Photo by cottonbro

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.

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.

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.

Yeah, I know it’s supposed to be 23 Skiddoo, but let’s not go there as we start the new year off. Who knows what this year will be like – much less the one after it. I think the one thing we can agree on is that we’re all quite happy to see ’21 end.

Sure, business was mostly insanely – and unpredictably – great last year and many companies had unbelievable years, on both the supply and retail side of the business. We may never see the likes of the Great Pandemic Home Boom ever again in our business lifetimes.

But it was the cost – financially, physically and psychologically – that took their toll on all of us. At the risk of not reliving the agony, let’s just say we all remember what it was like, and move on.

Move on, that is, to 2022 – with the caveat that the changing of the calendar pages (real and/or virtual) do not usually signify changes in the Metasphere (whatever that is, thank you Zuck). Other than being hungover, we do not feel that much different on January 1 than we did on December 31.

But over the course of the next 12 months we are likely to see several phenomena that will defi ne this new year. In no particular order – other than the first and last – here are some of them:

• Business is going to stop being quite so good: Business will most likely not be bad over the course of this year. Attention to purchases for the home, driven by demographics and newfound spending priorities, will continue. But those seeking the kind of increases in their sales and revenue they saw over the past 18 months are advised to look elsewhere. Maybe bitcoin.
• The supply chain will get only a little less untangled: The worst of the logistical nightmare of getting goods from Point A to Point B are probably over, but lingering issues with container costs, backed-up ports and labor shortages will remain. Decreased demand will help, but it won’t be enough to reverse what happened in 2021.
• Price increases will come to a crashing halt: Every consumer product sector got a magical “Pass Go, Collect $200” card last year. They will be rapidly rescinded as shoppers find more of their disposable income disposed of and attention focused elsewhere. Remember what Janis Joplin said: “Get it while you can.”
• Retail market shares shifts will continue, albeit at a slower pace: The growth in e-commerce, the decline of physical stores, the rise of social selling and livestream retailing will all continue, but the radical shifts of the past 18 months are over. Thank heaven, too, because that was exhausting. But the one constant in ’22 will be that the big will continue to get bigger…and the rest will not.
• The new ways of doing business are semi-permanent: Whether it was curbside pick-up, home delivery, sourcing from new suppliers, securing traceability and sustainability in your products or having a direct connection to your customers, companies that have learned new skills will need to keep them for at least the immediate future.
• Lessons learned need to be retained: If it was a little touch of human kindness, a small dose of understanding the bigger picture or just the ability to put everyday problems into the larger context of our shared lives, one hopes we enter a new year with maybe even a little bit of a new mindset.

Remember “22” was the winning number on the roulette table in Casablanca. The fundamental things apply.

Relax. You’ve got more than enough things to worry about as the New York Home Fashions Market begins this week: How are you going to get your next delivery, the cost of that delivery and the container it came in, trying to deal with the upheaval in the New York market showroom situation, raw material shortages, Chinese cotton politics, Covid shutdowns and getting a dinner reservation when everybody’s operating at half-capacity?

The one thing you don’t need to worry about: the boom in the home textiles and overall home furnishings business suddenly ending next Tuesday.

It may eventually happen on a Tuesday, but it’s not going to be any Tuesday soon.

The industry has been riding what amounts to an unprecedented surge in business the past 18 months as Americans, cooped up at home, are spending record amounts of their disposable incomes (and that of government subsidies, too) on making those homes nicer places. Everything from sheets and towels to pots and pans to washers and dryers has been moving off the shelves – physical and virtual – like crazy. And chances are business would be even better if the sources of supply were more plentiful. But that’s a subject for another time since I don’t happen to have a spare container in my backyard.

The concern that it would all come to a sudden and crushing stop once Americans began to travel again, go on vacations, eat out at restaurants and go to concerts and movie theaters has terrified those in the home business. With more places to spend their money, home furnishings purchases could no longer be quite so much in demand for shoppers who now had alternatives.

And to be sure, the surge in home furnishings sales has slowed down this spring and into the summer as we have in fact ventured out of homes again. The Delta variant, the idiocy of the unvaccinated and general apprehension has impacted that, but people are out and about once more.

But here’s the thing: the bottom has not fallen out of the home business. Retailers who report their numbers publicly, from Home Depot and Lowe’s to RH and Williams Sonoma, are all saying the same thing. Their business continues to be good, beating not just 2020 but 2019 as well – and they are forecasting that it will not change through at least the first part of 2022.

Listen to what Gary Friedman, the impresario CEO who has turned RH into one of the most exciting retailers in the world, says: “We believe the data and current trends support the argument of a more long-term and sustainable step change in consumer spending on the home. An important point to consider when analyzing the strong demand in the housing market is the migration of consumers to larger suburban and second homes.

“This trend is resulting in substantial square footage growth that is driving increased furniture and furnishings demand. Add to that, historically low interest rates, a record stock market and the reopening of several large parts of the economy, and elevated spending on the home could have a very long tail.”

A long tail indeed.

You’ve got plenty of things to worry about, but take it easy on this. The great times aren’t going to last forever, to be sure, but the good times should be with us for longer than you think.

It’s got to be about the most unexpected single consequence of a year when the unexpected has become the expected. There’s no other way to describe it.

Even as business remains strong, shoppers continue to lust after products to make their homes nicer places to be, and the challenges of meeting that demand have never been harder, the industry is doing something it has no short-term (perhaps long-term?) experience doing.

It is raising prices.

From the days of Supercale being down-priced, bed-in-a-bag commoditizing the entire ensemble business and towels getting bigger in every aspect except their price tags, the home textiles industry has never been very good at raising prices. Raising prices? Let’s face it, the industry hasn’t been very good at even keeping the current prices.

So, what’s happening now is, while not unprecedented, not something many people currently running companies have any memories of. Raising prices is just not in anybody’s skill set.

Not that there’s much choice these days. What with container prices quadrupling (at least), cotton a politically and environmentally scarce fiber and shortages in just about every manpower classification in American business, raising prices is no longer an option, it’s the only option.

But let us not get giddy here, folks. Consumers are reading the same reports you’re seeing and understand that prices are going up. They are willing to pay more for just about everything, and as crazy as it sounds, they have the resources to do so.

The big question is how much?

Historically, when prices have increased it’s usually been in the transition from one program to another. A 300-thread-count sheet set that replaced another 300-count program often got priced a few points higher. But this is different. Running programs, existing core collections and even opening price point basics are all facing cost pressures and need to be repriced.

What we’ve seen so far are increases in the 3% to 5% range, usually engineered to keep hitting some magical price point. Of course, the irony is that retailers and suppliers work so hard to get those suggested retails to meet shopper-friendly numbers when in fact most of this stuff is bought on sale, with a coupon or through some promotion, and the actual selling price is usually some bastardization that is anything but a round retail number.

But here’s the thing. Sheets and towels are not like milk and bread. They are not bought every week, and shoppers generally don’t have a clue what they paid for their bedding the last time they purchased it – very often years (or even decades) ago. Yes, the price has to be reasonable and it has to be in the context of other consumer goods, but all consumer goods are being repriced higher and so you have to consider pricing structures on a curve, much like our algebra tests in high school.

The truth of the matter is that there has never been a better time to try to get a little more for the products you make and sell. The need to do so is very real. These justified increases are part of a bigger picture and, most of all, the consumer will understand.

Just as everything to do with this pandemic has taken us into unchartered territory, the issue of when and how much to raise prices is the same way.

And as we so very much hope with this pandemic, it’s not going to last forever.

So, I’m talking to this guy who runs a smaller company selling some nice specialized products – at least he says they are nice – and he is lamenting the difficulties vendors like him have attracting attention from retailers.

At a regular, in-person market week, buyers have tight schedules, are always behind in their appointments and just generally don’t have much time for checking out new suppliers. But at online shows, like this month’s virtual Home Textiles Market, they don’t have to worry about catching cabs, getting stuck in traffic and running out of time. “Shouldn’t they be using this format to find new resources?” he asked.

Shouldn’t they indeed.

The business hand that the pandemic has dealt the home textiles industry certainly has more than its share of jokers and wild cards. Business, for the most part, is better – far better – than anyone could have hoped for…or predicted. The biggest problem for everyone is getting enough inventory to meet the demand. Whoever would have thunk it?

But it’s also created these virtual markets, which I don’t care what you say, are just not as good as the real thing. But they’re not bad and they do serve the purpose of connecting buyers and sellers. Imagine trying to function in a Zoom-less world…like two years ago, for instance.

Virtual markets also have created conditions that allow for old practices and norms to be broken and new patterns established, which is no easy task. We are all victims of old habits and the “this is the way we’ve always done it” brand of thinking. Yet, the pandemic has forced everyone – suppliers, retail[1]ers, even lowly media columnists – to learn to do things differently.

So it should be at virtual markets. We all know buyers who have practically unlisted email addresses and wouldn’t dare go check out a new resource. This time there’s no excuse. If your job is to find the best products for your store or website then that means going beyond the guys you currently buy from and seeing what else is out there. Shame on a buyer that doesn’t do this. It’s even more horrifying that senior merchandising management doesn’t make this a requirement.

Vendors can be just as guilty. I’ve actually heard suppliers say they don’t want new customers, that they are perfectly satisfied with the people who buy from them now. But what happens when Pier 1 goes bankrupt? When Bon Ton shuts down all its stores? Or Tuesday Morning reduces its footprint by a third?

Just as retailers need to search out new resources, resources need to find new customers. You never know where your next retail bankruptcy is going to come from and you better be prepared for it because, make no mistake, the next one is coming.

Like many things to do with the pandemic we’re still in the midst of, there are all kinds of game-changing situations that are causing business to be done differently. Trade shows are certainly one of them.

What’s that old saying about never failing to take advantage of a good crisis? To that I would add, never fail to take advantage of a new way to work a market week. See you out there Zooming.