By David Gill
NEW YORK–The textiles industry became one of the victims of the failing U.S. economy in 2007, as total sales for the products tracked by HFN fell by nearly 2 percent to slightly more than $19.5 billion.
The industry’s overall total represented a turnaround from 2006, when sales rose by more than 2 percent and topped the $20 billion mark. The biggest drops among the individual categories occurred in down comforters, whose sales plummeted by nearly 6 percent; sheets, down by 3.5 percent; and shower curtains, off 3.2 percent.
For down comforters, it was yet another disappointing year, following on the 7.5 percent sales drop the category reported for 2006. It was also surprising considering consumers’ increased interest in all-natural products in a variety of home categories; these products, of course, are filled with white goose down and often have covers consisting of 100 percent cotton.
Mass merchants and warehouse clubs continue to dominate the retail scene in home textiles. For the majority of the categories, the discount channel represents more than half of all retail sales.
The mixed results in the decorative-bedding product categories included a 5 percent gain in sales for bagged bed ensembles, replicating the results in last year’s research; and a 3.5 percent drop in sales of sheets, a turnaround from last year’s slight pickup. Bagged bed-ensemble sales topped the $1.5 billion mark, while sheet sales fell back to $2.4 billion.
Because so much of the nation’s decorative bedding now comes from abroad, the frail U.S. dollar comes close to the top among the concerns of U.S. marketers of these products. The declining value of the currency actually exacerbates the challenges posed by rising costs, which is a perennial issue among manufacturers. And with price-conscious retailers unsympathetic to these concerns, making a reasonable profit will be all the more difficult for manufacturers this year.
Executives with these manufacturers worry that the rising value of currencies abroad will boost the costs of making decorative bedding to the point where there will be fallout among the marginal players. Others point out that if the cost of producing abroad rises enough, manufacturers who make decorative bedding here could actually become competitive again—perhaps not to the scale that manufacturing here once was, but to the point where a cottage industry of home-textiles producers could spring up.
Given the challenges posed by the currency, it would seem to be more important than ever for the decorative-bedding industry to come up with products that are compelling in the fashion sense. Several industry executives believe that this will be a crucial challenge for these manufacturers to face this year. This is always a challenge for the many manufacturers who are based abroad, who need to understand the U.S. market from both a fashion and cultural sense in order to come up with salable merchandise.
The basic-bedding business experienced a decidedly bumpy road in 2007. Sales grew at a crawl for manufacturers of bed pillows and mattress pads, and fell for producers of both down and non-down comforters. The down-comforter category had a frightening sales drop of nearly 6 percent last year.
Although much basic bedding is still filled in these shores, manufacturers believe that the weak U.S. dollar will be just as big a problem in the basic side of the business as it will be for decorative bedding in 2008. The dollar’s dropoff will pressure both retailers and vendors, and—as in the case with decorative bedding—exacerbate the problems these manufacturers are already experiencing in rising production, transportation and container costs.
The burst of the housing bubble has also posed challenges to basic-bedding manufacturers, and will continue to do so this year. One of the main downstream effects of this development is the reduction in consumer confidence; the fear is that consumers will pass up on purchasing commodities like pillows and pads.
On the other hand, the fall of housing could create an opportunity for this market. Industry executives said when people don’t move, they will sometimes spend more on their existing homes to make them more comfortable. Thus another challenge for the basic-bedding vendors will be to create and market products that give consumers a heightened sense of comfort.
The soft sector of the window-coverings industry performed better than the hard part, although only slightly.
Sales of curtains and draperies topped $2.8 billion in 2007, 1.4 percent ahead of 2006; while sales of hard window treatments slipped by 2 percent to less than $4.5 billion. Both segments significantly underperformed their 2006 totals, in which soft window-coverings sales rose 3.6 percent and hard coverings posted a 2 percent sales increase.
The declining housing market will pose continuing challenges to the industry this year, given that moving to new homes often spurs sales of both soft and hard window treatments. In addition, the media’s coverage of the flagging U.S. economy is likely to put consumers out of the mood for expenditures on the home.
In addition, manufacturers fear the impact of rising manufacturing costs, especially in China, where much of the window treatments now at U.S. retailers are made. Those costs could be even steeper in 2008 as energy expenses continue to climb and the value of the U.S. dollar maintains its downward spiral.
Numerous challenges in the bath category kept business flat across the board. Miserable exchange rates and the devaluation of the dollar made doing business in China and India tougher than ever, and when coupled with rapidly rising energy costs it put a real squeeze on vendors, several of whom are now raising prices.
The bath towel business has become crowded with new players, most of whom produce extensive lines of solid-colored collections in a variety of constructions. “The solid color business has become difficult,” dragging it down to a question of price and grams per square meter, said one vendor. Some are reconsidering jacquards. Some are focusing on performance attributes, such as quick-drying towels, or appealing to consumers’ desire to pamper themselves with luxury goods and spa-oriented products.
Many of the same pressures negatively impacted the bath accessories business, which dropped approximately 2 percent in sales. “Retailers cannot accept price increases and are expecting more bells and whistles and a higher service level than ever before,” said one vendor. Department stores and mass merchants lost a small amount of business to specialty stores and catalogs.
Sales of shower curtains dropped 3 percent. Department stores lost share while mass merchants and specialty stores gained slightly.