Volume 10 | Issue 1 | Year 2007

You can’t afford to be caught sleeping in a highly competitive business. Even when what you make is designed to entice customers to want to lie down and relax. But as Richard Pinchuk, CEO of textile manufacturer Beco Industries, remarks, “This has become a highly competitive business. It wasn’t that long ago that a comforter was a comforter. Today, it’s about how the comforter coordinates with the entire home decorating scheme, a scheme that today’s homeowner frequently changes to follow the latest design trend.

Consequently, it’s no longer just about making a product – a comforter – but about providing a solution: a comforter with a design that can be extended with complementary bath and kitchen items.”

Beco Industries is based in Montreal, Canada, where it is the largest national manufacturer and exporter of home textile products. These products include sheets, comforters, bedspreads, duvet covers, decorative pillows, blankets, window coverings, juvenile bedding and sleeping bags. Fabrics used in these products include solids, prints, woven jacquards, satin, eyelet and lace, fleece, jersey, suede/leather, denim, microfiber and flannel. A relatively new addition is the so-called “nano” fabrics that are highly stain resistant. Beco’s exclusive designs cover many different styles, from contemporary to traditional. Customers are major retailers in the mid-to-low end categories of home furnishings; sales are roughly 60 percent to the U.S. and 40 percent in Canada.

Beco’s exclusive designs cover many different styles, from contemporary to traditional. “Developing complete coordinated fashion programs for use throughout the house – not just the bedroom – is a key competitive strength,” Pinchuk says. “Our designers use coloration, fabrication, and creative packaging to differentiate our product from the rest of the marketplace to produce a better quality product, while maintaining the best possible standards and value. Whether it is sheet sets, comforter sets, bed sets in a bag, blankets, throws, or any other of our vast product assortment, our designs and quality are second to none.”

The company has a design team dedicated to keeping abreast of the latest fashion trends and fabrications, as well as setting some trends of their own. “We work with our customers to see what they’re looking for; at the same time, we’re working to keep them informed about what we see as what’s going to be a distinctive look that’s going to bring people into their stores,” Pinchuk says.

And people are looking to stores for new home furnishings. As Deborah Holmes, executive editor of The Old House Web, observes, “The industrial age brought a new-found wealth of machine-made furnishings to the middle class. Homeowners showed off their prosperity and status by cramming their parlors and drawing rooms with furniture and knickknacks. Egyptian, Turkish and Oriental ornamentation were featured in richly colored wall coverings and fabrics.And today, once again, homes have become a place to express personality.”

Pinchuk agrees that a driving a trend in the textile industry is greater consumer awareness of home decorating design as a means to express personality. “Certainly, the growth of magazines and television shows devoted to home decorating have helped foster not only a greater interest in revamping d‚cor, but greater sophistication about achieving a particular `look.’ It’s true that home sales are beginning to decline, but we’re not at the part of the real estate cycle yet where that is starting to affect us. Plus, it’s always going to be counterbalanced by the fact that if people don’t feel financially comfortable about buying a new house, they’re all the more likely to redecorate their existing home and still get something different.”

Equally as important as look, however, is quality. “Three years ago I had one quality control person,” Pinchuk notes. Today, I have a quality control department of nine people.”

The home furnishings retail industry has seen some consolidation. According to “B2B Intermediaries in the Home Furnishings Industry,” by Matthew Bostrom and Tari Titherington, “Just 15 years ago, the retailing side of the industry was dominated by small retailers and price was less of an issue with both buyer and seller enjoying acceptable margins. In order to capture market share, however, retailers have recently been gouging price points and this has undercut already weakening profit margins. As retailers consolidate, they require increasing levels of service from manufacturers; since small manufacturers are unable to keep up with large retailer’s needs, they are associating with much larger manufacturers that have the logistics and distribution support needed. This trend has served to push the smaller buyers and sellers out of the market.”

Cost Controls
Pinchuk, however, believes suppliers will continue to survive in this environment, if only because the ones who couldn’t survive have already gone under. Indeed, Pinchuk anticipates 10 percent yearly sales growth, while conceding that, “In the old days, that was easier to do. Today, everything is a struggle and we’ve all had to work harder. It’s a global business and with that has come intense pressure to keep costs down while maintaining high quality. That’s why, like everyone else, we’ve moved our manufacturing offshore, to take advantage of lower labor costs. In the 1990s, we spent about $10 million upgrading our manufacturing capabilities. Today, nobody in the industry would do anything like that because it’s so much less expensive to do manufacturing overseas.

So we have offices in Pakistan and China and sourcing arrangements with quality-assured mills in the Far East. In addition, we’ve achieved ISO: 9001 certification. Also, we do have a 300,000-square-foot finishing and warehouse/distribution facility here in Montreal as the final step to ensure our goods are the highest quality.”

In league with lower cost manufacturing is to shave shipping expenses. “Fuel is more expensive, and improved logistical management is even more important to control costs,” Pinchuk says. “Fully automated technologies power our materials handling, cutting and sewing, packaging and shipping systems, which are UPC, EDI/AS2, ASN, JIT and Retail Link compliant. Canadian and U.S. F.O.B. points allow for NAFTA sanctioned duty, customs, currency and transportation efficiencies and cost advantages. Consequently, the company’s size and scale enable it to be fast and responsive while the economies of scale provide exceptional value for our customer.”

As Pinchuk points out in Canada’s Trade Negotiations and Agreements Web site, “‘You need to keep abreast of the laws and make them work for you to improve your bottom line. Marry the advantages of what can be done in China with what you can do in Canada.’ For Beco, that has meant manufacturing comforter covers and accessories in China while continuing to produce the bulky, transport-costly stuffing in Canada.”

New Trends
The company, which employs about 300, has been in business for over 60 years, but recently made the transition from private to public ownership last December. “It was the right time,” says Pinchuk, who was one of family owners. “It brought capital to the company and was the right thing to do both for the family owners who wanted to move on as well as those, like myself, who chose to stay with the business as it moves in new directions.”

One such direction is towards more private labeling. “We already have licenses with Joe Boxer and Kodiak, which is Canada’s version of Colombia Sportswear in the U.S. We’re currently working to close a number of licensing deals with other companies.”

But whether private labeled or not, customers continue to select Beco Industries for three reasons, says Pinchuk. “We offer the products that are in demand. We are price-sensitive. And we have the strong design knowledge to co-ordinate our products to constitute a complete decorating solution.”

That should make not only Pinchuk, but his customers, rest easier.

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