Bath segment heats up as competition mounts

DSN Retailing Today, April 16, 2001 by Mike Duff

Bath is becoming a significantly tight, hotly contested segment as specialists and broadliners build lively rivalries by introducing more elements to their assortments.

Broadliners have been particularly active recently, devoting resources to initiatives that represent a greater commitment to the category. The highest profile efforts have been launched at Wal-Mart, Kmart and Target, but this doesn't mean other retailers haven't been carefully considering their bath operations.

Many retailers continue to express confidence in the home category despite the economic slowdown affecting the United States and Canada. Indeed, more home initiatives seem to be the order of the day. But the competitive pressure is growing. The economy and competition have overtaken prominent home specialists--Strouds, HomePlace and Lechters--who have been going through major upheavals.

Yet retailers continue to invest in the category. The newest of the specialists, House2Home, is devoting about 9,000 sq. ft. to domestics, said Henry Ragan, vp of merchandising, with about half of that devoted to bath. Ragan said House2Home would use the large volume of space available in its warehouse-style stores to differentiate itself in domestics.

"Domestics is a key part of our approach of putting things together for the customer. What will make this successful is assortment and having unique products. Our buyers in New York are not just trying to get a quarter off the price of a towel, but are there to figure out what color is going to be hot in the market this year and what embellishment on a towel is going to be right," he said.

Broadliners are not ready to concede the market to specialists, however. Martha Stewart Everyday rolled out in 1997 with a program of towels and added bath accessories about a year later. In its first year, Kmart sold 16 million MSE towels. In Canada, Zellers has followed Kmart in introducing MSE products, starting with an initial roll out in mid-1998.

On March 2, Kmart launched a new collection of 100% Pima cotton sheets and towels and took the opportunity to reposition the top tier of the Martha Stewart Everyday brand. Previously known as Silver Label, the top end of the good/better/best assortment has been recast as the 5-Star bed and bath program. In addition to the Pima cotton goods, the 5-Star program includes 230-thread count cotton sateen sheets with a new tonal dot pattern, new decorative bedding programs and an Egyptian cotton bath collection.

Nicole Dowswell, a Kmart spokeswoman, noted that the new designation for what had been Silver Label goods is part of a larger repositioning of MSE brands that is currently playing out. "We had Blue, White and Silver. We did 4 Star in the fall from White; we're doing Silver as 5 Star. Blue changes to 3 Star later. As we get closer to fall, we'll have a more detailed story on those changes, she said.

Wal-Mart's record in the category has been spottier. After initial success with Sahara towels, the company reworked its program after the Sahara Supreme introduction disappointed and lowered bath's profile. However, last year, Wal-Mart made a new commitment to the category, and a branded one at that, with SpringMaid, and now features towels and accessories under the label.

The latest major introduction in domestics has occurred in Target. This spring, Target is rolling out a new licensed domestics line called Waverly Garden Room. The program fills a void in a branded domestics program that emerged last year when it introduced two Martex sub-labels--Indulgence and Royal Legacy. The Martex labels were Target's way of making itself more attractive to the department store shopper the company aspires to draw--a shopper who is frequently more brand-driven than is typical for discount store shoppers. Yet, while Martex is a well-regarded name, the looks of both Indulgence and Royal Legacy were contemporary in styling and contemporary is not the preferred look in much of the country, particularly the Midwest and South.

Waverly Garden Room fills the gap in Target's branded domestics presentation, said Carolyn D'Angelo, vp of marketing and licensing for F. Schumacher, which controls the Waverly brand.

Waverly has a reputation for traditional domestics, particularly florals, so Target turned to the F. Schumacher for design expertise and brand equity.

The Waverly Garden Room introduction continues a relatively new trend for Target. As it became more fashion-oriented in the late 1990s, Target developed a design staff at its headquarters, in part to make its private labels more stylish. However, the design staff didn't just do private labels. Target's design team also developed proprietary brands the company licensed, such as Cherokee in apparel. Things have changed, however. Goods under brands the company has licensed more recently have been designed by the licensor, and Waverly is among those labels being developed by the company that owns it.

"We do our own development of bed and bath. We have a design director. She's spent the last year working with Target. But we have to protect the brand name," said D'Angelo.