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Marketing Research of STX -
April 8th, 2011
STX (a contraction of the word "sticks" but commonly called "S-T-X") is a sports equipment manufacturer based in Baltimore, Maryland. It is a subsidiary of Wm. T. Burnett & Co. STX makes lacrosse equipment, field hockey equipment, and golf putters, but its main business is in manufacturing of men's and women's lacrosse sticks and protective gear, including gloves, pads, and women's eyewear. The company was founded in 1970 by Richard B.C. Tucker, Sr. as STX Inc. STX's first stick was the double wall, synthetic lacrosse head, which was the first synthetic stick and the only type used to score goals in the first NCAA Men's Lacrosse Championship (1971).
STX is one of the largest manufacturers of lacrosse equipment, and in Maryland, part of the $18 million industry.
In the mid-1970s, STX began branching out from lacrosse equipment with the development of golf putters, aided by ties with the chemical company DuPont. In 2006, a Darrell Survey conducted on the PGA Tour determined that STX putters were considered among the top five.
Total spending for children’s wear advertising in 2005 was EUR 22.3 million, which is 10% of the textile producers advertising budget. Consumer magazines took in EUR 8.8 million of the money companies spenton advertising, followed by television with EUR2.8 million. Poster advertising worth EUR 4.2 million, and flyers and free advertising magazines worth EUR0.6 million, managed to markedly increase their popularity as advertising media. Clothing companies rank only at place 25 in advertising budget rankings of different industries, with an overall budget total of EUR 226.7 million in 2005. Sanetta currently runs a marketing campaign with its trade partners for the baby wear label Sunshine Body. Parents of newborns receive a welcome parcel with a Sanetta voucher for EUR5 to buy garments that do not cause skin irritation. The textile discount chain, Kik Textilien & Nonfood GmbH, is currently marketing its wares with a high profile national campaign on TV.
This market is extremely fragmented with the top six companies holding only about a 6 % share of the market . Many of the companies are family-run LLC’s that do not publish results. The market for children’s wear, like those of other consumer goods, has been strongly affected by the general economic conditions, but in particular by the crisis of its most important outlet, KarstadtQuelle. The stagnation of the German economy has driven large numbers of small and medium companies into bankruptcy, among them in late 2003, the traditional children’s wear company Hummelsheim. Some companies have addressed market decline through a process of consolidation. One example is Sanetta Textilwerk whose subsidiary Boki Company Gebrüder Amman GmbH, acquired the license for Bodywear from the Betty Barclay lifestyle brand. Children’s and teenage wear from big fashion and sports labels were doing well, thanks to extensive marketing and spin-offs from the adult market. Competition from cheap foreign manufacturers and the trend towards discount shopping in Germany is eroding the strongly quality based industry.
Sanetta Textilwerk Gebrüder Amman GmbH & Co.KG
Sanetta Textilwerk Gebrüder Amman GmbH & Co.KG increased its sales by 9.1% in 2004 to EUR 63.5 million. The company employs 1,000 people; information on revenues was unavailable. The owner-run company is currently the largest specialist children’s wear manufacturer in Germany with its labels Down Over (formerly Match), Boki, and DoppelMoppel. Licenses held by Sanetta include the trend label Marc’O Polo, Tabaluga, and Betty Barclay. The company also has a cooperative agreement with organic baby food producer Hipp. The company runs various stores throughout Europe including 160 shop-in-shops, 2 franchise stores and 2 of its own brand Sanetta stores.
Hucke AG increased its sales by 3.7% in 2003/2004 to EUR 154.2 million, with a decline in revenues to EUR 3.7 million. The results of the first half-year of 2004/2005 were EUR70.6 million and pre-tax losses of EUR 2.5 million. Hucke AG’s important export business was not affected by Germany’s structural problems. The percentage of exports in terms of sales increased from 49.8% in 2003 to 52.2% in 2004. In the children's outerwear sector, sales dropped to around EUR 17 million in 2003/04; a decrease from EUR 22 million in the previous year. This business sector has been consolidated and improved by the restructuring of the Whoopi brand segments and the Steiff and More & More licenses. The new More & More Kids & Teens licenses have generated new impulses for growth and incentives to buy. Serious problems during 2004 in the department store chain KarstadtQuelle, one of the most important Hucke sales channels, have affected the current value and volume of business of Hucke AG negatively.
Santex Moden GmbH
Santex Moden GmbH is a private company and does not publish its figures. Santex is the biggest Turkish-run company in Germany and is part of the Sahinler Group Europe. It produces private label products for supermarkets, department stores, and discounters. The company employs 12,000 people in 28 companies spread over 13 countries. One of the company’s assets is a number of popular children’s licenses such as Harry Potter, Pokemon, Warner Brothers and Disney figures. Santex Moden GmbH sells ladies, men’s, and children’s wear to about 8,000 distribution outlets. It also runs its own chain of clothes outlets, Adessa.
Josef Kanz GmbH & Co. KG
Josef Kanz GmbH & Co. KG, founded in 1949, and does not publish its figures, as it is a family-run company. The company currently holds the largest market share in baby wear. Between 1999 and 2004, strong investments in production facilities and in the headquarters in Neufra were made, strengthening the Kanz brand. In 2004, the company completed its restructuring from general textile manufacturer to baby and children’s wear specialist.
The most important distribution channels are department stores, accounting for about 50% of all value sales in 2005. Mail order and internet sales represented 18% of the market in terms of value in 2005. This remains a popular channel due to convenient payment in installments. Other types of credit payments are still uncommon in Germany. Hypermarkets and supermarkets, including discounters with their strong own private label clothes, have increased their share over the review period, accounting for 14% in 2005. Specialist clothing and fashion retailers kept a share of 10%.
Sportswear outlets and brand retailers (such as Esprit and Hennes & Mauritz) represented up-market retailing were doing well, while traditional fashion retailers were falling behind. One exception is the C&A group who made a spectacular recovery in the past four years. It has opened 60 “Kid Stores” outside their department stores and is planning to open another 60 for 2005. Textile discount stores, Nonfood GmbH, a subsidiary of the Tengelmann chain are gaining ground. In the ten years of its existence, Kik has opened close to 2000 stores in Germany and Austria. Kik is ranked in 12th place of fashion retailers. The Swedish chain Hennes & Mauritz (H&M) now has four Young Fashion shops in Germany and is also poised to expand.
Price, quality, durability, natural fabrics and ease of care are the main reasons for adults to choose clothing for children of all ages until their teens. Children, and in particular teenagers, are a consumer group that make their own decisions. Only the reluctance of school children to be identified as “Aldi (discounter) Kids” is keeping the discounters from taking an even bigger share of the market. Brand choice has become increasingly important, with the vast majority 13-15 year olds buying the brand they prefer. Teenagers are directed by peer group fashion pressure and consequently are influenced by fashions they see their pop and film idols wearing. Children in the age group of four to twelve express high interest in theme-related clothing. Companies which hold licenses to cult movie and television characters are experiencing good results despite the recession. Safety is a prime aspect in children’s wear. In April 2005, norm DIN EN 14682 came into force banning cords and string ties at the neck for children’s clothes up to the 14-year age group.
The market for children’s wear is forecast to decline by 6.1% from 2005 to 2009, and reach a value of EUR 5.4 billion. This is in large part due to the fact that the average disposable income of German households will shrink over the next five years, and the economy will take longer than the forecast period to fully recover. German consumers have been buying fewer clothes over the past few years. In 1999, they spent 5.8% of their income on clothing; in 2005, this figure was down to 5.1% and is predicted to shrink even further. Dynamic discounter presence will further erode the value, if not the volume, of this market. Strong import competition with alleged, “price dumping” from India and particularly China is expected to cause value loss on the German textile market in the medium and long term.
Girl’s wear is expected to remain the largest segment, accounting for 45.9% of the market in 2009, reaching sales of EUR 2.4 billion. Baby wear will see the most dramatic change, as the birth rate will start to rise again in the second half of the decade. Its market share will rise to 31.8% worth EUR 1.7 billion. Boys clothing will be the sector experiencing the largest loss, as boys remain less fashion-conscious than girls and will therefore be clothed in cheaper brands. It will be premium brands in particular that will experience serious problems in the long term, as it is the high-income population group that is having fewer children. By this same token, demand for cheaper brands and discounter private labels will grow. Manufacturers of mid-range quality clothes are confident that their market shares will increase over the preview period.