Australian Directors Expect Further Consolidation in 2001
January 5, 2001
Sydney Australia — The year 2000 saw major consolidation in the competitive middle and decorative products sectors of the market. A number of acquisitions, mergers and strategic alliances developed throughout 2000.
According to John Harvey, CEO and managing director of the Bruck Textile Group, the gradual elimination of quotas and tariffs has contributed to a flood of piece goods and madeups into the Australian market. "This has resulted in both manufacturing and wholesale companies reconsidering their capacity in order to be competitive," he said. "Where necessary, a number of strategic alliances have taken place in order to strengthen market position, adding value to each group's distribution chain."
External factors such as the introduction of a Goods & Services Tax, (GST), the low value of the Australian dollar on world markets, interest rate increases and the extraordinary pace of trade during the latter part of the year triggered by the 2000 Olympic Games, have all conspired to slow sales for the normally busy pre-Christmas period.
Allan Lenton, managing director of Rowe Fabrics, said this confluence of factors has taken its toll on the home decoration industry. "Consumers are still spending, but the introduction of GST has seen competition in prices of imported cars, electrical consumer goods and information technology products. People are still making value purchases, but with limited incomes, home decoration is being put on hold."
Graham Fewell, director of furnishings for Charles Parsons, acknowledged there is competition for the consumer dollar from within the decorative products industry. "We are losing sales as fabric trends still support minimalist fashion. Window coverings such as plantation shutters, UV filter blinds, timber and vertical blinds work with the minimalist look and eventually this will turn around." Both Rowe and Charles Parsons Furnishings said that company marketing plans need to be aggressive in the new year in order to encourage a return to decorative window treatments.
Many company directors see further consolidation necessary to ensure survival. "In general terms, the acquisitions during 2000 were results of ongoing internal market strategies for the larger distribution companies to gain greater market penetration in new market areas," said Lenton. "There will need to be further consolidation within the market in order for companies to achieve future growth and profitability."
Rowe Fabrics acquired Fabric Library International , headed by Hugh Stevenson from Fabric Library South Africa on 1 May, 2000. Fabric Library International has had steady growth in Australia and is the major distributor for Fabric Library (South Africa) and Home Fabrics (South Africa). The broad acceptance by the Australian market of South African product in quality and coloration is indicative of the better decorative products end of the market constantly sourcing new and fashionable product to satisfy fashion trends.
Lenton, said the acquisition "enables both companies to share overheads and administrative functions, whilst retaining brand individuality, marketing, ranging and sales forces." Warehousing, administration and distribution have been consolidated. Rowe and Fabric Library's customer bases have increased with minimum overlap, he said. Customers benefit because they can select from a comprehensive range of decorative products, suitable for drapery and upholstery as well as decorative curtain hardware from either company. The companies hope the one-stop-shop approach fosters greater customer loyalty, said Lenton.
A similar acquisition by Jacka-Wortley under the direction of Peter Wortley, of Wilbro Fabrics was effected 1 July 2000. Both companies have a strong upholstery focus and hope their strategic alliance generates greater market coverage. The Wilbro decorative upholstery products gained the attraction of Jacka-Wortley who has a very strong profile in the budget-end upholstery market. Jacka-Wortley are distributors of Gosh Leather, Wilbro and Textilia products in Australia. As part of the arrangement Textilia will now distribute Wilbro in New Zealand, increasing market reach.
Under terms of the agreement, the companies will share administrative and distribution facilities but will maintain their individual marketing profiles. The companies are situated in Mulgrave, Victoria, with offices in all other states. "In both markets the group has a greater depth of product. The alliance has created stronger purchasing power, and both companies have a similar philosophy in relation to customer service and product supply. These factors will ensure that the group maintains a very stable core business that will continue to grow as the market strengthens," said Ian Wallace, managing director of Wilbro.
Meanwhile John Harvey saw Maurice Kain's exit from the Australian market in May 2000 as an opportunity for the wholesale company Wilson Fabrics (part of the Bruck Textile Group). Wilson assumed Maurice Kain's Australian operations, distributing Maurice Kain and Sekers products within Australia. In return, Maurice Kain will distribute Wilson Fabrics products in New Zealand. Maurice Kain will continue to operate as a separate marketing identity to Wilson Fabrics. According to Harvey, the introduction of state-of-the-art distribution and warehousing facilities in Alexandria, New South Wales, will improve efficiencies for both companies, increasing productivity and accuracy while minimizing operational overheads and lead times.
Bruck Textiles manufacturing business also acquired assets of the National Bartex print business and National Textiles Rutherford from National Textiles during 2000. Meanwhile, the Bruck Wangarratta plant is undergoing a major upgrade, which will be completed by March 2001.
New looms — including jacquard looms — and dyeing and printing equipment have been incorporated to modernize the plant. With greater globalization of the furnishings market generally, Harvey believes manufacturers must adjust. "Reduction in lead times, flexibility in products offered, and maintaining and improving operational efficiencies will need to be achieved by manufacturers to be successful in building future business relationships."
For 2001 all companies interviewed believed the Australian soft furnishings industries would consolidate further. "The market is going through a period of transition and will continue to do so for some time," Harvey said. "With further strategic alliances certain to take place, the industry needs to consolidate in order to remain competitive. As a manufacturer, wholesaler, supplier or converter, the key players within the industry believe the only way to succeed is to produce products more efficiently, with shorter lead times and greater design flexibility. Customers and suppliers need to be serviced effectively and finally strong marketing of soft furnishing products must be represented throughout the interior design market, to enhance the profile of soft furnishings, in particular window treatments, to the Australian consumer."
According to John Harvey, CEO and managing director of the Bruck Textile Group, the gradual elimination of quotas and tariffs has contributed to a flood of piece goods and madeups into the Australian market. "This has resulted in both manufacturing and wholesale companies reconsidering their capacity in order to be competitive," he said. "Where necessary, a number of strategic alliances have taken place in order to strengthen market position, adding value to each group's distribution chain."
External factors such as the introduction of a Goods & Services Tax, (GST), the low value of the Australian dollar on world markets, interest rate increases and the extraordinary pace of trade during the latter part of the year triggered by the 2000 Olympic Games, have all conspired to slow sales for the normally busy pre-Christmas period.
Allan Lenton, managing director of Rowe Fabrics, said this confluence of factors has taken its toll on the home decoration industry. "Consumers are still spending, but the introduction of GST has seen competition in prices of imported cars, electrical consumer goods and information technology products. People are still making value purchases, but with limited incomes, home decoration is being put on hold."
Graham Fewell, director of furnishings for Charles Parsons, acknowledged there is competition for the consumer dollar from within the decorative products industry. "We are losing sales as fabric trends still support minimalist fashion. Window coverings such as plantation shutters, UV filter blinds, timber and vertical blinds work with the minimalist look and eventually this will turn around." Both Rowe and Charles Parsons Furnishings said that company marketing plans need to be aggressive in the new year in order to encourage a return to decorative window treatments.
Many company directors see further consolidation necessary to ensure survival. "In general terms, the acquisitions during 2000 were results of ongoing internal market strategies for the larger distribution companies to gain greater market penetration in new market areas," said Lenton. "There will need to be further consolidation within the market in order for companies to achieve future growth and profitability."
Rowe Fabrics acquired Fabric Library International , headed by Hugh Stevenson from Fabric Library South Africa on 1 May, 2000. Fabric Library International has had steady growth in Australia and is the major distributor for Fabric Library (South Africa) and Home Fabrics (South Africa). The broad acceptance by the Australian market of South African product in quality and coloration is indicative of the better decorative products end of the market constantly sourcing new and fashionable product to satisfy fashion trends.
Lenton, said the acquisition "enables both companies to share overheads and administrative functions, whilst retaining brand individuality, marketing, ranging and sales forces." Warehousing, administration and distribution have been consolidated. Rowe and Fabric Library's customer bases have increased with minimum overlap, he said. Customers benefit because they can select from a comprehensive range of decorative products, suitable for drapery and upholstery as well as decorative curtain hardware from either company. The companies hope the one-stop-shop approach fosters greater customer loyalty, said Lenton.
A similar acquisition by Jacka-Wortley under the direction of Peter Wortley, of Wilbro Fabrics was effected 1 July 2000. Both companies have a strong upholstery focus and hope their strategic alliance generates greater market coverage. The Wilbro decorative upholstery products gained the attraction of Jacka-Wortley who has a very strong profile in the budget-end upholstery market. Jacka-Wortley are distributors of Gosh Leather, Wilbro and Textilia products in Australia. As part of the arrangement Textilia will now distribute Wilbro in New Zealand, increasing market reach.
Under terms of the agreement, the companies will share administrative and distribution facilities but will maintain their individual marketing profiles. The companies are situated in Mulgrave, Victoria, with offices in all other states. "In both markets the group has a greater depth of product. The alliance has created stronger purchasing power, and both companies have a similar philosophy in relation to customer service and product supply. These factors will ensure that the group maintains a very stable core business that will continue to grow as the market strengthens," said Ian Wallace, managing director of Wilbro.
Meanwhile John Harvey saw Maurice Kain's exit from the Australian market in May 2000 as an opportunity for the wholesale company Wilson Fabrics (part of the Bruck Textile Group). Wilson assumed Maurice Kain's Australian operations, distributing Maurice Kain and Sekers products within Australia. In return, Maurice Kain will distribute Wilson Fabrics products in New Zealand. Maurice Kain will continue to operate as a separate marketing identity to Wilson Fabrics. According to Harvey, the introduction of state-of-the-art distribution and warehousing facilities in Alexandria, New South Wales, will improve efficiencies for both companies, increasing productivity and accuracy while minimizing operational overheads and lead times.
Bruck Textiles manufacturing business also acquired assets of the National Bartex print business and National Textiles Rutherford from National Textiles during 2000. Meanwhile, the Bruck Wangarratta plant is undergoing a major upgrade, which will be completed by March 2001.
New looms — including jacquard looms — and dyeing and printing equipment have been incorporated to modernize the plant. With greater globalization of the furnishings market generally, Harvey believes manufacturers must adjust. "Reduction in lead times, flexibility in products offered, and maintaining and improving operational efficiencies will need to be achieved by manufacturers to be successful in building future business relationships."
For 2001 all companies interviewed believed the Australian soft furnishings industries would consolidate further. "The market is going through a period of transition and will continue to do so for some time," Harvey said. "With further strategic alliances certain to take place, the industry needs to consolidate in order to remain competitive. As a manufacturer, wholesaler, supplier or converter, the key players within the industry believe the only way to succeed is to produce products more efficiently, with shorter lead times and greater design flexibility. Customers and suppliers need to be serviced effectively and finally strong marketing of soft furnishing products must be represented throughout the interior design market, to enhance the profile of soft furnishings, in particular window treatments, to the Australian consumer."
