FUTURE of LEAD CRYSTAL FUTURE of LEAD CRYSTAL CONSUMER PRODUCTS IN THE CONSUMER PRODUCTS IN THE
UNITED STATES MARKETUNITED STATES MARKET
Timothy MaherTimothy Maher
ICF Meeting – SienaICF Meeting – Siena
November 5, 2007November 5, 2007
INTRODUCTIONINTRODUCTION
Challenging TimesChallenging Times
Changing ConsumerChanging Consumer
Retail “Revolution”Retail “Revolution”
Shrinking Revenues & ProfitsShrinking Revenues & Profits
Consolidations & TakeoversConsolidations & Takeovers
Consumers Have Different ValuesConsumers Have Different Values
Post war 62-79Post war 62-79
Leading edge Leading edge boomer 53-61boomer 53-61
Trailing edge Trailing edge Boomer 42-52Boomer 42-52
Generation X 31-41Generation X 31-41
N Generation 23-30N Generation 23-30
Distribution ChannelsDistribution Channels
Department Stores*Department Stores*:: Macy’s (Federated merger with May Co.)Macy’s (Federated merger with May Co.) J. C. Penney (Moving “Up Market”)J. C. Penney (Moving “Up Market”) Dillard’sDillard’s Belk StoresBelk Stores Bon-TonBon-Ton Gottschalk’s (Eliminating “Home”)Gottschalk’s (Eliminating “Home”) 1984 = 1 National & 38 Regional Department Stores1984 = 1 National & 38 Regional Department Stores Today = 2 National & 4 Regional Dept. StoresToday = 2 National & 4 Regional Dept. Stores **Excluding SearsExcluding Sears
Department Store Retail Sales Department Store Retail Sales 1993-2006 ($ Billions)1993-2006 ($ Billions)
$0
$50
$100
$150
$200
$250
1993 1995 1997 1999 2001 2003 2005
USA Retail Sales*USA Retail Sales**Excluding Motor Vehicles & Parts*Excluding Motor Vehicles & Parts
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
U.S. Department Store Death SpiralU.S. Department Store Death Spiral (Share of Non-Automotive Retail Sales)(Share of Non-Automotive Retail Sales)
0%
2%
4%
6%
8%
10%
12%
14%
1993 1998 2003 2008
U.S. Depar tmentStor e Sal es
Distribution ChannelsDistribution Channels
““Independent” Tabletop Stores:Independent” Tabletop Stores:
China & CrystalChina & Crystal
JewelryJewelry
GourmetGourmet
Interior Design/FurnitureInterior Design/Furniture
GiftGift
1984 = 3,500 – 5,0001984 = 3,500 – 5,000
Today = 250 – 350 “Tabletop” IndependentsToday = 250 – 350 “Tabletop” Independents
Distribution ChannelsDistribution Channels
““Specialty” Retailers:Specialty” Retailers:
Bed Bath & BeyondBed Bath & Beyond
Crate & BarrelCrate & Barrel
Linen’s & ThingsLinen’s & Things
Pottery BarnPottery Barn
Williams SonomaWilliams Sonoma
1984 = Few Regional Stores or Non-existent1984 = Few Regional Stores or Non-existent
Today = Thousands of StoresToday = Thousands of Stores
USA Annual E-Commerce Retail Sales*USA Annual E-Commerce Retail Sales*Billions of DollarsBillions of Dollars
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
1998 2000 2002 2004 2006 2008
E- Commerce
E- Commerce will account for 10% of U.S Retail Sales by 2010
*Excluding Travel
Internet Consumers & RetailersInternet Consumers & Retailers
85% of “High Income” Consumers Buy Products 85% of “High Income” Consumers Buy Products on The Internet.on The Internet.22% of All Regular Retail Store Sales Are 22% of All Regular Retail Store Sales Are “Influenced” By Internet Shopping.“Influenced” By Internet Shopping.46% of “Online” Customers Also Purchase 46% of “Online” Customers Also Purchase Products At Regular Retail Stores.Products At Regular Retail Stores.““Multi-Channel” Marketers Control 75% of Multi-Channel” Marketers Control 75% of Internet Sales.Internet Sales.Internet Sales (excluding travel) Are Growing at Internet Sales (excluding travel) Are Growing at More Than 25% per Year.More Than 25% per Year.
Crystal IndustryCrystal Industry
Total Lead Crystal SalesTotal Lead Crystal Sales Stemware & Giftware SalesStemware & Giftware Sales Imports By Country Imports By Country
Total Crystal & Glass ImportsTotal Crystal & Glass Imports
““Crystal” Retail Sales By ChannelCrystal” Retail Sales By Channel
Future DirectionFuture Direction
Market Size :Market Size : U.S. Crystal Imports 1985-2005 U.S. Crystal Imports 1985-2005
(Millions of Dollars) (Millions of Dollars)
20 YR. Average Annual Growth: 2.4% Compounded20 YR. Average Annual Growth: 2.4% Compounded
104 92 98134
100
88
196247
275
205
0
50
100
150
200250
300
350
400
450
1985 1990 1995 2000 2005
Gif twar eStemwar e
288
345
409
305
192
U.S. Crystal Imports U.S. Crystal Imports Lead Crystal Imports have Declined Lead Crystal Imports have Declined 41%41% Since 1999 Since 1999
(Millions of $)(Millions of $)
142 134 101 106 104 108 100 81
205214214226232
275287
0
50
100
150
200
250
300
350
400
450
500
1999 2000 2001 2002 2003 2004 2005 2006
Gif t war eSt emwar e
429409
333 332 318 322 305
% Change +13% -5% -18% N/C -4% +2% -5% -17%
173
254
Crystal Imports By Product Type Crystal Imports By Product Type Stemware vs. Giftware 1985-2005Stemware vs. Giftware 1985-2005
0%
10%
20%
30%
40%
50%
60%
70%
80%
1985 1990 1995 2000 2005 2006
Gif twareStemware
54
46
68
72
6767
3228
33 33
68
32
Crystal Imports By Exporting Region Crystal Imports By Exporting Region (1985 – 2005)(1985 – 2005)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Wester n Eur ope 86% 82% 80% 75% 72%
Easter n Eur ope 6% 12% 17% 22% 22%
Far East 5% 5% 2% 2% 5%
Other 3% 1% 1% 1% 1%
1985 1990 1995 2000 2005
Crystal & Glass Imports - StemwareCrystal & Glass Imports - Stemware1995-2005 (Millions of Dollars)1995-2005 (Millions of Dollars)
020406080
100120140160180200
1995 1997 1999 2001 2003 2005
CrystalGl ass
10 YRS: Lead Crystal Stemware Increased from $98M to $100M
Glass Stemware Increased from $80M to $178M
Crystal & Glass Imports – Giftware Crystal & Glass Imports – Giftware 1995-2005 (Millions of Dollars)1995-2005 (Millions of Dollars)
0
100
200
300
400
500
600
1995 1997 1999 2001 2003 2005
CrystalGl ass
10 YRS: Crystal Giftware Decreased from $247M to $205M
Glass Giftware Increased from $244M to $356M
2000 - 2006 Crystal Retail Sales 2000 - 2006 Crystal Retail Sales
0
50
100
150
200
250
300
350
400
450
2000 2002 2004 2006
Depar tmentStores
Spec ial tyStores(Category &Independent)Catal ogs(Mail / Internet)
Other
$762 $725 $711 $678 $665 $645
Note: HFN Defines Crystal as “High Quality Glass” (Not Limited to Lead Crystal)
(Millions of Dollars)
$667
INDUSTRY “FUTURE” DIRECTIONINDUSTRY “FUTURE” DIRECTION
IDENTIFY TODAY’S CONSUMER IDENTIFY TODAY’S CONSUMER AND REACH THEM WHERE & AND REACH THEM WHERE & WHEN THEY SHOP.WHEN THEY SHOP.Crystal Is a “LIFE ENHANSING” Crystal Is a “LIFE ENHANSING” Product & Must Be Sold As SuchProduct & Must Be Sold As Such..Design Uniqueness & QualityDesign Uniqueness & Quality Are Strategic Imperatives.Are Strategic Imperatives.Diverse Distribution Channels Are Diverse Distribution Channels Are RequiredRequired To Reach Today’s To Reach Today’s Consumer.Consumer.““BRAND BUILDING” IS ESSENTIAL !BRAND BUILDING” IS ESSENTIAL !
