs, playing into the growing consumer affection for creating an entire
outdoor living space. Texture, too, has reared its head in this once cookie-cutter category, with high-low treatments and even cut pile starting to pop up.
26 HFN / February 26, 2007
Accent rugs Channels of Distribution
Other
1%
Specialty
stores
19%
Flooring
stores
1%
Other
1%
Specialty
stores
19%
Department
stores
9%
Department
stores
9%
Flooring
stores
1%
Mass merchants
& clubs
70%
Mass merchants
& clubs
70%
Retail Sales
2006
% change
2005
($ millions)
$1,073.81
0.5%
$1,067.95
Accent Rugs
While the category was essentially flat for the year, one thing that did seem to pick
up was a consumer-inspired vendor move to offering more in the way of runners and
unusual shapes and sizes. Often popping up to coordinate with popular contemporary designs already in their lineup, several vendors made the move to offer runners
for the first time, while others expanded the sizes of their rounds and mixed things
up a bit with octagons and other shapes not previously offered. The idea of cutouts
Continued on page 28
the markets floor covering
Sales Come In for a Soft Landing for the Various Rug Categories
Continued from page 26
was even put into play by at least one company, which used the effect to further
accent scalloped and otherwise angled edges. Executives
STATE
said retailers came to them saying their customers were
asking for hallway runners and other shapes that would of the industry
coordinate better with their transitional or contemporary decorative styles, as opposed to the traditional designs that once ruled this
segment.
Washable Rugs
Still garnering much of its business from the seasonal and themed accent rugs,
the category experienced a slight bump up for the year. Companies found success
with the themed route, as it, as always, is a basic guarantee the customer will be
back for more in the next season or holiday or when they change out their general
decorative theme again.
Washable rugs, as they have previously been the only acceptable product for
outdoor weather or splashed-upon kitchens and bathrooms, could be the one area
not thrilled with the escalating growth of the market for indoor/outdoor area rugs,
but results in that vein have yet to register. n
28 HFN / February 26, 2007
washable rugs Channels of Distribution
Other 2%
Catalogs 3%
Home improvement
centers 5%
Department
stores
17%
Other 1%
Catalogs 3%
Home improvement
centers 5%
Department
stores
19%
Specialty
carpet stores
18%
Specialty
carpet stores
17%
Mass merchants
& clubs
56%
Mass merchants
& clubs
54%
Retail Sales
2006
% change
2005
($ millions)
$831.85
4.0%
$799.86
the markets tabletop
crystal Channels of Distribution
Other
5%
Catalogs
8%
Other
8%
Catalogs
6%
Department
stores
45%
Department
stores
46%
Specialty
stores
40%
Specialty
stores
42%
Fewer Places
At the Table
By Allison Zisko
Retail Sales
2006
% change
2005
($ millions)
$667.07
3.5%
$644.51
glassware Channels of Distribution
Other
4% Department
stores
4%
Other
4% Department
stores
4%
Specialty
stores
31%
Specialty
stores
30%
Mass merchants
& clubs
61%
Mass merchants
& clubs
62%
Retail Sales
2006
% change
2005
($ millions)
$1,350.58
1.8%
$1,327.35
housewares dinnerware Channels of Distribution
Other 4%
Supermarkets/
drugstores 4%
Other 2%
Supermarkets/
drugstores 4%
Department
stores
9%
Department
stores
8%
Specialty
stores
26%
Specialty
stores
24%
Mass merchants
& clubs
59%
Mass merchants
& clubs
60%
Retail Sales
2006
% change
2005
($ millions)
$1,170.79
4.3%
$1,122.16
upstairs dinnerware Channels of Distribution
Other
12%
Supermarkets/
drugstores
5%
Other
10%
Supermarkets/
drugstores
5%
Department
stores
40%
Department
stores
45%
Specialty
stores
40%
Specialty
stores
43%
Retail Sales
2006
% change
2005
($ millions)
$803.82
0.8%
$797.18
40 HFN / February 26, 2007
NEW YORK–It was another hand-wringing year for tabletop executives, as sales remained flat at $4.9 billion. The challenges facing this business are well-documented
and oft-repeated: change in consumer lifestyles (not a new
concern), rising raw material costs (which were significant in
STATE
2006), consolidation on both the retail and vendor fronts.
of the industry
It is perhaps this last factor that currently weighs most
heavily on executive minds. While Lifetime Brands has recently scooped up numerous ailing tabletop companies and shows promise of turning them around, there
are several other large, big-brand companies—as well as large, behind-the-scenes
companies—that continue to struggle. Competition is good for any industry, and the
trials of any one tabletop business impacts them all. On the retail end, the Macy’s
Home Store business is the one most closely watched, discussed, parsed and analyzed. The emergence of Martha Stewart at Macy’s will further that analysis.
At a crossroads, tabletop companies have begun to take action. They have adopted
different strategies. Some hew close to their core business and focus on fine-tuning
their channels of distribution. Others have expanded into ancillary businesses. A
few have created new brands that give them entree into new areas at retail. Virtually
all of them are focused on the casual end of the market.
Crystal
Crystal faced a double-whammy. As a key part of the formal, upstairs market it has
suffered from the same declining consumer interest the other upstairs categories
have endured. Crystal is also one of the most price-sensitive tabletop categories because of an unfavorable currency exchange (much of it is still made in Europe) and
because of soaring energy costs. Crystal has to be heated at very high temperatures
for long periods of time, which is expensive. And when an industry leader suffers—in
this case, Waterford—the whole industry feels the pain.
The biggest issue facing the crystal industry, according to one vendor, is the use of glass
versus the use of crystal and the difference in pricing that results. “Consumers often
can’t tell the difference in the quality or value,” the vendor said.
Nonetheless, the crystal business posted a very slight gain in sales last year, and
there is indication that it could enjoy a revival of sorts. Young brides are showing
more interest in crystal, according to Antonia van der Meer, editor in chief of Modern
Bride and Elegant Bride, and they have a better understanding of quality. But they
approach it in a different way than their predecessors and are not afraid to pair it
with casual dinnerware. “They are starting to mix and match … they don’t see a
disconnect between low and high end,” van der Meer said.
Crystal still draws newcomers into the fold; at the recent Ambiente fair, Royal
Worcester offered a line of crystal stemware that it may bring to the United States,
while Waterford’s alliance with fashion designer Marc Jacobs has the potential to attract new consumers. Waterford also reported strong Christmas sales in the American division of Waterford Crystal.
Glassware
Consumer interest in casual entertaining benefited the glassware category, as barware and accessories saw healthy growth over the past year, especially in such areas
as stemless and wine-specific glasses.
Consumers are becoming more sophisticated and educated about the wines they
drink, resulting in the increase in varietal wine glasses. Stemless wineglasses, which
started out at the high end, have now trickled down to all levels of retail. The emphasis
on wine has begun to shift over to beer as well, as more beer glasses and drinking sets
seem to be on the rise. Expanded entertaining sets, from tailgating to backyard barbecues to movie-watching groupings, are also big. In dinnerware, clear glass is still the
clear standard, and the attention recently given to colored glass has begun to wane.
Continued on page 42
Consolidation in the industry made the biggest
impact on sales, which were flat for the year
hfnmag.com
the markets tabletop
melamine dinnerware Channels of Distribution
Specialty
stores
15%
Department
stores
4.5%
Department
stores
5%
Specialty
stores
16%
Mass merchants
& clubs
80.5%
Mass merchants
& clubs
79%
Retail Sales
2006
% change
2005
($ millions)
$48.14
-1.0%
$48.63
stainless-steel flatware Channels of Distribution
Other 1%
Catalogs 4%
Supermarkets/
Department
drugstores 4%
stores
14%
Catalogs 4%
Supermarkets/
drugstores 3%
Department
stores
17%
Specialty
stores
24%
Specialty
stores
25%
Mass merchants
& clubs
51%
Mass merchants
& clubs
53%
Retail Sales
2006
% change
2005
($ millions)
$716.94
5.0%
$682.80
sterling-silver flatware Channels of Distribution
Other
12%
Department
stores
16%
Other
22%
Department
stores
18%
Catalogs
22%
Specialty
stores
40%
Catalogs
22%
Specialty
stores
48%
Retail Sales
2006
% change
2005
($ millions)
$104.40
-10.0%
$116.00
acrylic beverageware Channels of Distribution
Specialty
stores
17.5%
Department
stores
5%
Specialty
stores
17.5%
Mass merchants
& clubs
77.5%
Department
stores
5%
Mass merchants
& clubs
77.5%
Retail Sales
2006
% change
2005
($ millions)
$107.02
-2.0%
$109.20
42 HFN / February 26, 2007
Fewer Places at the Table
Continued from page 40
Glassware, while posting positive numbers, has been hurt by rising materials and
labor costs in both the Far East and in Europe, where the value of the euro has hurt
those who do business with the United States. This has forced more design and lifestyle presentations, one vendor pointed out. The American marketplace is resistant to
price increases, said another. “The real challenge is to stay profitable in this environment while keeping up with a constantly evolving retail marketplace.”
STATE
Dinnerware
The growing divide between upstairs and downstairs din- of the industry
nerware became more evident last year: Housewares dinnerware posted a 4 percent gain, while upstairs dinnerware was flat. Department
stores slightly increased their percentage of the housewares dinnerware business,
while they lost about 5 percent of the upstairs business (which was picked up by
specialty stores and the “other” category). Indeed, at trade shows last year, much of
the focus was on the casual market, not the formal one. Some of the formal houses
did not even introduce formal patterns.
“Formal has almost become a dirty word based on how people live their lives today,
especially with Gen Now,” said one vendor. “One challenge is to be cognizant of the
shift from fine to casual in how you approach our product lines. Another is that the
life cycle of patterns has greatly decreased over the last several years.”
As a result, many upstairs tabletop companies have either brought housewares practices upstairs, such as boxing bone china in expanded sets, or brought their products, in
a different form, to the housewares department. For example, plain white bone china is
being presented as a durable, beautiful product that can and should be used everyday.
Flatware
Like dinnerware, the flatware category was pulled between two opposite poles:
Stainless-steel sales were healthy, while sterling-silver sales were weak. And silverplate, while the lucrative mainstay of a handful of high-end companies, has almost
ceased to exist as a percentage of overall tabletop business. HFN has dropped it from
its annual State of the Industry survey.
The good news is that stainless-steel flatware saw more fashion and innovation
as a category last year. The bad news is that the cost of raw materials has risen while
the consumer has been trained to buy more for less—more flatware in boxed sets
rather than by five-piece settings. But overall the category had the largest growth
increase (5 percent) in the tabletop industry for 2006.
As another example of fashion feeding into this category, licensing agreements
also seem to be on the rise, from Cambridge’s line for Fiesta to WMF’s recent Ambiente introduction of its $250-a-place-setting flatware from architect Zaha Hadid.
Vendors are also emphasizing style in their treatments of handles, which include
adding matte gold or graphite. And Lifetime Brands, which purchased Syratech last
year, has only begun to stamp its influence on the industry, having revived Sasaki’s
flatware business (at lower price points) and categorized its numerous other brands
from that acquisition, along with that of Retroneu and Excel. But the challenge for
flatware vendors overall will be to wean consumers off of the get-more-for-less path,
or it will be hard to make money.
Sterling-silver flatware took the hardest hit in sales last year, plummeting 10 percent to $104 million. Department stores lost a small share of the business, while
specialty stores, perhaps one of the last viable channels for this business, decreased
their percentage of the business to 40 percent from 48 percent the year before. The
loss was picked up by the “other” category, which, for this category, can be considered the Internet.
Even for a category on the decline, sterling-silver sales suffered last year, primarily
because the cost of silver rocketed to its highest level in many years. Although some vendors reported a steady or increased business in the third and fourth quarters despite this
dramatic price increase—the assumption being that it increased the value of sterling in
consumers’ eyes and prompted them to buy before prices went up further—it evidently
was not able to overcome the general waning interest in this high-end business.
Melamine and Acrylic
After years of steady and robust growth, both melamine dinnerware and acrylic
beverageware experienced a dip in sales last year, most probably due to rising energy and raw material costs. It apparently has not dampened enthusiasm for the
category, however, as more and more vendors enter the business with a growing
number of fashion-forward designs (though the bulk of the business remains, for
the time being, in the mass channel). Plastic dinnerware can be officially considered
a legitimate tabletop category, one that will most likely fuel growth in the years to
come. — Andrea Lillo contributed to this report.
hfnmag.com
the markets housewares
cookware (metal only) Channels of Distribution
Other
14%
Other
15%
Department
stores
17%
Specialty
stores
23%
Supermarkets/
drugstores
13%
Department
stores
18%
Specialty
stores
21%
Mass
merchants
& clubs
33%
Mass
merchants
& clubs
32%
Supermarkets/
drugstores
14%
Retail Sales
2006
% change
2005
($ millions)
$1,968.46
5.5%
$1,865.84 7
Bakeware (metal only) Channels of Distribution
Other
4.5% Department
stores
Specialty
8.5%
stores
17%
Other
8%
Specialty
stores
17%
Mass
merchants
& clubs
45.5%
Supermarkets/
drugstores
24.5%
Department
stores
10%
Mass
merchants
& clubs
42%
Supermarkets/
drugstores
23%
Retail Sales
2006
% change
2005
($ millions)
$536.06
4.0%
$515.44
Coffee makers Channels of Distribution
Other 7%
Catalogs 3% Department
stores
Specialty stores
15%
13%
Supermarkets/drugstores
4%
Other 7%
Catalogs 3%
Department
stores
Specialty stores
15%
10%
Supermarkets/drugstores
4%
Mass merchants
& clubs
58%
Mass merchants
& clubs
61%
Retail Sales
2006
% change
2005
($ millions)
$572.69
6.5%
$537.74
Design, New Ideas
NEW YORK–Even though there were plenty of factors that would normally hamper
sales growth, the housewares industry managed to boost its growth rate in 2006.
Overall industry sales rose by 4.3 percent last year, bettering the 3.9 percent increase
recorded in 2005, finishing at nearly $17.4 billion.
Design and innovation piqued consumers’ interest in merchandise in all of these
product sectors. In several housewares segments, the buzz created by design and
new technologies enabled manufacturers to nudge up
STATE
price points on new merchandise. Consumers showed
themselves willing to pay the extra money as well, which of the industry
helped manufacturers on both the top and bottom lines.
The industry remains concerned about imports, high costs for raw materials and
retail consolidation. Price will likely continue to play a huge role as manufacturers
jockey for market share in 2007.
Cookware/Bakeware
Though rising raw material costs and other issues challenged the cookware and
bakeware industry last year, sales still saw growth in line with the other housewares
categories, with cookware at 5 percent and bakeware at 4 percent.
With so much selection of materials, designs and price points facing the consumer
today, manufacturers see a need to differentiate product and more clearly communicate the price/value relationship. As prices rise due to increasing raw material costs,
manufacturers also feel they have to provide more value as well, which can be done
with better design and marketing.
The possible health concerns with non-stick cookware is still mainly a non-issue
with consumers. However, some consumers have turned to other materials, such as
cast iron and copper. In bakeware, silicone is still a huge growth driver.
Small Electrics
Taken together, the small electrics segment registered a solid, if unspectacular, sales
gain in 2006. Combined sales for coffeemakers, toasters, blenders, food processors
and irons rose more than 6 percent ahead of their aggregate sales in 2005.
The surprising bright spot in this category was irons, whose sales leaped by 12
percent in 2006. Manufacturers and retailers have been stepping up their efforts
to highlight the new technologies, features and benefits available on recently introduced products.
Coffeemakers stepped up to a 6.5 percent increase in sales in 2006 from a 4.7 percent rise in 2005. Design and new features proved crucial to driving sales increases
in coffeemakers, blenders, food processors and toasters.
Cutlery
The cutlery business thrived last year, posting a more than 7 percent jump in sales.
Blenders Channels of Distribution
Other
9%
Toasters Channels of Distribution
Catalogs
3%
Other
13%
Department
stores
5%
Specialty stores
10%
Supermarkets/drugstores
3%
Mass merchants
& clubs
66%
Other
Catalogs 12%
2%
Department
stores
8%
Retail Sales
2006
% change
2005
($ millions)
$380.60
2.5%
$371.32
46 HFN / February 26, 2007
Specialty stores
18%
Department
stores
15%
Specialty stores
16%
Mass merchants
& clubs
58%
Specialty stores
9%
Supermarkets/drugstores
2%
Mass merchants
& clubs
67%
Other
15%
Department
stores
15%
Mass merchants
& clubs
54%
Retail Sales
2006
% change
2005
($ millions)
$517.59
5.1%
$492.47
Innovation created a buzz among consumers,
hfnmag.com
Irons Channels of Distribution
Spark Growth
The increase in raw material costs hasn’t had as much of an impact on this business
as it has in other sectors, enabling vendors to keep prices stable.
The category has attracted several new players recently, from both overseas and
domestically. Consumers have grown much more knowledgeable about the finer
points of cutlery use and maintenance, giving a boost to chef-endorsed lines as well
as professional quality blades.
At retail, department stores lost market share, while specialty stores and mass
merchants and clubs—representing opposite ends of the price point and quality
spectrum—enjoyed gains.
Kitchen Tools and Gadgets
The kitchen tools/gadgets sector followed a solid 5 percent pickup in sales in 2005
with an even stronger 7.2 percent gain last year. Along with the cookware market,
the tools and gadgets industry is enjoying growth from consumers’ heightened interest in cooking at home—especially in the area of gourmet cooking.
The specialty-store channel tacked on an impressive four percentage points to
its market share in 2006, reaching 30 percent. Specialty stores grabbed away market share in this segment from supermarkets and drugstores, whose share of sales
dropped five percentage points last year.
Food Storage
The food storage segment once again posted gains, following two years of solid increases in the category. Given that there were no changes in distribution share, the
3.5 percent increase in sales can be attributed to both price increases and volume.
The assortments at the stores have increased, as everyone from mass merchants
to catalog retailers showcase expanded configurations, multiple lines and more premium products. That trend is likely to continue, with a rash of even higher-end
products, from polycarbonates to vacuum-sealed goods, reaching the market.
Wire Storage
Wire storage continues to be the workhorse of the storage category, posting a 4.7
percent increase in sales—following a strong increase in 2005. Raw material price
increases have somewhat stabilized, and vendors already have passed along price
increases, so the gain in sales owes as much to consumers’ continued demand as any
other factor.
Vendors are still looking for ways to add innovation to the category to keep it from
becoming a commodity. Still, all is not ideal in the category as direct import shelving
is looming as a big issue for vendors. One industry executive said consumers may
demand and look for the product, but they often lack the knowledge about installation or components to use it correctly.
Continued on page 48
Food Processors Channels of Distribution
Catalogs
8%
Other
7%
Other
16%
Department
stores
17%
Department
stores
18%
Catalogs
5%
Specialty
stores
20%
Specialty
stores
15%
Mass merchants
& clubs
48%
Mass merchants
& clubs
46%
Retail Sales
2006
% change
2005
($ millions)
$158.17
4.7%
$151.07
leading to a 4 percent sales increase
hfnmag.com
Other 4%
Home improvement\ Department
centers 3%
stores
12%
Specialty stores 10%
Supermarkets/
drugstores
3%
Other 3%
Home improvement\ Department
centers 3.5%
stores
10%
Specialty stores 10.5%
Supermarkets/
drugstores
3%
Mass merchants
& clubs
70%
Mass merchants
& clubs
68%
Retail Sales
2006
% change
2005
($ millions)
$408.54
12.0%
$364.77
Cutlery Channels of Distribution
Other
1%
Other
1%
Department
stores
19%
Specialty
stores
43%
Specialty
stores
39%
Mass
merchants
& clubs
36%
Supermarkets/
drugstores
1%
Department
stores
25%
Mass
merchants
& clubs
34%
Supermarkets/
drugstores
1%
Retail Sales
2006
% change
2005
($ millions)
$425.37
7.5%
$395.69
Kitchen Tools & Gadgets Channels of Distribution
Other 1.5%
Catalogs 3% Department
stores
6.5%
Specialty
stores
30%
Other 1%
Catalogs 2% Department
stores
7%
Specialty
stores
26%
Mass
merchants
& clubs
40%
Supermarkets/
drugstores
24%
Mass
merchants
& clubs
40%
Supermarkets/
drugstores
19%
Retail Sales
2006
% change
2005
($ millions)
$1,049.86
7.2%
$978.89
Food Storage Channels of Distribution
Catalogs
9%
Home improvement
centers 3%
Supermarkets/
drugstores
26%
Catalogs
9%
Home improvement
centers 3%
Mass
merchants
& clubs
48%
Supermarkets/
drugstores
26%
Specialty
stores
14%
Mass
merchants
& clubs
48%
Specialty
stores
14%
Retail Sales
2006
% change
2005
($ millions)
$416.12
3.5%
$402.05
February 26, 2007/ HFN 47
the markets housewares
Design, New Ideas Spark Growth
Wire Storage Channels of Distribution
Other Department
1% stores
1%
Mass
merchants
& clubs
28%
Home
improvement
centers
53%
Other Department
1% stores
1%
Mass
merchants
& clubs
Home
28%
improvement
centers
53%
Specialty
stores
17%
Specialty
stores
17%
Retail Sales
2006
% change
2005
($ millions)
$986.14
4.7%
$942.17
Plastic storage Channels of Distribution
Home
improvement
centers
5%
Supermarkets/drugstores
12%
Specialty
stores
17%
Home
improvement
centers
6%
Supermarkets/drugstores
18%
Mass merchants
& clubs
66%
Specialty
stores
15%
Mass merchants
& clubs
61%
Continued from page 47
Plastic Storage
The plastic storage segment has settled down from its wildly fluctuating years, posting a modest 1.7 percent growth. Unlike last year, though, there was a marked shift
in distribution. Vendors’ desires to focus less on opening-price-point and commodity business showed most prevalently in the supermarket and drugstore channels,
down to 12 percent of the market. Home improvement centers declined for the same
reason, and because of their aim to upgrade their assortSTATE
ments to higher-end plastic and other storage materials.
Mass merchants and clubs picked up five percentage of the industry
points and now account for two-thirds of the business at
66 percent. Specialty stores also logged an increase, up to 17 percent of the market,
owing to their position as destination home stores and their focus on unique products unavailable in other channels.
Personal Care Products
The personal care category registered combined sales of nearly $2.2 billion in 2006,
up 4.5 percent over their combined sales in 2005. Massagers, with a 9 percent gain
in sales last year, registered the strongest performance of all of these categories.
Consumers have become increasingly aware of the general benefits of massage in
stress relief and in overall physical well-being.
The lackluster showing in men’s shavers stemmed from the fact that many consumers traded down in purchasing these products. In addition, many men have
begun to grow their facial hair, and are thus looking for products that trim and shape
facial hair, rather than shave it off. Hair-styling appliances achieved an increase of
6.5 percent in dollar sales, in spite of the fact that unit sales grew marginally.
Continued on page 50
Men’s Shavers Channels of Distribution
Others
7%
Specialty stores
14%
Retail Sales
2006
% change
2005
($ millions)
$1,379.46
1.7%
$1,355.73
Supermarkets/
drugstores
13%
Supermarkets/
drugstores
Department
11%
stores
26%
Specialty stores
19%
Specialty stores
19%
Mass merchants
& clubs
72%
Retail Sales
2006
% change
2005
($ millions)
$340.00
-1.0%
$343.40*
*REVISED
Women’s Shavers Channels of Distribution
Mass merchants
& clubs
43%
Mass merchants
& clubs
43%
Supermarkets/drugstores
10%
Mass merchants
& clubs
66%
Other
1%
Department
stores
24%
Department
stores
4%
Supermarkets/drugstores
9%
Massagers Channels of Distribution
Other
1%
Others
8.5% Department
Specialty stores stores
4%
5.5%
Retail Sales
2006
% change
2005
($ millions)
$480.95
9.0%
$441.24
Other
3.5%
Department
Specialty
stores
stores
3%
2.5%
Other
6% Department
Specialty
stores
stores
2%
2%
Supermarkets/
drugstores
22.5%
Supermarkets/
drugstores
24%
Mass merchants
& clubs
66%
Mass merchants
& clubs
68.5%
Retail Sales
2006
% change
2005
($ millions)
$55.00
0.0%
$55.00*
*REVISED
48 HFN / February 26, 2007
hfnmag.com
the markets housewares
Design, New Ideas Spark Growth
Continued from page 48
Hair Dryers Channels of Distribution
Specialty Department stores 1%
stores Other 1%
6% Catalogs 1%
Specialty Department stores 1%
stores Catalogs 1%
5%
Supermarkets/
drugstores
26%
Supermarkets/
drugstores
24%
Mass merchants
& clubs
67%
Mass merchants
& clubs
67%
Retail Sales
2006
% change
2005
($ millions)
$327.73
5.0%
$312.12
Hair Styling appliances Channels of Distribution
Other
1.5%
Specialty
stores
3.5%
Other
2%
Specialty
stores
4%
Department
stores
1%
Supermarkets/
drugstores
22%
Department
stores
1%
Supermarkets/
drugstores
22%
Mass merchants
& clubs
72%
Vacuum Cleaners
Handheld and stick vacuums sucked up sales in 2006, thanks to an upscale push.
Historically relegated to the commodity ranks, these categories have migrated to
higher ground of late, led by performance-driven models, fashion-forward products
and stick vacuums that focus on convenience features.
Hand vacuum sales finished the year with a bang, due in part to the introduction
of Dirt Devil’s new Karim Rashid-designed Kone, said James Krzeminski, executive
vice president of sales, marketing and product development at Bissell. “Kone drove
the fourth quarter and the whole year,” he said.
STATE
Extractors recorded a slight sales decline, due to a slowdown from major extractor player Hoover, which was of the industry
somewhat neglected as it was being positioned for a sale
by parent Whirlpool. “A lot of [Hoover extractor] floor spots had been reduced over
the past year,” said Rob Newcombe, director of marketing at Electrolux.
Canisters led floor care gains for the year, driven in part by heavy promotion by
“dominant player” Sears with its Kenmore brand, Newcombe said. He added that
new innovative launches in the category, such as Electrolux’s Twin-Clean Bagless
Canister with self-cleaning filters, also spurred sales.
Home Environment
Home comfort product makers enjoyed comfortable top-line gains over the past year.
However, two of the three categories—air purifiers and heaters—underperformed
their 2005 volume gains.
Despite the air purifier sales pace having slowed from 2005 double-digit gains,
Continued on page 53
Upright Vacuum Cleaners Channels of Distribution
Mass merchants
& clubs
71%
Other
19%
Retail Sales
2006
% change
2005
($ millions)
$539.62
6.5%
$506.69
Department
stores
11%
Home
improvement
centers
9%
Oral Care Channels of Distribution
Other
4% Department
stores
3%
Supermarkets/
drugstores
43%
Other
4% Department
stores
3%
Supermarkets/
drugstores
43%
Mass
merchants
& clubs
50%
Mass
merchants
& clubs
50%
Other
19%
Mass
merchants
& clubs
53%
2006
% change
2005
($ millions)
$443.43
2.0%
$434.74
Door to door 2%
Appliance stores 4%
Vacuum shops 4%
Door to door 1%
Appliance stores 4%
Vacuum shops 3%
Retail Sales
2006
% change
2005
($ millions)
$2,590.85
3.7%
$2,499.21
Stick & Handheld vacuum cleaners Channels of Distribution
Other
20%
Department
stores
8%
Mass
merchants
& clubs
59%
Home
improvement
centers
9%
Other
22%
Mass
merchants
& clubs
57%
Home
improvement
centers
9%
Door to door 1%
Appliance stores 2%
Vacuum shops 1%
50 HFN / February 26, 2007
Mass
merchants
& clubs
51%
Home
improvement
centers
8%
Department
stores
8%
Retail Sales
Department
stores
12%
Door to door 1%
Appliance stores 2%
Vacuum shops 1%
Retail Sales
2006
% change
2005
($ millions)
$325.96
5.3%
$309.46
hfnmag.com
Cannisters Channels of Distribution
Other
25%
Humidifiers Channels of Distribution
Other
24%
Department
stores
35%
Door to door
11%
Appliance stores 2%
Vacuum shops 10%
Department
stores
34%
Door to door
15%
Mass
merchants
& clubs
17%
Appliance stores 2%
Vacuum shops 10%
Mass
merchants
& clubs
15%
Other
7%
Catalogs
5%
Other
8% Department
Catalogs
stores
6%
8%
Home
improvement
centers
20%
Department
stores
6%
Home
improvement
centers
20%
Mass
merchants
& clubs
39%
Mass
merchants
& clubs
44%
Supermarkets/
drugstores
18%
Supermarkets/
drugstores
19%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$294.63
5.5%
$279.27
($ millions)
$435.49
5.0%
$414.75
Extractors Channels of Distribution
clocks Channels of Distribution
Department
stores
10%
Other
24%
Other
27%
Mass
merchants
& clubs
47.5%
Home
improvement
centers
11%
Department
stores
10%
Mass
merchants
& clubs
45%
Home
improvement
centers
10%
Catalogs 3%
Appliance stores 4.5%
Catalogs 4%
Appliance stores 4%
Other
4.5%
Department
Catalogs
stores
9.5%
2%
Specialty stores
21.5%
Other
5% Department
stores
Catalogs
2%
11%
Specialty stores
22%
Mass
merchants
& clubs
61%
Supermarkets/
drugstores
1.5%
Mass
merchants
& clubs
59%
Supermarkets/
drugstores
1%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$573.21
-1.0%
$579.00
($ millions)
$651.87
-0.5%
$655.15
Scales Channels of Distribution
Air cleaners Channels of Distribution
Other
5%
Catalogs Department
stores
5%
15%
Home
improvement
centers
20%
Other
8%
Catalogs
4%
Home
improvement
centers
20%
Mass
merchants
& clubs
35%
Specialty
stores
15%
Department
stores
15%
Other
9%
Home improvement
centers 3.5%
Specialty stores
17.5%
Mass
merchants
Specialty
& clubs
stores
42%
9%
Supermarkets/drugstores
2%
Supermarkets/drugstores
5%
Other Department
4.5% stores
Home improvement 5.5%
centers 4%
Supermarkets/
drugstores
8%
Department
stores
5.5%
Specialty stores
17.5%
Mass
merchants
& clubs
60.5%
Mass
merchants
& clubs
60.5%
Supermarkets/
drugstores
4%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$493.29
5.0%
$469.80
($ millions)
$223.99
2.4%
$218.74
Heaters Channels of Distribution
Laundry Care Channels of Distribution
Other 3%
Catalogs 8%
Department
stores
8%
Other 4%
Department
Catalogs 6%
stores
6%
Mass
merchants
& clubs
41%
Home
improvement
centers
40%
Mass
merchants
& clubs
43%
Home
improvement
centers
41%
Other
2%
Other
4%
Home
improvement
centers
23%
Home
improvement
centers
21%
Mass
merchants
& clubs
50%
Specialty
stores
21%
Specialty
stores
23%
Retail Sales
2006
% change
2005
Retail Sales
2006
% change
2005
($ millions)
$343.52
5.0%
$327.16
($ millions)
$454.62
5.0%
$432.97
52 HFN / February 26, 2007
Mass
merchants
& clubs
56%
hfnmag.com
housewares the markets
Design Helps
Spark Growth
Continued from page 50
a handful of new players stepped into the category. Companies
such as Korean manufacturer Phileo have recently launched
models in the United States, while established home environment companies such as WindChaser Products and Vornado
have recently added the category.
Industry executives expect the new entrants to push prices
down, squeezing sales dollars. However, air purifiers are poised for continSTATE
of the industry ued growth, due to increasing allergy
and asthma concerns.
The unseasonably warm start to
the 2006 winter may have slowed heaters’ sales pace over the
prior year, but consumer awareness about energy efficiency
was enough to keep sales in the black. Vendors have capitalized
on consumer price sensitivity to energy costs by emphasizing
space heaters’ energy-efficiency benefits on their packaging.
Humidifiers in 2006 outpaced the prior year’s sales gain. The
hot summer coupled with new digital technology helped boost
volume.
Clocks
The clock industry once again saw a drop in sales, although the
decline was less than last year’s. While raw material prices continue to affect the market, vendors’ biggest challenge is the rise
of direct imports by retailers, which creates more competition
and greater pressure on prices.
The need for vendors to offer stylized clocks at sharp prices
can be seen in the breakdown of channels of distribution. While
department stores remained unchanged, mass merchants, clubs
and supermarkets/drugstores all saw their shares increase.
Meanwhile, specialty stores and catalogs declined, as many category killers now source their own units. Increased competition
and pricing pressures are expected to push manufacturers to
start selling directly to consumers via their Web sites.
Scales
Following last year’s trend, the scale business was up again,
posting a sales increase of 2.4 percent. The biggest change was
a tremendous increase in supermarket/drugstore shares, which
coincided with a significant drop in the “other” channel.
Supermarkets and drugstores saw their share rise to 8 percent
of the market, doubling their share from the previous year. While
the volume increase is significant, the corresponding increase in
total category sales was small as this channel has pushed more
opening-price-point models. Mass merchants and clubs still
dominate the category, with nearly 61 percent of the market, unchanged from last year, and specialty stores are steady at 17.5
percent of the market.
Laundry Care
The laundry care segment continues to be a significant bright
spot in the industry, once again posting solid gains. The category
was up another 5 percent this year, owing to consumers’ continued desire to upgrade their laundry room products.
In a departure from many home care product categories,
mass merchants’ share actually declined for the second year
in a row, dropping from 56 percent in 2005 to 50 percent in
2006. At the same time, specialty stores and home improvement centers’ shares increased, both rising from 21 percent
to 23 percent.
Growth in the category has come from other areas beyond
channel shifts. More vendors are focusing on premium and commercial quality goods, such as stainless-steel sorters and valets.
Decorative products, including canvas hampers, also are fueling
strong sales. n
hfnmag.com
February 26, 2007/ HFN 53
the markets major appliances
Beating the House With White Goods
electric & gas appliances Channels of Distribution
Other
9%
Other
10%
Sears
30%
Home
improvement
centers
28%
Mass
merchants
& clubs
5%
Appliance
stores
28%
2006
Retail Sales
Sears
33%
Home
improvement
centers
26%
Mass
merchants
& clubs
4%
Appliance
stores
27%
% change
2005
2.0%
$3,515.38
($ millions) $3,585.69
room air conditioners Channels of Distribution
Other
8%
Home
improvement
centers
30%
Appliance
stores
11%
Sears
15%
Home
improvement
centers
29%
Mass
merchants
& clubs
37%
2006
Retail Sales
Other
5%
Sears
14%
Appliance
stores
16%
Mass
merchants
& clubs
35%
% change
2005
32.5%
$1,603.99
($ millions) $2,125.29
refrigerators Channels of Distribution
Other
7%
Other
10%
Sears
35%
Home
improvement
centers
27%
Appliance
stores
23%
Mass
merchants
& clubs
8%
2006
Retail Sales
Sears
34%
Home
improvement
centers
26%
Appliance
stores
23%
Mass
merchants
& clubs
7%
% change
2005
5.5%
$6,588.06
($ millions) $6,950.40
laundry appliances Channels of Distribution
Other
10%
Other
13%
Sears
35.5%
Sears
35%
Home
improvement
centers
27%
Home
improvement
centers
27.5%
Mass
merchants
Appliance & clubs
7%
stores
21%
Retail Sales
2006
Appliance
stores
19.5%
Mass
merchants
& clubs
4.5%
% change
2005
5.4%
$6,528.94
($ millions) $6,878.24
54 HFN / February 26, 2007
By Michael Rudnick
kitchen, consumers are seeking colors and more
design-forward front-load models.
“Front-load is the product line with sex appeal.
… Like automobiles, buy with your eyes first, then
check on the data,” said Tim Kavanaugh, director of marketing and merchandising at LG Electronics. “Front-load is improving aesthetically as
well as technologically. Top-load, by comparison
is much more staid and traditional,” he said. He
added that because front-load washers and dryers
are generally double the average ticket of a topload units, sales within this group help to push
dollar volume in the overall laundry category.
NEW YORK–Major appliances thrived in 2006
despite the housing slowdown, leading all home
furnishings categories for a second consecutive
year with a 7.1 percent sales gain.
As home sales slowed, consumers shifted their
focus to improving their existing houses with a
focus on the kitchen as the center of entertainment. Kitchen remodeling has meant new, higherticket step-up appliances, translating to greater
dollar volume. Rising energy-efficiency concerns
sparked by high fuel costs drove consumers to
seek out energy-saving appliances, which was
most evident in laundry upgrades.
Electric and Gas Cooking Appliances
Department stores, while remaining the chan- Cooking appliances reported relatively modest sales
nel sales leader, continued to cede major appli- gains in 2006 and cooled off from the 2005 pace.
ance market share to home improvement centers,
“Cooking appliances started to get soft in the
mass merchants and wholesale clubs.
second quarter,” said BrandSource’s
STATE
Lowe’s and The Home Depot have
White. He said that interest rates
grown white good share via aggres- of the industry impact cooking more than any other
sive store expansion and a focus on
home category, due to these products’
mid to higher-end newer major appliance brands, strong tie to home remodeling. As interest rates
while Sears has not been able to open off-the-mall began to creep up in 2006, remodeling projects
stores fast enough to compete with the home im- funded by home refinancing slowed, he said.
provement competition and has stuck with older,
While cooking appliances may not have had as
opening-price-point midmarket brands, as earlier hot sales, their white goods peers, volume stayed
reported by HFN.
positive, due in part to a focus on premium and
mass premium step-up units and technologies, such
Room Air Conditioners
as steam ovens and induction cooking. “Steam is
This seasonal category climbed with the thermom- coming. Everyone is looking at some kind of steam
eter in 2006, leading all home furnishings catego- oven this year,” White said, adding that this is beries with a nearly 33 percent sales gain. “[Room ing fueled by a focus on healthier cooking.
air] sales gains on the retail side were strictly due to
Induction cooking, which uses magnetic waves
warmer weather,” said John White, general man- to cook food, while not a new technology, is one that
ager for appliances at BrandSource. He said that a handful of manufacturers have been trying to relast year’s warm summer allowed retailers to clear vitalize over the past couple of years. “America is
excess inventory off of their shelves that had been a gas [cooking appliance] market. People are lookclogging up the shipment pipeline for quite some ing for something as powerful as gas, but easier to
time. “The shipment side this year will be good, be- clean and more efficient,” said Gaggenau’s general
cause last year everyone got rid of inventory they manager of North America Mark Oliver-Schneider,
were sitting on for the past three years,” he said.
of induction cooking. “In five years, 50 percent of
Independent retailers like BrandSource may the premium glass/ceramic market will be inducnot have reaped the benefits of the room air sales tion,” he claimed.
boom as the channel has shied away from the category of late, White said. He explained that the Refrigerators
category has become entrenched with smaller Refrigerator sales were nothing but cool in 2006,
Asian manufacturers that sell via private-label as the category was the number-two gainer among
agreements with large national retailers such as major appliances.
The Home Depot and Lowe’s, leaving indepenLike room air manufacturers, refrigerator
dent retailers at a disadvantage.
makers have the hot 2006 summer to thank for
a portion of replacement sales, White said. “Hot
Laundry Appliances
summers can put extreme pressure on compresFront-load washers and dryers were at the front sors, causing a higher failure rate,” he said.
of the laundry pack, as these higher-end, energyDollar volume growth can also be attributed to a
efficient washers and dryers continued to drive continued migration to higher-ticket bottom-freezsales in 2006. “We are seeing a bit of [laundry] er and french-door models from the more tradiresurgence given front-load and new colors have tional top-freezer and side-by-side configurations.
been introduced to the laundry category, helping Kavanaugh said that french-door refrigerators,
to spark sales,” said Peter Goldman, president of which carry a slightly higher price tag than bottom
home at the NPD Group. He explained that as freezers, are poised to be the big growth category in
laundry appliances in new homes move out of the 2007 as more manufacturers launch models with
basement and into more visible areas such as the ice and water dispensers in the door. n
Despite the housing slowdown, major appliance sales
thrived in 2006 with a 7.1 percent sales gain
hfnmag.com