Tuesday, March 22, 2005

Market Basket Cheaper in 2005

Marketing Report

Source: By Home Textiles Today 2005(c)

New York - Whether a factor of deflation or a reaction to consumer sensitivity, spring prices on bedding and bath items fell back in this year's Market Basket survey.

Home Textiles Today's fourth annual report found that pricing dropped this year in most of the highest-priced and lowest-priced items in the survey.

In terms of top price point item in each market basket, tickets were reduced sharply at five of the nine stores visited by HTT:

- Sears, down 50 percent;

- Kohl's, down 42 percent;

- Linens 'n Things, down 29 percent;

- JCPenney, down 17 percent;

- Marshall's, down 14 percent.

The top price point Market Basket item remained the same at Bed Bath & Beyond ($249.99), Target ($149.99) and Kmart ($114.99).

Only Wal-Mart, famed as America's low-price leader, bumped the top line. The most expensive item in the Wal-Mart basket - a queen bed-in-a-bag - rose from $84.75 in last year's survey to $99.74 this year, a hike of nearly 18 percent.

At the same time - and emblematic of Wal-Mart's strategy of pushing price points at both ends of the spectrum - its lowest-priced queen bed-in-a-bag dropped from $44.96 in the 2004 survey to $28.84, a 36 percent cut. Also indicative of the general trend, last year's item was manufactured in the United States by Springs Industries. This year's low-price bed-in-a-bag was sourced from Pakistan by Wal-Mart.

Nonetheless, the U.S.-manufactured goods in Wal-Mart's basket increased substantially. The ratio stood at just 2 percent last year - the lowest in the 2004 survey - and grew to 25 percent this year.

The ratio of U.S. made goods in the basket also rose at Kmart, from 3 percent to a whopping 53 percent - the largest concentration of domestic goods in this year's survey. At all other retailers, the percent of domestically manufactured goods declined.

For the annual Market Basket reports, HTT assembles a list of basic bed and bath items, then visits one store from each of 9 of the top 10 home textiles retailers to find the lowest priced item and the highest priced item for each product on the shopping list. The No. 10 retailer on HTT's Top 50 Retailers ranking - Pottery Barn - was not included in the survey because its in-store assortment of bedding and bath products is too slight to make valid comparisons.

As in previous years, the market baskets contain only items marked at everyday prices. Sale and clearance goods are not added to the cart in order to establish a base line for EDLP.

HTT's editors were unable to complete their shopping lists at four stores. Neither the JCPenney nor the Target store offered any non-sale bath sheets on the day they were visited. Wal-Mart had no tissue boxes, and Marshall's was lacking both the queen-sized bed-in-bag and the queen dust ruffle on the list.

While the market baskets are not representative of each chain's "average market basket," they do represent what a customer who shopped these stores in these markets - during the period between March 7 and March 14 - would have found if she were looking for either the least expensive goods or the presumed top-of-the-line products.

This year's survey found prices tumbling on the low-end as well. The retail on the lowest-priced item in the baskets dropped dramatically at the majority of stores visited:

- Sears, down 75 percent;

- Kohl's, down 60 percent;

- Linens 'n Things, down 57 percent;

- Marshall's, down 50 percent;

- Bed Bath & Beyond, down 33 percent.

Last year, the lowest-priced item in each of their baskets was produced in the United States - primarily by WestPoint Stevens - with one exception. This year, the retailers' lowest priced items were produced abroad - again, with one exception.

Only Wal-Mart and JCPenney held level on their lowest-priced market basket items, at 78 cents and $3.99, respectively. Kmart raised the price on its least expensive market basket item by a penny.

Target was the lone retailer in the survey to hike the ticket in its lowest-priced, non-sale wash cloth: up 79 percent from 88 cents in 2004 to $1.58 this year.