Flat domestics sales prompt chains to create fashion-oriented image - discount store chains - Annual Industry Report, part 2

Discount Store News, July 18, 1988

Flat Domestics Sales Prompt Chains To Create Fashion-Oriented Image

Upscaling strategies in discount store domestics departments affected business only slightly in 1987, as home fashions sales remained essentially flat. Discounters have long groaned that domestics was rapidly becoming a commodity market, with minimal profit potential and discouraging results outside white sales and other special promotions. But, some took steps in 1987 to turn the situation around.

The situation was particularly painful because home fashions specialty chains, which were springing up like wildfire, seemed to be doing just fine, retailing roughly the same products discounters carry at considerably more favorable markups, although most offered discounts from department store prices. Overall, the home fahions industry has exploded over the past two years, and projections indicate that the growth may have only just begun.

Why, then, aren't discounters getting their share? The answer to that question, several retailers seem to have decided, is a lack of fashion image. "If consumers feel that a retailer is on top of fashion, they feel more confident spending their money, and they are willing to spend more for that reassurance," one buyer said.

Creating a Fashion Image

The problem that remains, however, is how to create a fashion image in an environment that, quite frankly, simply can't afford to look au courant. "A high-fashion bed and bath shop just runs counter to what discounting is all about," another buyer pointed out.

The answer, several chains decided last year, lies in coordination. The leader in adopting the concept was Gold Circle, the Worthington, Ohio-based discount store division of Federated Department Stores.

Its answer, a program called Home Views, combined semi-exclusive fashion products in a color palette that extended from bath towels to bathrugs, sheets, ceramics, window treatments and comforters.

All products were collected in a central area within the home fashions department, with individualized signing and videotape presentations to familiarize customers with the concept.

All seemed to be going well, as a chainwide premiere in early March created, at some stores, nearly empty shelves.

However, as rumors of an impending takeover of parent Federated spread through the industry, plans to expand the program were placed on hold, and shortly after Federated's acquisition by Campeau, several key buyers and merchandisers left, including senior vice president for soft home, Steven Fishman, who left Gold Circle for Caldor.

With Gold Circle's future in the balance (a proposed management-led leveraged buyout has so far failed to materialize), the Home Views experiment remains on hold.

However, preliminary results were encouraging, and other chains utilizing similar, if less comprehensive, approaches have also encountered a degree of success, causing more chain buyers to look at the coordinated concept as a potential traffic and sales builder.

Before he left, Fishman noted that a key issue in the decision to go with Home Views was that of "differentiation." As discount stores become less and less distinguishable from one another, management has looked high and low for ways to stick out in a crowded marketplace.

Target and Gold Circle, to name two, have settled on upgrading their fashion image, and others (Ames most recently) have followed suit.

In the domestics arena, such a move might well prove vital. As more and more retailers have targeted the department for future growth, competition has become much more intensive.

Specialty chains like Atlanta-based Branden's, the Dayton Hudson subsidiary, have been very successful, often selling products found in discount stores, but at prices higher than discount stores.

One explanation for that success among value-conscious consumers is that customers feel more secure buying fashion products from someone who at least ostensibly specializes in fashion.

Although most consumers seem to have become more confident in their decorating capabilities over the past five years, there remains a residual uncertainty about taste levels. Specialty stores offer a certain level of reassurance, and that, at least in part, explains their success.

On the other hand, some discounters have succeeded in introducing a fashion image to their apparel departments, and they seem to be getting better at it every day. There is no real reason to think that the same can't be applied to the domestics area as well.

Gold Circle was (and may still be) well on the way, and textile manufacturers--as concerned with deteriorating profits among mass retailers as are the retailers themselves--seem willing to make the same kind of extra effort with other chains as Dundee Mills did with Gold Circle.

Cannon Mills, for instance, recently introduced a line of coordinated wallcovering borders to go with its mass market sheet, comforter and towel collections. The borders will be available only to mass marketers who sell the Cannon products and are meant to give discounters a means of differentiating themselves in a crowded marketplace.