Here Comes the Sun
Posted on September 16, 2010 by
Lenox has high expectations for Winter Song, its new casual Christmas pattern. lenox.com
By Allison Zisko
Retail orders are in, plans are in place and hopes are up.
The fourth quarter is not a fait accompli--the goods still have to sell, of course--but the tabletop landscape has brightened and the industry is breathing a little easier. The year looks to end on a more positive note than the one on which it began.
Business has been progressing as expected, said Sal Gabbay, president of Gibson, which has been improving operations over the past several years. "We are expecting to see a modest improvement in the fourth quarter compared to 2009," he said. "We are more concerned with the business outlook in the next two years as we anticipate the economy will be sluggish. We're planning on cost increases for 2011, as the cost of production will inevitably rise."
David Zrike, president of The Zrike Company, was a little more sanguine. "We have very strong bookings going into fourth quarter," he said, although he expressed concern over fluctuating factory and shipping prices. "It is exciting that things are selling, that is for sure."
David Mackrell, senior vice president for dinnerware and glassware at Lifetime Brands' Mikasa and Pfaltzgraff, was more enthusiastic. Business, he said, has performed way beyond expectations and is doing "very, very well."
Some of the best performing tabletop categories, according to vendors, are casual dinnerware and accessories (particularly mugs), barware, serving pieces geared toward home entertaining, and key giftable items.
"The strongest growth opportunities for Gibson continue to be in the value and upscale channels overall, with the dinnerware and ceramics categories especially experiencing a healthy increase this year," said Gabbay. "But our kitchen and metals categories have the most room to grow and will be an important part of the business for years to come."
Sixteen-piece sets of casual dinnerware are selling well for Lifetime Brands. This success encompasses its many brands and a range of price points, from $49 to $79, said Mackrell. Private label business is also growing for the company.
Within dinnerware, an evolving array of reactive glazes are clicking with consumers, along with embossed and antiqued looks, decaled porcelain and bright, bold designs.
Zrike's "hardcore" dinnerware business has been "tough," Zrike acknowledged, but small, giftable businesses such as mugs, small bowls and salad plates are doing well, while the company's "comfort" brands, like Coke, Kellogg's and Disney, have been successful.
The formal dinnerware category is still depressed, but not out of the game. At Lenox, fine dinnerware is down, but ahead of plan and budget, according to Sherri Crisenbery, vice president of Lenox brands. "Everyone says it's dead, but it's not dead ... The bride is still picking it."
Lenox's casual business, meanwhile, continues to grow. Well-established patterns like Butterfly Meadow and Butler's Pantry still have impressively strong legs, while the company has "high expectations" for newcomers like Winter Song, a holiday pattern that taps into the current trend toward natural elements with a variety of seasonal bird designs.
Barware typically performs well in the fourth quarter, and this year should be no exception, vendors said. Sets of four casual glasses are selling well for Mikasa, reported Mackrell, particularly its Cheers line, while at Lenox, consumers' ongoing interest in wine drinking has boosted lines like Tuscany and Napa Valley.
Lenox is increasing the size of all of its core stemware patterns to be more in line with what consumers want. "That's a big initiative," said Crisenbery.
Libbey, which reported a nearly four percent net sales increase in the second quarter and a double-digit increase in sales to retail customers in the United States and Canada, is banking not only on traditional stemware and beverageware lines but also on home decor and home entertaining, said Greg Pax, consumer marketing manager. The company's Just Desserts mini dessert dish program is off to a "wonderful" start, he reported, while "home entertaining will be huge for us."
Libbey benefits from a regular replacement business as well as the incremental business it derives from its home entertaining solutions in a box, a format that it has offered for the past several years and continues to expand.
The greatest challenge of the fourth quarter for those who manufacture in China will be staying on top of the supply chain.
"If people don't have their orders in now, it will be impossible to get goods," said Lifetime's Mackrell.
Limited capacity in good quality factories and a reported shortage of workers has left some vendors vying for space. In addition, freight costs have increased exponentially.
There are also currency concerns.
"We anticipate the RMB to increase by three to five percent next year in light of international pressures coming from European and North American governments," Gabbay said. "This is likely to happen. In addition to the increases in production costs, raw material [and natural gas] costs have increased ... with packaging and cardboard costs going up as well."
Gibson considers the impending price increases--most likely double-digit increases industry wide, it predicts--to be the most important issue facing the industry as it prepares for the Fall Tabletop Show in New York in October.
"The situation is tightening up in China due to factory closures, worker shortages and huge price increases," Zrike said. "It has become a seller's market ... and the key to survival is having strong long-term factory relationships. We are spending more time at the factories and are looking for other countries to produce in."
Planning with retailers has proven essential, said Mackrell, who said his company sits down with its retail partners a year ahead of time to review where they are in terms of orders and shipments and where they need to be.
Business has remained steady across all channels of distribution, each of which caters to slightly different consumer tastes. The grocery store channel, with its pick-up appeal in a down market, represents a growth opportunity for some, while others say that online business is soaring.
Sales are "exploding" with online retailers, according to Mackrell. The online business of traditional brick-and-mortar retailers has been "growing by leaps and bounds," he said. The business has always been there, but Mackrell believes that as retailers pay more attention to their sites and position them properly they have reaped the benefits.
Some brick and mortar retailers are promoting new collections online before they arrive on store shelves, a strategy that has been successful in building business around a collection, Crisenbery said.
The Internet's ability to present whole collections, coupled with a vendor's willingness to drop ship, has reduced inventory pressures on retailers, she continued. It also feeds into a consumer desire, particularly among brides, to research goods online before deciding on a purchase.