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(Last updated: 04 Jul 2008)
Trends and opportunities
The market
The line between general gifts and decorative accessories is slowly disappearing, with home furnishings still the dominant category. The home furnishings segment (includes candles, picture frames, tabletop accessories and vases) was valued at US$17 billion.
The most important emerging trend in the general giftware sector is the move away from gifts purchased for another person, to purchases increasingly being for the individuals themselves. Important product segments for self-purchases include: home furnishings, aromatherapy products, art candles, Christmas decorations, lamps, linens/throws and plush toys.
Seemingly unlimited access and exposure to new products, materials and resource markets has made US consumers impatient. As a result, Australian suppliers need to have a steady supply of new designs, concepts and/or products available for their distributors and buyers.
American consumers are increasingly using the Internet for purchases. More importantly, consumers are using it as part of their process for learning about and identifying products for purchases made in retail environments. The existence and accessibility of the Internet to consumers becomes a source of legitimacy for the manufacturer. It also becomes an opportunity to communicate information to receptive consumers. The website should be user friendly, providing easy navigation to product information.
Jewellery in particular has sold well over the Internet. Online sellers are often able to sell at lower prices due to fewer middlemen, lower overheads and a 24-hour store front. A search for the keyword 'jewellery' on eBay reveals close to 40,000 items.
US gift convention organisers are the most experienced intermediaries between buyers and wholesalers, and several have launched B2B websites (ie. Americas Mart and Dallas Market Center) designed to capitalise on their existing relationships and expertise.
While most B2B gift industry sites market product on behalf of suppliers, the web is also producing a cyber version of the wholesale distributor — a company in the US that will take ownership of the product and resell it to the retailers. Examples include Farcountries.com and Whereoware.
Opportunities
The giftware category includes:
- Art/prints, including fine art and ceramics - Crossing the line between collectibles, investments and home decorative accessories, wall art is a growing sector.
- Collectibles - Companies providing corporate gifts, jewellery and sculptures are expected to experience good continued growth.
- Greeting cards and stationery - Greeting card sales are flat, due to the availability of e-cards on the Internet, but sales of gift wrap paper, ribbons and bags continue to rise. This industry is characterised by low margins and high competition, especially from key players Hallmark and American Greetings.
- Lamps and lighting accessories
- Linen (also pillows, throws and rugs) - Rapidly increasing in sales, as the market looks toward luxurious home furnishings.
- Picture frames - Steadily the most popular of the category, reflected by the family and home focus.
- Tableware - Growth products are white fine china with metallic trim, bridal gifts and children's dinnerware.
- General gifts – Includes aromatherapy products, candles, vases, etc.
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Marketing your products and services
Market entry
There are over 70,000 gift stores in the USA. Giftware retailers purchase their goods primarily through manufacturer's representatives and prefer to work with local warehousing resources for fulfilment and delivery of product orders. Many of the manufacturer's representatives in the home decor and gift related market have permanent showrooms in which they display current product lines and introduce new products.
For most giftware products, attending and participating in trade events is a valuable way to assess competitors in the market and discover distribution channels. A detailed list of upcoming giftware trade events is available.
Using a manufacturer's representative allows Australian companies to divide North America into more manageable territories, which allows for tighter management and steady, proactive expansion. They typically target a variety of market segments, rather than just specialising in one. For example, in giftware a manufacturer's representative would target end retailers such as mass merchants, department stores, speciality stores, perhaps home centres and mail order companies.
Manufacturer's representatives usually handle complimentary but not competitive lines, and are rewarded on a commission basis. They are therefore often more concerned about seeing a product line sell well, whereas importers or distributors may often carry multiple competitive lines and/or their own exclusive brand.
Product pricing and unique features will always be key success factors, regardless of the market entry method. Local warehousing and shipment of product is also generally preferred, regardless of the distribution channel. This may mean Australian firms using Manufacturer's reps will need to identify a good fulfilment house (smart warehousing services) to be able to reliably supply their reps or end buyers.
Manufacturers Representative Profile provides search and management services for manufacturer's representatives.
Distribution channels
The potential size of the US giftware market means there are a number of distribution channels available to Australian exporters of giftware, depending on your target end-user segment, price positioning, production capacity and marketing budget.
According to Data Monitor, the main channels for giftware are:
- Mass merchants (ie. Wal-Mart, K-Mart, Target and Kohl's) account for 36 per cent of sales (and is on the increase)
- Department stores (ie. Dayton-Hudson, Macy's, Saks) account for 30 per cent of sales
- Chain stores (ie. Sears, JC Penney, Montgomery Ward) account for seven per cent of sales
- Specialty stores (ie. Ross, Toys-R-Us, Bed, Bath and Beyond, Linens-N-Things) account for 12 per cent of sales
- Independent specialty retailers account for seven per cent of sales
- Mail order (ie. Spiegel, Hanover Direct, Pottery Barn) account for seven per cent of sales
- Home centres (ie. Home Depot and Lowes) account for four per cent of sales. These include retailers with home decor, living products
- Electronic retailers (ie. QCV and Home Shopping Network) account for one per cent
- The total adds up to 104 per cent, as some retailers also sell via mail order, electronic channels and other means.
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Contact details
The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.
Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
Austrade:
- Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
- Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
- Administers the Export Market Development Grants scheme.
- Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
- Provides advice to the Australian Government on its trade and investment development activities.
- Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au |
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