Tabletop vendors pressured to compete with big box market

Tabletop vendors are feeling the pressure from big box retailers who continue to reinvent themselves with better product design and higher quality goods. Vendors are refocusing their lines to capture customers by staying ahead of the curve design-wise and building their brand image.

"The big box retailers are getting smarter and smarter all the time," said Adam Taylor, vice president of sales and marketing for Arte Italica. "They have great product development people, many of the sources they have are the ones the higher end tabletop companies used to be exclusive to. I walk into Crate and Barrel and I see our vendors' merchandise on their shelves; because of their volume they can sell those things at lower price points.

"Most high-end tabletop companies continually get copied, which is flattering, but it dilutes the market," Taylor said. "To combat this, we maintain our high standards, our image and brand, by distributing through the very best retailers in the country. We sell to stores that make a shopping experience special, they know the consumers by name, they call them when new items arrive, they offer exceptional service and that's what makes our product special. If our brand were in Crate and Barrel, it wouldn't be as special, it would be everywhere."

"The tabletop industry's challenge is the big box retailers and discounters are going upstream and what does that mean to department stores and the independent retailer, it's an image issue," said Doug Vaughn, president of Vietri. "I think there are a lot of brands that have had trouble finding their message, there is a lot of inconsistency."

Vaughn said building a brand image is what has helped Vietri succeed in a competitive marketplace. "We've built a brand rather than being so product-focused, and there's a sense of security that's reflected in the brand," Vaughn said. "We like to think we serve a different customer. We really focus on having something others don't in design and we believe there's no one better than Italians for the artistic nature and training."

Other suppliers agree design is the key and being trend-forward helps increase the perceived value of the product. However, they say by offering a range of price points, they can meet more stores' needs.

"The key to success is having timely, well-themed merchandise," said Andrea Sadek, vice president of Andrea by Sadek. "I think there's a huge amount of offerings in the casual market but there are still opportunities for well-designed merchandise. The association with good design is key whether it comes through licensing or good creative people."

Helen James, president and CEO of MoMo Panache, believes offering a unique product that others don't provide is important. "The key is how to make our product stand out in the crowd," James said. "The only way to survive is to focus on what we're best at and that's design and being unique. We work in a very detailed way with our suppliers to work out saving a cent or five cents without compromising our decorative style. Our key accounts have more aggressive pricing requirements; for them I have to do a modified design and get better pricing in China. If I need high volume, I have to go to China."

"With so many manufacturers switching to Asian-based factories, you have to be competitive," said Neal Blanchard, sales and marketing manager of Abigails. "We still maintain our core product line from Italy, but for us to have a secondary price point we have to offer alternate countries of origin, it provides a good mix for our customers." Another issue facing the tabletop industry is the rising costs, directly impacted by the rising fuel costs, which affect virtually every aspect of the manufacturing process. Raising prices to the customer seems inevitable, although manufacturers say they are increasing efficiency, simplifying processes and lowering margins to avoid passing costs on.

"We're absorbing rising fuel costs right now," Blanchard said. "We're confident that this too shall pass, that's sometimes the cost of doing business."

"Suppliers have definitely pushed prices up for the same products because of rising fuel costs," James said. "We're trying to work harder and smarter to get better pricing out of our factories and we're lowering our margins. The challenge is keeping value but being competitive with pricing, doing more with less."

"The cost of goods is going up, there are some things we can do as far as simplification or different approaches to creating tableware to have better priced merchandise," Sadek said. "There are other issues like the factories' increases in cost of production that you cannot avoid."

Vaughn said because Vietri has long-standing relationships with its vendors, most of the back and forth regarding pricing is completed behind the scenes. "We take a good bit of that impact internally and we partner with our manufacturers for concessions. Our ultimate objective is not to price ourselves out of the market."

In 2006, tabletop manufacturers are hoping to stay on top of the game by providing retailers with quicker turning products than just dinnerware. Home decor, garden accessories and gift-boxed items offer a stretch from traditional dinnerware.

"Vietri's dinnerware has always been designed to pull out for home decor," Vaughn said. "We've tried to stay focused on the multi-faceted approach with real growth to our home decor segment. We really try and do our best to bring what the customer is looking for."