Photo by Sebastian Pena Lambarri on Unsplash

The good news from HTT’s annual Top 50 Retailing Giants report is that 46 retailers grew their home textiles business last year – 28 of them by double digits.

The hard reality, of course, is that 2022 is no 2021. The consumers most impacted by inflation, which is the bulk of them, are now spending less on discretionary goods, especially in home. The business has gotten tougher and is likely to remain so into next year. The big, delicious bubble has burst. I doubt that by the time HTT’s head of research tallies the numbers on this year’s soft home sales that we will end up with an equal preponderance of gainers.

In such a climate, it would be wise to think beyond the “We’ve got six of the top accounts, so we’re good” mindset. The double-digit gainers for 2021 include major retailers at the top of the ranking that you would probably expect, such as Target, Amazon, HomeGoods and Overstock. It also includes a raft of retailers toward the bottom of the list such as Ashley Home Store, Boscov’s, Citi Trends and Ethan Allen.

In terms of account size, the latter are what a long-ago colleague of mine would refer to as “little pishers.” He was a sales rep, so he wanted to chase the big fish, not the little pishers.

Let’s look at who some of the big fish were at that time. Sears was a Top 10 account. It no longer ranks at all among the Top 50. Linens ‘N Things was a Top 10 account as recently as 2008. By the end of that year, it was gone. Mervyn’s did nearly $400 million in soft home sales, about what Lowe’s does today. Gone. HomePlace was on a par with QVC/HSN. Gone.

I would strongly advise vendors to look to the lower ledger of the Top 50. Are you doing business any of them? Sure, not all of them are going to climb the ladder, but most of them do a steady business year after year.

Retailers, I would make the same case to you about suppliers. Just six of the Top 15 Supplier Giants in the era when my colleague was dismissing little pishers are still around today. Only three still rank among the Top 15.

Some accounts and some suppliers disappear over time. Others collapse all at once. You can hope for the slow fade, but you should be prepared for the sudden crash. Spread your risk

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For the hundreds of vendors who have done business with it, Bed Bath & Beyond, sadly, has turned into the punchline for an old Henny Youngman gag: “Can’t live with them…can’t live without them.”

As the big box retailer – still a huge seller of the industry’s products – twists and turns in its latest freefall, the fate of billions of dollars of business for suppliers in the industry – and competing retailers who would love to pick up all that market share – rests in its outcome.

Bed Bath & Beyond’s disastrous first quarter caused the forced departure of president and CEO Mark Tritton and chief merchant Joe Hartsig. Clearly, they are taking the fall for a failed strategy that depended too much on private label merchandise that turned out to be poorly executed and arguably not what customers wanted. Covid, supply chain collapses, inflation and waning demand for home merchandise all played their part, but the bottom line is that the turnaround plan didn’t work and now it’s somebody else’s turn to try to figure out this conundrum wrapped in an enigma.

Some fundamental things give BBB a fighting chance versus other retailers that were ultimately doomed. There is a clear and valuable place for Bed Bath in the marketplace; it is not trying to justify its existence as some others have. It also retains a loyal customer base that lives off its ubiquitous coupons and is still the go-to place for many home textiles and housewares purchases.

On the negative side is the glaring fact that one of the company’s most valuable assets – its cash-positive/low-debt position – has eroded significantly following consecutive quarters of losses. It still has money in the bank and access to more through loans and lines of credit, but it will be veering into dangerous balance sheet territory should the current downslide continue for a few more quarters.

And so that’s the BIG question: Will business remain rotten or will it get better? Assuming that the economy stays out of recession territory – an iffy assumption – BBB will control its own fate. It will dump a lot of bad inventory to raise cash, a chilling irony given its recent laments about not having enough goods to meet demand. It will turn to the industry vendors it scorned over the past two years to provide emergency transfusions of branded goods to revitalize its merchandise mix, although let’s be clear that those national brands in textiles are more in the minds of the vendor than in that of the consumer.

And, of course, BBB will double down on couponing, which for better or worse has been the backbone of its merchandising strategy for decades.

Will it be enough? I liked many of the initiatives Tritton and company tried even if they ultimately didn’t work. But it should be noted that before they got there, Bed Bath was failing miserably with its previous strategy, too. So, the answer may be a hybrid approach.

The home textiles business in fact can’t live without Bed Bath & Be[1]yond so it’s going to have to find a way that lets it live with it.

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A funny thing happened on the way to the Retailaggedon. It didn’t happen.

Consider these items from just one day’s news last month: Tractor Supply Co. says it will open 70 to 80 stores in the next year. Uniqlo plans 400 to 500 new stores around the world every year, including quadrupling the number of U.S. stores by 2027. Convenience store chain Wawa looking to add 40 new stores in the southeast over the next few years. Regional grocer Wegmans expanding further into New York City metro area. Fast fooders Popeye’s and Freddy’s Custard are adding hundreds of new stores. Amazon Go opens its first suburban location. Facebook announces its first store ever.

Did all these guys miss the memo about the demise of physical retailing? Don’t they know that e-commerce is the only game in town going forward and that stores are ancient relics of another era? Just wait until their shareholders and investors get word of this.

Of course, the Retailaggedon (who makes up these tongue twisters anyway?) was yet one more sky-is-falling headline, the kind that the media – and the journalists who write for them – just eat up and can’t wait to post on LinkedIn. And as such, it was yet one more prediction made during the height (or depth, perhaps?) of the pandemic times.

And the revival of physical retailing is just one more unintended consequence of the past two years, a list that grows longer every day. Remember when all the experts were predicting the demise of single-car ownership, replaced by ride services, ride sharing, bicycles and drones? Turns out people liked the idea of having their own private form of transportation away from the germ-infested masses. Or how about the death of the suburbs and exburbs as younger generations migrated to cities and urban areas? Yes, even as many American cities have rebounded since the bottom of the pandemic, rural areas are seeing enormous growth from those getting out of town and looking for wide open spaces.

We could go on. Nobody will ever buy groceries online. Business travel will never come back as Zoom/et al become the de facto way meetings are held. Forget about gyms and workout centers; we’ve got our Pelotons and we’re never going back to those places.

The point obviously is that as the past two-and-one-half years have represented unprecedented times they also have made most forecasters and so-called experts look absolutely foolish. Nowhere is that more true than with the predictions about physical retailing (which, by the way, is virtually never made of bricks or mortar). Stores – where people go to shop, but also to just look around as entertainment, as places where they pick-up online orders or return them and as businesses where in-person activities are held – have proven their worth and aren’t going away anytime soon.

You didn’t need me to tell you that.

But maybe you did need to hear that trying to figure out what’s next is no slam-dunk. Steve Jobs used to say he didn’t do market research because people couldn’t tell you what they wanted because they didn’t know it until they saw it.

Photo by Nathan Dumlao on Unsplash

Finally, volume retailers have gotten their hands on all that lovely home merchandise they were chasing after for months. Alas, the bounty arrived just as consumers decided they need to be more mindful of their spending. And when they do lay out their cash, they’re pretty much set with home stuff, thank you very much.

Suppliers have been saying since early this year that buyers were starting to pull back on order writing. More recently, we’ve been hearing that some buyers are completely done with orders for 2022. That state of affairs was confirmed in late May as a parade of major home textiles retailers reported their first quarter results.

Macy’s singled out soft home in particular as a popular pandemic category that has suddenly lost its luster. In the short space between Q4 2021 and Q1 2022, the department store saw a 20 point drop in sales of home textiles, casual apparel and activewear. Company chairman and CEO Jeff Gennette described the downturn as “more extreme than we expected.” Go-forward orders have been adjusted accordingly.

The era of major home makeovers seems to have ended for Target’s shoppers as well. Home saw a rapid slowdown of year-over-year sales beginning in March. While some of that was expected, “we didn’t anticipate the magnitude of that shift,” said chairman and CEO Brian Cornell. Overloaded with inventory, Target has opted to cut prices as it works to right-size its assortments.

At Ross Stores, apparel has re-asserted itself as the sales-driving category. While the off-pricer sees boatloads of deals on home goods in the market, it may not wind up buying many of them. Ross received its Q2 home goods imports earlier than expected, and with demand for the category declining, it has chucked them in packaway and will flow the merchandise later in the year as warranted.

The story rolled on similarly at Walmart (customers pivoting away from discretionary goods), Kohl’s (home sales down 17% and demand expected to remain weak) and Big Lots (moving focus to opening price points and looking for close-out opportunities).

To be fair, home wasn’t a washout everywhere. TJX Cos.’ home comp fell back in against a tough comparison, but sales remained solid. Williams Sonoma Inc.’s nameplates had a pretty strong first quarter as well.

It’s also important to remember that even the retailers that failed to shine in the first quarter are generating better sales than they were in 2019.

So, what are suppliers to do about it? They’ll do what they’ve done in every other calamity that has besieged this crazy business. Dig in, innovate and differentiative. The bubble has popped. Time to get back to the regular order of business.

The word “unprecedented” has gotten quite a workout over the past four years, and justifiably so.

This summer will mark the fourth anniversary of former President Trump’s tariffs on Chinese imports, a serious development that added costs to home textiles merchandise. Anyone who hoped the tariffs would be rescinded with the arrival of a new administration has thus far been disappointed.

Then came Covid-19, then shutdowns, then a boom in spending on home goods, then the colossal cock-up of the supply chain system, which is with us still. Now we have added a war in eastern Europe and inflation into the mix.

Each of these is a once-in-a-career event for any business, but we live in an era when one unprecedented disruption has cascaded on top of another.

Shifting through the plethora of prognostications and forecasts out there brings to mind that Schoolhouse Rock ditty “Conjunction Junction,” which advises us the “and, but and or will take you pretty far.” Because “and” and “but” are frequent qualifiers in the current environment.

The National Retail Federation last month reasserted its rosy forecast that retail sales for 2022 will increase between 6%-8%. The reasons: job growth AND wage increases AND strong household savings. BUT with inflation reaching a 40-year high AND strong consumer demand running up against restricted supply, the picture becomes more complicated.

There were more conjunctions swirling through a pair of Houzz surveys tracking residential renovation market activity.

Renovation activity this year looks healthy, with 55% of homeowners planning to renovate, 46% planning to decorate AND, for the first time since 2018, homeowners’ planned spend jumping to $15,000, up $5,000.

BUT professionals in the construction, architectural and design services sectors are tempering their expectations. Lengthy backlogs persisted in Q2 AND the pros worry future business may stall due to inflation, supply chain delays and rising costs for materials.

Similarly, consumer sentiment has become muddled. The April Consumer Confidence Index found that consumers’ short-term outlook for income, business and labor market conditions ticked up to 77.2 from 76.7. BUT their assessment of their present situation fell to 152.6 from 153.8 in March. Vacation intentions cooled BUT intentions to buy big-ticket items rose, AND purchasing intentions are down overall from recent levels.

Suppliers in every category of home textiles have reported that retail orders began falling off earlier this year. Raw material prices had been rising for months and freight costs remained high – and everyone knew that double-digit consumer spending on home furnishings had to run its course at some point.

BUT there is still hope that if inflation can be constrained, the housing market will deliver a few years of Gen Z-driven growth.

Dizzy yet?

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Dave Tracy and Seymour Seidman in the Avanti showroom during the 1990s.

A few of us – maybe four or five – were standing around talking outside the church where there had just been a funeral mass for Dave Tracy, the legendary executive of the home textiles industry responsible for helping to bring Royal Velvet, Ralph Lauren, Calvin Klein and Donna Karan to the market.

“How sad to see what the home textiles industry has turned into,” one said. “There used to be brands and programs that every retailer in the country in a channel had to have,” said another. “Now, it’s become an OEM business where every store has a different mix and there are no national brands.”

“It’s the exact opposite of what Dave Tracy believed in and made successful,” said a third.

The conversation is true, even if the words are a bit paraphrased. And the speakers are best left unidentified as some still earn their livings in the industry while others have retired and are in no position to do anything about the current situation.

Dave Tracy, I’m sure, could sell private label tonnage when he had to keep his mills running, and not every program he developed worked. Nobody was that good.

But his focus on brands and marketing those brands represented the pinnacle of the home textiles industry and produced revenues and profits for manufacturers and retailers alike that no doubt have been duplicated since but never in the same way. The industry’s reliance on dedicated private and/or captured brands developed at the behest of their retail customers is a sad state of affairs that just doesn’t have to be.

You may question that and point about that the retailers are so much bigger than their vendors and so can control all the shots. But that’s not always true. Think Dyson vacuum cleaners, think Waterford crystal stemware, think KitchenAid stand mixers. These are all national brands that every store in their respective channels must carry to be able to offer their customers a proper assortment. The same exact product is offered in multiple stores in the same mall, along the same strip of the highway and on the same online sites. And the world doesn’t end.

The Royal Velvet towel wall at JCP in 2019.

That was what Dave Tracy did with Royal Velvet way back when. Stores fought over getting the line – to the extent that one retailer of the era that was locked out of matrix took action. Linens’n Things famously put up a billboard along the route Fieldcrest executives drove into their Manhattan office, pleading to get access to the brand. Think about something like that happening now.

As much as that group at the bottom of those church steps on that morning a few weeks ago lamented the sad state of affairs the industry finds itself in with respect to national brands, there were glimmers of hope that perhaps it didn’t have to be that way. Could the remaining larger suppliers in the business put some marketing muscle behind their programs and force retailers to carry these products? It could happen, even if the effort would require serious investments and even more serious patience. It’s not impossible.

One likes to think Dave Tracy will be up there watching.

See also:

David Tracy, Legendary Mill Innovator

Miniso’s top price point is $10.

New York – For every vendor in the home textiles business who laments there are no new customers and every retailer who thinks they know the competitive landscape, let me introduce you to Miniso, a Chinese take on the dollar-store concept.

Ten dollars is its max price point. It recently opened its first store in New York City, in Soho no less. It’s unlike any retail concept you’ve seen before…and yet very similar to some.

The Good

• Instead of impulse items at the checkout area, Miniso is an entire store of impulse merchandise, all of it priced at below $10. The long lines at those checkout lanes confirm shoppers are responding to the concept.
• Rather than just a sea of generic non-brands, this store has all kinds of branded goods from such names as Disney, Black & Decker, Sharper Image and Marvel. And we bet the margins are still healthy even with the royalties.
• Miniso Rewards is the retailer’s loyalty program, simply explained on in-store signage, and a compelling purchasing trigger.

The Bad

• Housekeeping, always an issue in high-turn stores, certainly could have been better – not that anybody seemed the least bit perturbed in their pursuit of bargains, real or otherwise.

The Ugly

• We suspect if we went back to the store 48 hours later the merchandising mix would be entirely different – we get it – but a little better organization by product category wouldn’t be such a bad thing.

For the first time in a very long time, big pencil retailers turned out in person for home textiles market. And for the first time since fall 2019, a good number of showrooms opened their doors for face[1]to-face appointments.

Although more suppliers rolled out the welcome mat for spring market than had done so during the tentative fall 2021 market, most expected a heavy schedule of virtual appointments. Several con[1]fessed they’d had no intention of freshening up their spaces. Others had not planned to come into the city at all. But around March 7, retailers started ringing them up for in-person visits, so vendors sprang into action.

When all was said and done, all but four major retailers sent at least a few buyers to the New York Home Fashions Market, even if they didn’t bring the full battalion.

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The spring New York Home Fashions Markets arrived at an apt moment. After nearly 18 months of scrambling to find enough inventory to slap onto shelves and feed the explosion of e-commerce orders, suppliers and retailers are in a position to consider what suits consumers’ needs and wants as the country transitions from pandemic to endemic mode. Focus is shifting from “What can you deliver right now?” to “What white spaces do we need to address?”

New products have always been the bread and butter of market week, but this time around suppliers were pushing NEWNESS – with an exclamation point.

Buyers weren’t the only ones pounding the pavement. Several companies that are currently without showroom space were making the rounds to check out real estate along 5th Avenue. Some were showing in temp spaces; others came in to just get a sense of the market.

While it would be foolhardy to bet that fall market will mark a complete return to the pre-pandemic order, there was a sense last month that home textiles market is moving toward a new normal.

Most of them came, many of them bought and just about everybody had a tough time trying to conquer last month’s New York home textiles market week.

There’s no disputing the fact that it was the best, most normal – or maybe least abnormal – and generally welcome market the industry has seen since BC (before Covid). Then again, the bar was pretty low given the overall weirdness of trying to do business during a global pandemic. On the one hand, business was about as good as it has been for most people’s business life[1]times with the surge of spending on products for homes at record levels. On the other hand, there were outrageous increased costs for just about everything you need to make textiles and a business largely executed in Hollywood Squares-style on the closest screen you could find.

So, the return to a largely in-person market event was a genuine relief. Not only were we all able to shake hands, give the occasional friendly hug and even see each other’s faces sans masks, but there was the physical experience of touching products in real time rather than virtually. If you said your new item had a terrific hand, you better not have been making it up because now we could find out in person.

But there were twin palls hanging over the New York Home Fashions Market, to be sure. First, there was the geography issue. Many showrooms were not quite where they used to be and finding your next appointment required not only the excellent HTT market directory (cheap plug, but hey, why not?) but also a compass, a Google Maps app and perhaps a Ouija board. Old habits die hard and new ones don’t come easy to all of us victims of this-is-the-way-we-did-it-last-time thinking.

More troubling was the surprising pessimism you heard once you got into serious conversations with many market attendees. As good as business has been, it appears it’s not that way now. One can make the argument that everyone is comparing 2022 to the outstanding past two years and is simply spoiled by how good the good times have been. This year will not be a repeat, but when you asked people if their numbers are still beating PC (pre-Covid) 2019 most said they are.

Nonetheless, the general weariness of dealing with cost pressures, supply chain meltdowns and trying to navigate sourcing in a world gone mad seems to have had a cumulative effect on some people. The roller coaster ride is not over.

So, it was that kind of market week in New York last month. There wasn’t a person there – at least not anybody I met – who wasn’t absolutely thrilled to be back. What’s next is another story entirely, but for now, it’s not bad at all.

With all due apologies to The Who, it’s time for some healing.

As the industry – or at least some of it – gathers this week in New York for spring market week, it once again faces an existential question that is has grappled with for years: What is the value of these markets?

The big difference now is that up until March 2020, that question was largely theoretical. The industry, buyers and sellers alike, pretty much kept conducting business as usual with no sense of urgency – much less emergency – to make any kind of change in the way it went about this process. Of course, Covid changed that, as it changed so many things, but the situation was further exacerbated by the sale and subsequent shutdown of the main market showroom building at 295 Fifth Avenue.

So, for the past two years the industry has proceeded on a meandering course that largely consisted of online meetings, virtual showroom product presentations and the occasional in-person visit when the stakes were high enough. In the process the international dynamic of the business, which had become critical for buying and selling, largely ceased to exist. Overseas travel was when you crossed the Hudson.

But now, this week is something different. Many companies – perhaps some is a better word – have taken new showroom space scattered about midtown Manhattan. If the recent housewares show earlier this month in Chicago is any indication, the industry can expect pretty decent in-person attendance from at least some people from most of the big retail national chains that dominate the business. There will still be some Zoom calls, but they are likely to be far fewer in number than the past four market seasons.

The combination of suppliers setting up new showrooms and buyers planning to visit in-person suggests a very obvious conclusion, but one many people have questioned since the pandemic began: the industry needs a market. It’s that simple. Anyone who doubts that – who maybe thinks the business got along OK without a market so we don’t really need one – has to be rethinking that theory.

The need for retailers to See, Feel, Touch (more really Be Touched) and ultimately Buy is as important as it ever was and no amount of digital magic is ever going to replace that. Granted, virtual can make some aspects of the buying process easier, more efficient and less of an ordeal.

But that face-to-face interplay is indispensable …and irreplaceable. It’s not just about product, it’s about the process and the people.

It’s why one has to hope the industry can figure out a way to reassemble some sense of cohesiveness when it comes to its physical presence in New York. Showrooms scattered about with no rhyme or reason are not only inefficient, but they also create the opportunity for some other market location to come in and offer a better solution. “Can’t happen here,” the home textiles industry will sa.“We have to be in New York.” But that’s the same thing the furniture, the lighting, the gift and the rug industries all said – and each one has largely decamped elsewhere.

The home textiles industry should not be the next one to get fooled…again.