High Priced Dec Pillows Move at Retail as Consumers Look to Dress up Home Affordably
Cecile Corral -- Furniture Today, November 25, 2011
NEW YORK - It was once said by an industry veteran that decorative pillows are like lipstick for the sofa.
Nail polish might also work as a metaphor here.
The parallels between home fashions and cosmetics, especially in a sluggish economy, make perfect sense. According to Time magazine's recent "Special Money Issue" of Oct. 10, lipstick sales have increased 14% this year and nail polish sales are up an even more impressive 54%. "Makeup is a cheap thrill for penny-pinched shoppers," Time noted.
The same theory holds for dec pillows when consumers are looking to affordably liven up their surroundings at home - after all, they are spending more and more time there because their dining-out budget has shrunken.
That's what some of the major decorative pillow suppliers are seeing this year and have been experiencing for almost two years.
"Dec pillows are indeed lipstick for the sofa," said Loren Sweet, president of Carson, Calif.-based Brentwood Originals, long a top category player in the industry with $138 million in dec pillow sales in 2010.
"People are still shopping as they did, but they are spending more money, which drives them into decorative accessories. And within that pocket, they are trading into nicer things," Sweet said. "That is one reason the dec pillow business is good now - people are willing to buy a $15 or $20 dec pillow because it's a new look but still cheaper compared to new drapes or a new sofa or painting the house."
He said Brentwood's sales have had "the best month in September since August 2008. It's the combination of some strong fashion that has really kicked in for us at higher price points and some nice performance by updated basics that are also kicking in well," Sweet continued. "We are selling higher price points across board - from basics and fashion merchandise."
Sweet explained the higher price point trend is not occurring strictly at more upscale retail venues. Rather, channels ranging from discounters to department stores are testing and then committing to better goods at higher tickets - and selling them.
"If you go to any of [two mid-tier department store retailers] stores, you will see their fashion people want looks you'd typically find at [two high-end specialty retailer] stores. It's the conventional retailers who more and more want to achieve that kind of look but develop that look in house. It's essentially our same customers buying the new products and trading up in dec pillows."
Joy Stewart, president of the second largest dec pillow supplier in 2010 with $61 million in category sales - Los Angeles-based Spencer Enterprises Ind. - confirmed "trade up" in process "is definitely happening, and happening at every level of retail, from close-outs to higher-end people."
This incline began when the costs of cotton and raw materials and other manufacturing and sourcing expenses started to escalate about a year ago.
"I have been in dec pillows for 10 years, and I can remember in 2004 when we used to be able to sell a $39.99 pillow to [a mid-tier off-price department store chain] and [a major off-price chain] all day long," Stewart recalled.
But 2008's recession knocked price brackets down to the $14.99 and $19.99 levels for fashion product.
Until now, Stewart continued. "We've started seeing success again at $24.99 and $29.99 as well. Everyone is trading up, increasing by about $2 to $5, depending on the retailer and where you work."
Offering more color on the trend at retail was David Frankel, president of New York-based Arlee Home Fashions, which in 2010 posted the third highest category sales at $52 million.
"The decorative pillow retail market place is divided between those that are pure planogram and those that flow an ever-changing mix of product. Obviously, the second group provides us with more opportunity to try new items more easily and regularly," he said. "We have focused more effort on the highly designed pillows as they have greater perceived value and hence can garner higher retails. As retailers work to freshen their assortment they are looking to add more pattern and print in a less embellished way. ‘Safer' patterns, mainly in chenille, give the consumers pops of color while not being too design-specific."
But there are other things to consider and be concerned about lately that have some negative impacts on the category, Frankel noted.
"The marketplace continues to be challenging. The yuan continues to move up against the dollar at a steady rate. The mills and vendors in China have reduced their own design and development efforts, so it is more challenging to find new and different products."
Stewart is experiencing the same sourcing challenges. Even though the consumer is willing to pay higher price points, she said, "you still have to make it the right size and fill for that retailer. It's just become more difficult from a sourcing perspective because it means now we have to take a fabric that is too heavy or expensive and change it into something that can sell for the right price."
But the effort pays off ultimately in most cases because it is encouraging the retailer to hit higher prices that haven't been touched for several years.
"You can't force [a mid-tier department store] into selling a $29.99 pillow," Stewart explained. "But they have a new threshold they can still meet, and if we reconstruct the product make it a little less heavy or use different yarns, we can get them to maybe $17.99 - which represents a step up for them from where they use to be, which was at $12.99 and $14.99."
Weightier fabrics are just some of the new styles working in favor of increasing price points. Prints are back after a hiatus of more than a decade, noted Neil Zuber, evp of New York-based HFI - last year's fourth largest dec pillow supplier with $31 million in sales.
The company recently doubled its dec pillow assortment by adding new outsourced varieties that retail partners requested from the company. Among them are printed linen styles.
"Our customers asked us to be more diversified. They were seeing these kinds of looks in India and China and so they asked us to add them to our line, so we took it upon ourselves to seek out and find lots of new designs," Zuber said. "It's a business that has become important to our customers. Jacquards and tapestries are not so important now as they were three years ago. Instead, the demand today is for prints again. I remember 15 years ago you couldn't give them away. But now, prints are making a big revival."
Corey Faul, president of Portland, Ore.-based Newport/Layton Home Fashions, commented on the evolution of the recent demand for printed pattern in the category.
"For a while, people seemed to find more perceived value in wovens and not in prints," said Faul. His company ranked in 2010 as the 2010's fifth largest category player with $22 million.
"But now seeing and more interested in decorating with pattern and you can certainly make more impact with pattern and print than you can with wovens," he continued. "And what has happened because of it is that business has absolutely improved. Our top-line sales are outstanding. Our margins are under pressure, and they are smaller than they were. But my volume is bigger."
Manual Woodworkers and Weavers (MWW) in Hendersonville, N.C. is seeing a different kind of trend emerging in its product sales.
Saverio Barbiere, vp of sales and marketing, said its shopper is bent on Made-In-America goods, which explains the company's bump up in sales of its new "ClimaWeave" all-weather indoor/outdoor pillows.
"[They] are gaining in popularity as more and more consumers look to expand their living spaces and time outside," Barbiere said. "The fact that our ClimaWeave pillows are made and printed in the USA is another strong selling features, as ‘Buy American' is gaining traction and resonating with consumers."
Another fashion trend moving for MWW lately, he noted: "Animal prints in their natural color or in wild neon chartreuse and purples and pinks are also very strong."
Because it targets the juvenile, tween and teen market segments, Dallas-based Brunton International sees a similar kind of design trend moving in the marketplace.
Roy Brunton, owner and president, said faux fur looks make up most of his sales, interpreted in a core palette of six bright colors - hot pink, aqua, lime, yellow, orange, and purple - with one recent "hot" addition: "Black. It's become very strong now for us, too," he said.
What Brunton does have in common with other dec pillow suppliers is that he, too, has achieved gains in retail price points.
"Our pillows run from $6 to $25 at retail, and we work with everyone from [single-price discount chains] to [mid-tier department stores]."
Brunton noted two forces in his business' favor in this otherwise negative economic climate.
"Parents and grandparents will do without themselves in tough economic times, but they will not do without for their kids or grandkids. And that gives us a unique niche in the business," he cited.
Secondly, Brunton said he has steered his business beyond the back-to-school season into a "year-round" category.
"Over the past seven years, we have been we have been working to change the perception that this is only back-to-school business," he explained. "We broadened our sales range by getting stores to test those same ideas in fuchsia, yellow, purple, lime in the fall when retailers were hesitant. But they tried it, and were successful enough so that the category has warranted a year-round presence.
Brunton added that his youthful and bright pillows "are sold more heavily in the holidays than back-to-school. Whereas our largest sales in the category used to be back-to-school, our sales are now higher in the"
Newport-Layton Home Fashions
Manual Woodworkers and Weavers, Inc
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