Private label drives value, image in domestics

Discount Store News, August 4, 1997

Discounters continue to drive business in domestics by improving their assortments with better quality goods, more fashion options and coordinated looks across product categories.

The shakeout among specialty chains and the meltdown at Montgomery Ward could flood the market with markdowns, but discounters with coherent, compelling fashion/value offerings get a chance to add to their consumer base.

Soft home is a critical area for battle, as chains strive to maintain this strong margin area as a bulwark against Wal-Mart's dominance in hard lines. Target holds its own with private label domestics programs complemented by on-trend seasonal housewares and furnishings.

Martha Stewart Everyday could deliver blockbuster sell-through and carries the potential for a major image improvement for Kmart, which is wisely positioning MSE-based domestics as a lead front-of-store department in its 450-unit-per-year remodeling program.

Tying the MSE domestics palette to an aggressive MSE paint program builds out Kmart's total home merchandising strategy and directly appeals to consumers' demand for simple, one-stop home decor solutions.

Partly as a result of some vendors' commitments to massive shipments supporting the MSE launch at Kmart, various regional chains said they experienced supply gaps in early spring 1997 merchandise. The continuity of programs were also challenged by the churn among the players in a consolidating vendor base.

Just as it is currently pushing the envelope to gain more of a fashion edge in apparel, Wal-Mart has plenty of opportunity to upgrade the in-store presentation of its domestics departments. Cramped for space, the chain has the resources and committed vendor partners to craft a better ambiance and produce a more-than-commodities business.

Discount stores pressed their high-volume advantage against department stores in such categories as accent rugs and throw pillows. Discounters have a much tougher fight against upstairs chains in such core product areas as comforter covers, bed sheets and window curtains.

Caldor is improving its private label line, Home At Last, by adding Egyptian cotton towels and more textured fashion prints and soft denims to its 200-thread-count bedding.

Venture rolled out its Home to Home private label program across bed pillows, mattress pads and solid color bed ensembles. The Midwestern regional chain also expanded its Euro/upscale Studio Uno label and traditional Lauren Rogers label into more domestics categories. The chain also tested housewares private label Master Cuisine in soft kitchen goods.

Bradlees is testing a fully coordinated private label program in bath that integrates shower curtains, bath mats, wall borders and hard accessories.

Vendors have applied more resources to category management capability to enable retailers to predict and tailor orders by regional demographics and taste patterns as well as unforeseen high sell-throughs.

Licensed juvenile bedding is providing more fully accessorized programs than ever, with extra momentum coming from such properties as Barbie and NASCAR.

In blankets, fleece reigns as the fastest-turning item in the casual throw segment. Thermal cottons, retailing in the $10 to $20 range, also gained ground.

Denim and denim-friendly fabrics and patterns continued to provide casual lifestyle fashion items and collections for discounters.

Knit sheets, pillowcases and comforter covers are appearing in mass market assortments, in a further tapping of casual trends.

The accent in towels and bedding for fall '97, spring '98 and beyond is soft, softer, softest.

Domestics Productivity

Department size       6,216 sq. ft.
Sales per sq. ft.          $526.86
Turns                         1.84
Initial markup               40.80%
Gross margin                 32.75%