By David Gill
The U.S. economy may be sliding, but vendors of luxury textiles are hoping that consumers still desire high-end linens for their home.
Executives with manufacturers of luxury linens said they still see demand for their products. On the flip side, however, retailers of these products have adopted a cautious posture for the category, in particular regarding the need to stock up on these items. “The bigger problem is that stores are more and more not wanting to carry stock,” said Aaron Stewart, creative director with Sferra Bros. “That puts pressure on us to be in stock and ready to ship when a consumer comes in to one of our stores and wants to buy luxury linens.”
Other companies are dealing with a more cautious attitude from their retail customers as well. “Our company’s customers are being thoughtful and prudent,” said Bob Hamilton, director of marketing at Welspun, “but it’s not the kind of panic you see from big retailers at this time.”
This has brought about changes in both the quantities that retailers are ordering, and in the buying cycles for replenishing their stocks. Mareike Finck, public relations and marketing coordinator with Blissliving Home, said, “We’ve seen shorter turnaround times for orders, so we’ve been challenged to look at our supply chain.” The retailers “are placing smaller orders and more frequently. They’re very cautious about keeping stock on hand.”
This cautious approach with inventories has made the special-order business more important to this segment, according to Oliver Newman, president of the Christy division of Welspun. “These high-end stores are more sophisticated now, using the latest technology for ordering,” he said. “Retailers can special-order to keep their inventories in line, and we can supply these quickly.”
At the very least, price remains less of an issue in the high-end textiles tier than it is in lower price-point products. The vendors said that retailers mostly accept the fact that these items can’t be lowballed without losing a lot of their cachet.
The operative word, instead, is value. “There are value equations we can use to stimulate retailers and consumers,” Hamilton said. “For independent small shops, whose price points are much higher than the rest of the market, the relativity of price becomes an issue. A $50 towel that’s sold at $40 thus becomes a significant value.”
For other vendors, a bigger issue than price is one’s assortment. “I think the biggest challenge is to keep a constant flow of new and fresh products,” Stewart said. “The consumer comes into the store two or three times and if they see the same thing, there is no urgency to buy anything as they think it will be there the next time. Store owners might not buy deep and wide at the moment, but there needs to be an interesting breadth of product that they can quickly get back into when something starts to move.”
Newman agreed with Stewart. “We think people are looking for newness and creativity, again rather than price,” Newman said. “You could batten down the hatches and hold on to current business, or you can be proactive. It’s not a price issue; it’s having the inventory in place.”
The shape of the business in 2009—what Newman referred to as the “million-dollar question”—depends in part on consumers’ need to replace their current luxury linens.
“I believe strongly that there has been a deferral in spending,” Hamilton said. “At some point in time, replacement becomes a necessary evil. Some time in 2009, you’ll see that replacement spending, maybe by the third or fourth quarter.”
Blissliving Home was launched in January 2007, and “as a small company, there are always ways for us to grow,” Finck said. “Overall, there is an opportunity from people who are concerned about the economic environment. They’ll want to spend more time at home, and they look at their home as an escape from the uncertainties out there. Retreat, relax, rewind … we try to design products that deliver these experiences.”
Holding the line on quality will also be crucial to the growth of the high-end market. “Of most importance is maintaining the loyalty of our core customers, to ensure they know that we will not compromise on quality to address short-term market demands,” Stewart said. “Such a strategy would only serve to jeopardize the exclusivity of the [Sferra Bros.] brand.”
It will also be essential for the retailers not to compromise on their identities. “In the specialty-store market, there is a pent-up feeling that people have not spent,” Newman said. “Once we get through the first quarter, you’ll see a slow pickup in the economy overall. Specialty stores in this market are differentiating themselves, and they’ll survive from doing this."