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A smorgasbord of dinnerware: category-killers try to leave no style unturned.

NEW YORK -- Category-killers' ubiquitous presence in tabletop is probably most obvious in the dinnerware department.

The success of category-killers in the dinnerware business results from the same strategy that has worked for them in other home categories -- conveying to consumers that they offer the widest possible selection at the best prices.

"No need to look elsewhere" is the message in each category.

In dinnerware this usually means displaying, from floor to

ceiling, upwards of 30 casual patterns from 20-piece sets retailing for as much as $99.99. To aid in selection, place setting pieces are displayed out of the box -- and accessories as well, where available -- and stock is kept right on the selling floor for carryout convenience.

"Our customer perceives the dinnerware department as one of our signature businesses, and our consumer research indicates that Waccamaw commands a dominant position in unaided top-of-mind awareness in this category," said Barbara Cline, divisional merchandise manager of Waccamaw, a 42-store chain.

Category-killers have made the casual lifestyle trend their own. They have have addressed the casual trend mainly through branded merchandise rather than direct imports, putting them in direct competition with department stores as well as each other. At the same time, category killers have avoided competition with mass merchants by staying away from the dinnerware carried there.

"Our strategy is to have the most dominant assortment of brand names within a casual and classic lifestyle focus," explained Mary Christensen, tabletop buyer for Linens 'n Things. The category-killer, which is on "a very dramatic growth trend," will have 170 stores by year-end, of which 138 will be superstores.

By becoming a destination for branded casual dinnerware and differentiating themselves from other retailers, category-killers have managed to capture a 15 percent share of the housewares dinnerware business, a market worth approximately $300 million. Category-killers preimarily compete with department stores and specialty chains, avoiding mass merchant goods.

Direct imports are becoming more important in the dinnerware assortment at Linens 'n Things. The retailer has brought in 16-piece sets from PTS America that, at $39.99 retail, represent "high-quality fashion at great value," Christensen said.

"Brand names are important," Christensen noted. For Linens 'n Things, these brands and patterns include Sango, Mikasa, Studio Nova, Nikko, Caleca, Royal China & Porcelain's Evesham pattern and Homer Laughlin's Fiestaware. The retailer is also testing or exploring opportunities with Newcor, International China, Franciscan, Wedgwood and Pfaltzgraff.

Linens 'n Things displays 40 to 45 dinnerware patterns on floor-to-ceiling shelves, in addition to Evesham and Fiestaware patterns on floor fixtures, along with some Caleca. Though Christensen will be developing a new planogram, she said.

Customers have gravitated recently toward lower price points in dinnerware, according to Christensen. "The dinnerware business has become quite a challenge, to say the least. The market is very vulnerable, and pricing strategies have changed."

She said where as recently as last spring, retailers were advertising sets at $69 to $89, now they're featuring sets for $49.99. "The only higher-priced business that seems to be holding up well is Pfaltzgraff, and we're just starting to get involved with them."

As is typical for category-killer, Linens 'n Things follows an everyday-low-price strategy instead of putting merchandise on sale. Dinnerware set prices start at $39.99, and Christensen said her customer is most responsive right now to the $40 to $75 range, though the retailer will go higher for dinnerware that represents "an unbelievable value. Most resources are now pointing their assortments in the $40 to $75 range, and we've seen some aggressive cost repricing to accomplish this," Christensen said.

Mikasa's line consists mostly of place settings rather than sets, but Christensen noted that the vendor has repositioned some of its place settings to fall in the $20 to $30 range for three pieces.

Said Cline of Waccamaw: "Waccamaw's greatest strength in the dinnerware business lies in our commitment to the category from an inventory investment, pattern assortment and visual presentation perspective."

Waccamaw's dinnerware assortment consists primarily of casual, lifestyle-oriented patterns "with emphasis on better, branded merchandise," Cline noted. "We emphasize our partnership with key resources by supporting a fairly complete offering of key lines, while at the same time maintaining a very opportunistic approach to fashion newness."

Key dinnerware lines for Waccamaw are Mikasa, Pfaltzgraff, Sango, Studio Nova, Royal Doulton, Noritake, Franciscan and Johnson Brothers. Key price points for boxed 20-piece sets are $79.99 to $99.99. Key place-setting price points range from $29.99 to $99.99.

Kitchen Etc. credits its dinnerware success to carrying more than 300 patterns, maintaining them in stock, and providing outstanding customer service, reported Debbie Anderson, senior vice president of merchandising.

The retailer's dinnerware assortment ranges from mid to upper moderate in price. "We stay away from lower-priced sets, and we tend to choose vendors with long-lived patterns because that supports our huge registry business," Anderson explained.

Through September, Kitchen Etc.'s formal dinnerware business was growing almost twice as fast as its more developed casual business, and both were enjoying double-digit gains over last year. Companywide, sales were also up by double digits on a comp-store basis.

"Just about everything we carry is for the table or kitchen," Anderson said, and the stores are divided evenly between tabletop and housewares. Half of the outlets are smaller than the new 14,000-square-foot prototype, but some of the smaller stores will be converted, she said.

Leading dinnerware vendors for Kitchen Etc. include Pfaltzgraff, Mikasa, Studio Nova, Lenox and Wedgwood. The retailer carries almost every Pfaltzgraff pattern, together with accessories -- including those produced by sister company Treasure Craft.

HomePlace has been the fastest growing category-killer, having opened 50 stores in its first two years. Chief executive Robert Hurwitz identified HomePlace's strengths in dinnerware as "our presentation and the brands we carry." The retailer devotes about 2,800 square feet to the category in each store.

HomePlace is considering adding formal china to support its bridal registry, which it regards as a major growth opportunity. The registry currently accounts for 6 to 8 percent of sales, and "we think it can be somewhat north of 10 percent," said James Monro, president and co-chief executive.

However, the retailer will add formal china only if it feels the product can meet sales and profit requirements, Monro added. "We're not interested in something that only turns once a year and has gross margins of 30 to 35 percent."

HomePlace, which carries Pfaltzgraff's housewares line as well as some products from its upstairs Portfolio collection, "has taken the approach of being a headquarters location for our products," said executive vice president Bob Farnsworth of Pfaltzgraff.

"They've looked for new ideas in offering service and selection. They work with us to find out what the customer is looking for. They're very proactive."

The vendor has established close relationships with HomePlace, Waccamaw and Kitchen Etc., and is testing products with Linens 'n Things and Bed Bath & Beyond.

Farnsworth noted that Kitchen Etc. provides "outstanding training for their sales associates" and that Waccamaw does "an outstanding job of showing selection by using a lot of Pfaltzgraff licensed products."

Vendors noted that category killers are leaders in merchandising.

"Category killers do play up the theatrics," said Joe Soviero, senior vice president of Sango. "The merchandise is fun, priced right, in stock, and the selection is large. They do have the space and are looking for the items. Consumers always end up spending more time in these stores than they planned to."

For Sal Gabbay, vice president of Gibson Designs, "presentation comes first to mind" to explain category killers' success in dinnerware. They offer a broader selection than department stores or mass merchants not only of patterns, but of the formats in which they are presented, Gabbay noted: sets of different sizes, combination sets and open stock.

"Consumers feel they have enough of a selection to make a choice. They feel good knowing they're going to be able to get what they need," he remarked.

And not just in dinnerware. Through cross-merchandising, category-killers tie dinnerware in with glassware, flatware and other home categories, Gabbey explained.

One of Waccamaw's great strengths, Cline noted, is its ability to cross-merchandise dinnerware with glassware and flatware. Cline added that Waccamaw will sometimes also incorporate coordinating lighting, gourmet food, fashion table linens, accent furniture, even home fragrances, in the dinnerware presentation -- for example, "with some of the popular art-inspired patterns or, particularly for our penetration in the southeastern coastal markets, with some of the shell and nautical patterns."

As a private-label business, Waccamaw's open-stock ceramics also represent a point of differentiation from its competition, Cline added. "Our continued goal in both our imported ceramic and glass businesses is to offer fun, functional and affordable pieces generating impulse sales versus replacement sales."

"Accessories are a critical component to our dinnerware department's success," commented Cline. "We are believers in satisfying the customer's need for instant gratification when desiring a coordinating accessory. And [we] have eliminated the need for special orders by maintaining an in-stock position on the key components in all stores."

For its part, Kitchen Etc. carries accessories for about half of the 300-plus patterns it carries, Debbie Anderson, senior vice president of merchandising said.

Category-killers have been able to sell dinnerware at a wide range of prices -- from just above the mass market upper limit all the way into the upstairs range -- without losing their value image, vendors said.

"They try to avoid competitive situations with mass merchants, but otherwise, they have no fixed floor or ceiling for prices," said Steve Lizak, vice president of marketing for Studio Nova. "After all, they can sell high-end linens. Price is really not an issue for them. The strength of the pattern is what's important," Lizak added. Category-killers, for example, carry both the Studio Nova housewares brand and the upstairs Mikasa brand.

For the most part, category-killers stay under $100 for a 16-or 20-piece set, according to Glenn Simon, president of Sakura, and the $30-to-$50 range is where the real volume is for them. The lowest they will go is $19.99 to $29.99 -- "they are not looking for goods at $9.99 to compete with mass merchants."

As for margins, they look for between 50 and 60 percent on an everyday basis, Simon said, but will work at a lot less than that on promotion.

Gibson's Gabbay agreed that dinnerware margins in category killers extend from over 50 percent to "well below," explaining that category killers use dinnerware and the other housewares categories to establish a perception of value in the minds of consumers.

"They're looking to keystone more or less, like everybody else," Sango's Soviero commented. "I know cases where department stores are working on lower margins. This is the most aggressive environment I've ever seen in setting retail prices. Nobody wants to be left out of the value story."

If category-killers don't impose narrow price and margin limits on themselves, they are similarly open to testing new patterns, most vendors reported.

"Their buyers have more freedom in what they can buy," said Sango's Soviero. "They're very quick to test patterns, but they watch the tests very closely. If they say a pattern doesn't move, you can be sure it's not a winner. If a pattern tests well, they blow it out very quickly."

Similarly, Vanna Marino, vice president of Caleca, described category-killers as very open to new patterns and very daring, but also very well prepared. "They know what they're looking for."

Cline of Waccamaw said:"We aggressively pursue and commit to new patterns." In fact, a company position paper notes that part of Waccamaw's mission is to "react faster to new trends and items" than department stores. It can accomplish this, the document adds, because of "the size of our organization and the trend in department stores to group buying."

In determining which new patterns to carry, Cline explained, Waccamaw respects and solicits direction "from our key partners in the marketplace, in addition to applying what we've learned from successful home fashion trends emerging in the domestics, furniture and decorative accessory markets."

Steve Lizak of Studio Nova said whiteware is still strong in casual dinnerware and "accounts for a super percentage of the business in category killers."

Joe Soviero of Sango said there is no single dominant trend, but that white is among the three most important "micro trends," along with solid colors and bright, bold patterns.

Glenn Simon said Sakura, for its part, is banking on the return of "fun, wild, wacky, crazy" patterns.

The success of category-killers has inspired other retailers to imitate them, and the housewares dinnerware business as a whole has reaped the benefit, according to Sango's Soviero.

"Department store buyers have seen what they're doing and taken note. This is very healthy for the industry. The housewares dinnerware business has moved away from selling tools to eat with to selling fun, fashion and adventure -- and showing consumers that acquiring them is very inexpensive."

Design and Color Trends

Whiteware

Solid colors

Bright, bold patterns

Emerging color trends include red, aqua and purple

Fast Facts

Category-killers have a 15 percent share, or $300 million, in housewares dinnerware business outside mass channels

Opening price point: $20 for a 20-piece set

Key price points: $30 to $50

Margins on everyday business: 50 to 60 percent

Margins on promotional goods: 30 to 45 percent
COPYRIGHT 1996 MacFadden Communications Group LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Neiss, Doug
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:Nov 25, 1996
Words:2219
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