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Patching up.

NEW YORK--The patchwork quilt business is trying to recover from a bout with deflation.

That's price deflation--and it's only cure is healthy dose of production innovation, according to home textile executives.

The business could be back on its feet in 1996, and up and running in '97, if suppliers can raise styling and pricing above the commodity levels of the past few years, when look-alike patchworks flooded the market from China.

Higher-priced quilts will be a different breed of covering, manufacturers say. They will go beyond traditional country looks and incorporate a broad assortment of fabrics and embellishments, which retailers hope consumers will find more interesting than the standard fare offered over the past few years.

And that's just the start. In 1997, textile executives predict, retailers will add accessories for the higher-priced quilts to bolster margins even more.

It's a needed change, according to executives. The patchwork quilt business, with annual sales of $250 million to $300 million, has experienced double-digit decreases in sales volume.

"The business is about 20 percent down from last year," said Jeff Block, president of sales for American Pacific.

Once supply and demand are brought into balance and profit margins improved textile executives expect patchwork quilts will experience 4 to 5 percent annual growth, on a par, with the growth of the home textile industry.

When patchwork quilts from China entered the U.S. market eight years ago, consumers had their first chance to buy a quilt that until then was unaffordable for most people. In those days as is still the case, handmade quilts had opening price points of about $500. In 1987, a promotional quilt sold between $99 and $129.

Over the past few years the excess supplies of patchwork quilts have forced retailers to drop prices on patchwork quilts, Block said. As prices have dropped, consumer's choices have broadened.

Quilts that had opening price points in the $99 to $129 range eight years ago can now be bought at $59 or $69, Block continued.

"The competition has forced manufacturers to put better quality and pricing into every price point," he added.

Today, 95 percent of sales volume is for patchwork quilts at price points less than $50, executives say.

In response, retailers will lift the opening price points on patchwork quilts m 1996 to $49 or $59, from $29.99 and $39.99, Block reported.

By 1997, it's expected prices will stabilize in the $50 to $80 range as the quilts that didn't make the 1995 quota trickle into the market and retailers abandon low-margin strategies.

This stability will result from tightened supplies as the last quilts that didn't make 1995 quota come into the market. But these 1995 quilts could pose some problems.

"There is a lot of junk people will want to get rid of," said Thomas R. Trouton, vice president and divisional merchandise manager for The Bon Ton. "It's not going to help the classification."

The poor state of the patchwork quilt business is evident in the dynamics surrounding the 1996 quota. Industry executives expect that for the first time in years the quota won't be filled, in large part due to the soft demand for patchwork quilts. But with fewer quilts coming into the market, textile executives hope there will be a greater emphasis on products that are higher priced and fashion-forward.

The poor performance of patchwork quilts is also evident at retail where the products have gone from shop presences to a classification presentation, said Farley Nachemin, vice president for textiles at Federated Merchandising

Nachemin says the devaluation of patchwork quilts has affected other categories, too. Consumers realized they could mix and match their patchwork quilts with different fabrics in a variety of colors and patterns.

At the peak, patchwork quilt sales triggered increases in solid-color sheet purchases. Other retail executives say the demand for patchwork quilts also led to sales of decorative pillows and other accessories. Purchases of solid-color sheets and other accesories have declined some since the fall in demand for patchwork quilts.

Nostalgia Home Fashions noticed the market saturation of promotionally priced quilts two years ago and changed its strategy, said Charles Harpeneau, vice president and national sales manager. Now the company is putting more modern designs in its patch-work quilts.

"Our company philosophy can be best summed up by our tag line: `Innovation through Tradition,'" Harpeneau sad. "We've taken the best of the old and taken it into the new, giving the customer fashion bedding in the handcrafted tradition."

Two years ago, promotional quilts with opening price points of $49.99 represented about 85 percent of Nostalgia's business, Harpeneau noted. In 1995, promotional goods represented about 50 percent of business. In 1996, they will represent about 20 percent of sales. Harpeneau said this shift has resulted in considerable growth of its profit margins. The company would not disclose details.

Nostalgia's line is composed of handcrafted products including Battenberg, crochet, hand-painted designs, chambray, which is pieced onto the quilts, and embroidery. About 50 percent of this assortment sells in the $69 to $89 price range. The remaining 30 percent is at the $89 to $129 level.

The change is in part fueled by retailers looking for new items to replace low-margin patchwork quilts, Harpeneau remarked. Retailers want higher priced goods but not too high priced.

"The retailers are still price-driven," he continued. "They are trying to get out of the $39 to $49 category. To trade them up, you have to convince them there is a success story. The first step is the $69.99 level. The second step is the $89.99 level."

Through this transition, the company has decreased its pattern selection from 70 to 25 or 30 quilts at higher price points, Harpeneau explained. In the meantime, volume has continued to grow.

Keeco says it uses its strength in handcrafted products to sell quilts in the mass market and department and specialty stores, said Greg Wyman, director of marketing.

Keeco sells quilt sets that include a lace dust ruffle or a lace sham, Wyman continued. The sets often sell for about $79 in department and specialty stores.

"For us, quilts are part of a handmade story," he said. "The answer for us is always in the lace."

Retailers will not raise prices for patchwork quilts without a reason, he added. Quilt sets are the reason in the price increase equation.

"It's a way to replace that $10 increase," Wyman said.

As prices increase for patchwork quilts, consumers should recognize the added value of patchwork quilt sets, Wyman said. He hopes Keeco's sets will sell alongside patchwork quilts that don't come with added accesories because it will will only accentuate the value of the Keeco product.

Block, of American Pacific, takes issue with Keeco's strategy. He maintains that Battenberg and crochet accesories now command 55 percent profit margins at retail. If retailers sell quilt ensembles it win dry up the accesory business. It might help short-term profits but will eventually cause long-term damage.

"Our contention on that is it isn't the panacea for the business," Block stressed. "What fixes the business is good marketing--not a quick pop."

Instead, retailers should have a structured assortment, Block offered. About 50 percent of the merchandise should be at opening price points with trade up options.

American Pacific, long a dominant player in the patchwork quilt arena, is reacting to the pricing change with better design and quality, Block said. For five years, American Pacific has developed a print library. As the library has grown in size and depth, the company's designs have improved, too. The company is not just pumping out simple check designs. It is offering retailers complex designs such as 10-screen florals.

"We have a huge investment in our print library," Block said. "We buy artwork on speculation."

Nelson S. Chow, vice president of sales and marketing for C&F Enterprises, said it is offering 100 different styles of quilts across all price points. He also says retailers are not ready to bounce back into the higher price points for patchwork quilts.

"The percentage of quilts that sell for more than $100 is very small," Chow maintained. "It's less than 5 percent. It's a very low margin business."

Scala International sees an opportunity to sell patchwork quilts that are made with shirting fabrics and embroidery which have opening price points of $150 or $160, said Pat Scala, managing director. Other quilts in this price range have chain stitch and quilting fabrics. They are also importing quilts from China that will have a starting retail price of $75.

"That's more of a volume kind of situation," Douglass said.

Better retailers and catalogs will sell the higher-priced quilts, Douglass said.

"Retailers are looking for something new. They say: `Oh, no, no more--we have so much of that," Douglass said about retailer's reactions to traditional patchwork quilts. "There is a big trend toward candlewicking or embroidered quilts."
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Title Annotation:patchwork quilt industry
Author:Williams, Alexander H.
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:Nov 20, 1995
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