Tough Year, Tough Choices

Last year was a tough one for the industry's largest U.S. suppliers, not that this came as a surprise.

But looking over the field of sales declines posted in HTT's annual rankings of the Top 15 and Top 5 suppliers, one should bear in mind that in several cases companies chose to walk away from high-volume programs to protect their profitability. Hats off to them.

This year, the most significant changes are likely to take place among the three old-line mills. Springs and Dan River are being absorbed into off-shore manufacturing companies. In each case, the U.S. business will serve as a North American arm in a broader global distribution strategy for the foreign parent. WestPoint International — the U.S.-based corporate parent of WestPoint Home sales and marketing operations — is shopping abroad for joint ventures and possible acquisitions of its own, but a Springs- or Dan River-like deal is not unthinkable.

Global reach is a sound pursuit in all three cases. The thrust, of course, will inevitably result in a massive downsizing of U.S. operations, both in production and personnel.

The coming year promises to be another challenging one, but not just because of off-shore competition. Across the traditional big-volume channels, home sales have gone slack in recent quarters.

It's no great surprise Anna's Linens decided to withdraw the initial public offering it had planned to undertake in the coming weeks. Look at the landscape!

At Federated, home has dragged at Bloomingdale's, was worse in the consolidated Macy's Home unit and worse still at recently acquired May Co. The remainder of the department store segment is caught up in selling off chunks of their divisions to one another — not a promising environment for merchandising focus.

In the specialty sector, Linens 'n Things has gone on the block, and Pier 1 is scrambling for a new formula. At MarMaxx, home was a high flier throughout 2004, then hit the skids last year.

Target, which posted impressive total-store comps, had trouble getting the performance in home to match up. Wal-Mart was drubbed all year by analysts for its lackluster approach to the category, and Sears/Kmart is still working through unification of its organizational units.

The opportunities for growth seem to be sprouting up in non-traditional areas for the New York/Carolinas axis of the home textiles world: furniture stores, gift stores, home décor operators, regional hardware chains and niche catalogs. Grocery may be the next channel to keep on eye on, as established regional companies look for ways to compete against Wal-Mart superstores.

Wherever your company is on the line from raw materials to in-store vignette: it's a new year, and the slate is clean. Go get 'em.