The third node
Jennifer Marks -- Furniture Today, March 26, 2004
A year ago, this space was devoted to a eulogy of sorts. It had become clear that Pillowtex was entering what would almost certainly be its final New York Home Textiles Market — and it was just as unclear how long it would take for the denouement to play out.
The wheel turns, and now the venerable Royal Velvet label is back at market, making its debut this week as an independent brand. Owned by a consortium of liquidators and other investors, and managed by a brand-building firm, Royal Velvet is an old-fashioned brand that's now going to market in a new-fashioned way.
The label has crossed over from the traditional breeding ground for brands — the established home textiles producer — into the rapidly emerging "third node" of supply to retail: the brand orchestration house that marries label, source of supply and channel of distribution in a package deal.
Think Isaac Mizrahi and Target, a match made by Earthbound LLC, which is now in charge of setting the Fieldcrest and Charisma brands back on their way.
This new approach to bringing product to market challenges some long-held assumptions in the home textiles industry. In this regard, the case of Royal Velvet is exemplary.
Its owners, the companies that formed GGST, do not produce consumer products (save one investor, Franco Manufacturing.) Its management firm, Group 3 Design, does not produce consumer products. It oversees development, marketing and placement of branded programs. Its major licensee, Li & Fung, does not produce consumer products. It is, by its own description, "a global consumer products trading company managing the supply chain for high-volume, time-sensitive consumer groups."
To the notion that brands no longer matter, this segment of the market argues otherwise. As an executive from Group 3 noted in an interview with HTT earlier this week, "If brands don't matter, why are so many people licensing dead designers?"
To the idea that the majority of one's marketing dollars must be handed over to retailers for markdown money and co-op spending, the brand-development segment stresses the importance of taking one's marketing message direct to consumers.
To the belief that product focus should be narrow and deep, it lobbies for a bigger vision. If bath towels and shower curtains, why not soap and candles? If window panels, why not hardware, blinds and shutters? If table linens, why not dinnerware, flatware and glassware?
Much attention has been paid to the erosion of the traditional mill sector. Far less has been given to the entity rising up to fill the void. For traditional home textiles suppliers, the third node stands as both a competitive threat and a potential ally. It may also have some lessons to teach along the way.
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