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SETTING STANDARDS; MANUFACTURERS ARE LOWERING PRICE POINTS FOR FORMAL DINNERWARE TO $100.00 AND BELOW.

NEW YORK-The magical price point in upstairs tabletop departments today has become $100, a marked change from even three years ago.

Industry experts agree that the increasingly competitive marketplace, an emphasis on perceived value and tighter consumer purse strings have pushed the key price point in formal dinnerware down to the $100 mark and below. During the Tabletop Show here a few weeks ago, few manufacturers ventured beyond that point in their product introductions.

Shifts in market share among various price-point ranges between 1999 and 2001 also support this business migration, according to statistics from market research firm NPD HomeTrak. Based on the percentage of business transacted at retail within a number of fixed price-point ranges, it is evident that the $109 to $119 range has become a key price point. Moreover, over the past three years, business has become more evenly divided among the various price-point ranges, which begin at $69.99 and go up to $149.99 in this survey.

By introducing more patterns with a greater perceived value, manufacturers have wooed customers up the value scale, said Roger Gendron, senior account manager at NPD. Since the share of patterns sold at higher price points remained intact, Gendron said it was likely that retailers were successful in getting consumers of a $79 or $89 pattern to trade up, so to speak. This was likely achieved mainly through design and an increase in the number of bone china patterns offered, which consumers perceive to be of better value than other materials, such as porcelain, Gendron said.

"This is such a pattern-driven business that it's got to be a good look at the right price," said Floyd Sullivan, senior vice president and director of tabletop for Noritake. "I see the business migrating to a pattern that looks good."

Consumers have not been willing to spend too much, however.

"Vendors have become extremely concerned that a five-piece place setting is kept within the range of a typical bridal gift," said Mary Bethel Binder, senior tabletop buyer at Kitchen Etc. She said the typical cost of a bridal gift over the past several years has dropped, from somewhere around $150 to about $75. Another retailer agreed that guests are spending less on bridal gifts, but didn't quote an actual price figure. In a challenging economy, gift-givers are more concerned than ever with perceived value, Binder said.

Gary Bromley, china buyer at Gottschalks, agreed that pricing has come down from all vendors, most of whom are shooting for $100 or below for a five-piece place setting. "A few years ago, everyone was at $129," he said.

Of course, patterns are promoted so often and so noisily that the promotional price point has essentially become the price point. "Nobody sells anything at the manufacturer's suggested retail price," said Binder.

Minimum advertised pricing -- the lowest price at which a manufacturer will allow an item to be sold -- has become the rule across almost all retail channels of distribution, and the standard deduction is 30 percent off. Most manufacturers provide windows of opportunity during which time a retailer may go below the minimum advertised price, through coupons or other promotions (buy three dinner plates, get one free, for instance). These windows occur so often at retail that most consumers don't know the real price of anything anymore, said Binder. But they do know they can always get it on sale, turning the dinnerware business into a commodity business.

"I'm a promotionally driven company in a promotionally driven department," said one department store dinnerware buyer. Allowed to be on sale 65 percent of the time, the buyer added, "I try to take advantage [of those times].

"You do the abundance of your business at the promotional price," the buyer continued. "[Consumers] don't buy it at the regular price. The customer knows it's going to go on sale."

"It's so rare to see anything at its regular price point," said Noritake's Sullivan. Minimum advertised pricing used to occur two weeks a season, twice a year at a promotional price point, according to Sullivan. Now it's year-round. "We don't even talk regular price anymore.

"The operative word is `street price.' You have to price goods and have to be careful about production costs to reach the street price so that [retailers] and vendors can meet margins," he said.

In order to hold the line on the price of a place setting, some manufacturers opt to make up the difference by raising the price of accessories. Consumers may be willing to accept an increase in the price of accessories because they trust that the value of the five-piece place setting is there, and because they want to purchase good-looking accessories to go with their good-looking dinnerware.

Prices have also risen on some of the top-selling patterns that have been around for years. Lenox's Federal Platinum, for example, has gone up about $10 in the past 10 years, according to one retailer. And Noritake was forced to raise the price of Silver Palace from $99.99 to $104.99 because of cost increases. "We were a little leery of doing it because that would put it over the $100 mark, but the extra $5 didn't hurt at all," Sullivan said.

Retailers and NPD's Gendron agree that consumers take these cost increases in stride.
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Comment:SETTING STANDARDS; MANUFACTURERS ARE LOWERING PRICE POINTS FOR FORMAL DINNERWARE TO $100.00 AND BELOW.
Author:Zisko, Allison; report, Carla Webb contributed to this
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Article Type:Brief Article
Geographic Code:1USA
Date:Dec 24, 2001
Words:882
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