Nimble Innovators Outpace the Titans

New York — In a year of continuing seismic change for the American home fashions business, the industry's landscape was forever altered as the size and shape of the playing field changed during 2005.

Three of the largest players changed hands; 40 percent of the biggest players recorded sales declines; the big commodity producers all lost ground; and fortune smiled on mid-sized niche producers that focused on fashion, brands, licenses or proprietary products, and marketed the hell out of them.

In a moment that crystallizes and defines the changes that have been taking place at an accelerating pace, an entire new template was created that will forever change the way the industry does business. Not only were companies bought and sold, this time they were bought by off-shore producers — not for their U.S. manufacturing base, but for their sales, marketing, design expertise and distribution network; to be transformed into marketing vehicles for goods produced abroad.

The numbers tell part of the story. In this year's Home Textiles Today ranking of the nation's 15 largest home fashions suppliers, overall sales of those industry titans fell by 7.1 percent, to $6.9 billion from $7.1 billion last year. Let's put that number into perspective. That means the industry leaders lost $532 million in sales last year. Put another way, that's as if two of the biggest companies (say the size of Franco and Croscill, the sixth and seventh largest players respectively), simply dropped out of sight, disappeared overnight.

In another big part of the story, all of the biggest suppliers — the ones who produce long runs of low-cost, constantly de-specced commodity product to fill the shelves of mass merchants — headed south. The biggest declines were the two titans, Springs and WestPoint, who between them lost an unnerving $656 million in sales — an amount equivalent to almost 10 percent of the combined sales of the entire universe of 15 key players.

So who were the winners last year? As a class, they were mid-size, niche players, entrepreneurial and driven, like American Pacific, which broadened its base in fashion goods and bulked up sales by almost 40 percent; or Sleep Innovations, which parlayed its innovative foam sleeping products into a sales gain of 27 percent, building on last year's gain of 76 percent.