NEW YORK — Cotton’s whopping 57 percent share of the overall fibers market at retail still doesn’t satisfy J. Nicholas Hahn.
The president and chief executive officer of Cotton Incorporated, the 24-year-old research and promotion arm of U.S. cotton growers, says several key segments need to do better. His goal: 60 percent.
Grabbing a bigger hunk of the women’s wear pie, creating more retail-oriented marketing and promotion campaigns and establishing an even greater presence on the international front, said Hahn, are all vital to keeping cotton king.
Even so, while Hahn professes the need to beef up those areas, he’s quick to point out that cotton is enjoying its greatest run since the late Sixties, when its share was an estimated 70 to 75 percent — scientific tracking began in 1970 — and that more cotton is being sold to the domestic textile industry than at any time in history. The next closest fiber to cotton is polyester, checking in with about a 25 percent share at retail.
Of the 1993-94 cotton crop of 17.4 million bales, 10.4 million were sold to U.S. mills, versus 10.2 million in 1992-93. Exports, too, continue to grow, as 7 million bales were shipped outside U.S. borders in 1993-94, against 5.2 million the year before. One bale is 480 pounds.
That, said Hahn, is in spite of having to compete with the man-made fiber producers and “their hundreds-of-millions-of-dollar budgets for advertising, promotional, research and development.”
Cotton Inc.’s current budget is $45.1 million. When the organization was formed in 1970, its budget was $13 million.
In addition, the rise in price of domestic cotton to nearly 84 cents per pound has caused some executives in the textile industry to speculate that man-made fiber producers have an opportunity to at least make a dent in that lofty market share number. While the price has dropped a bit into the high-70-cent range over the past few weeks, it is still about 15 cents higher than last year at this time, and could bounce back up.
“There’s an economic event taking place whenever a consumer walks into a store, lays down money and buys something,” said Hahn, during an interview at Cotton Inc’s offices here. “We are trying to influence that economic event, a critical one that drives the entire industry, toward cotton. The consumer is king.”
Women’s wear, said Hahn, remains a critical issue. According to figures supplied by NPD, a Port Washington, N.Y., research group, cotton’s share of the women’s wear market, on a fabric-weight basis, was about 45 percent in 1993, the same as in 1992. “Cotton historically has seen a lower share in the women’s wear market than in the children’s or men’s wear markets,” Hahn said. “Part of that problem stems from esthetics.
“Women’s wear products such as blouses and dresses require soft, fluid fabrics. Frankly, some of those attributes can be more easily attained by using other fibers. But it’s an area we are trying to strengthen.”
Due to improved breeding programs brought about by Cotton Inc.’s research staff — along with the growers — the average strength of domestic cotton fiber has increased about 30 percent, said Hahn. As a result, cotton can now be processed in high-speed spinning equipment and made into finer yarns. In addition, computerized methods of testing and evaluating the quality of cotton have been developed, enabling those same mills to select a specific quality of cotton they need to produce a yarn count with consistent quality.
“Twenty years ago, this was more of a ‘touchy-feely’ system as opposed to a high-tech system,” said Hahn. “Lots of errors occurred, and it was always a problem. To get those softer, drapier fabrics, you need a more sophisticated way of doing things.”
While the women’s wear category is gaining increased attention, so is the firm’s retail-driven promotion and advertising thrust, an area where Cotton Inc. has been remiss, said Hahn.
Cotton Inc., he noted, needs to become more involved with retailers that have made cotton products a big part of their offerings, “retailers such as J.C. Penney, Kmart, Wal-Mart and Sears.”
“We began by focusing on the mills, spinners, weavers, knitters and finishers,” said Hahn. “Then we focused on the apparel and home-products manufacturer. Then, we leapfrogged to the consumer. We just haven’t been as strong as we should have been with the retailer.
“Sears, for example,” added Hahn, “has done a fabulous job in turning its business around. You walk into a Sears store, and you see so much cotton. From a fiber perspective, cotton has played a big part in their turnaround.”
Cotton’s big mistake in the early days, said Hahn, was borrowing a page on fiber promotion from the man-made fiber producers, not realizing cotton’s audience was different than that of polyester, rayon or acrylic.
“The man-made fiber producers promoted the top of the market product in anticipation of it filtering down to volume area later,” said Hahn.
He noted that when polyester began making a big push in the early Sixties into fashion apparel, it was $1.50 a pound.
“At those prices, they had lots of promotions aimed at the higher end of the market,” he said.
“However, we had a commodity, and our biggest customer was in the mass end of market,” Hahn added. “So instead of focusing on our market, we tried going for the higher end, and we learned a hard lesson from that. Now, we want to have programs with more universal appeal, those that both the top-of-the-line and mass retailers will recognize as opportunities to help improve their businesses. I’m not sure we’ve been too successful at it so far, but that’s where we are trying.”
Cotton Inc.’s push in that direction, as reported, is a $2 million consumer print advertising campaign, which will start in the August edition of Reader’s Digest.
The contest, designed to heighten awareness of the firm’s “The Fabric of Our Lives” campaign, will be introduced with a call for entries through an eight-page insert in the magazine, asking readers to submit photos that they feel best exemplify the theme.
In the January issue, readers will be asked to vote on the best photo, out of 10 selected by a panel of Reader’s Digest judges. Winners will be announced in the May 1995 issue.
Cotton Inc. is currently in negotiations with several retailers to develop point-of-purchase material touting the promotion.
“It’s only a start, but with the retailers, we have to learn to walk before we run,” Hahn said. The campaign was developed by Ogilvy & Mather, Cotton Inc.’s longtime ad agency.
“Obviously, retailers are going to stock what they feel consumers want to buy,” Hahn said. “But we think we’ve done a good job convincing people to look for cotton and cotton trademark.”
Established in 1973, the cotton seal, according to a study by Roper/Starch Worldwide, has a 77 percent consumer awareness rate.
As Cotton Inc. aims to increase its retail presence, Hahn said one of the organization’s challenges will also be to deal with the changing retail climate.
He said that the agreed merger of R.H. Macy & Co. and Federated Department Stores is another sign that consolidation of department store retailers is only going to continue.
He said the big chains — Penney’s, Sears, Kmart and Wal-Mart — “are all doing a great job at becoming more like traditional department stores.”
“So, if the traditional retailers are going to stay in the game,” he continued, “they have to be able to operate on the economies of scale that the other guys are. I think this Macy’s-Federated thing is just the beginning.”
To serve the growing markets such as the Far East and Mexico, Cotton Inc. opened an office in Singapore in May. Later this year, it is slated to open one in Mexico City. Cotton Inc. also has offices in Raleigh, N.C., Los Angeles, Dallas, Atlanta, New York, and overseas, in Basel, Switzerland, and Osaka, Japan.
“We’re also looking to open one in China at some point, although the exact site and timing hasn’t been worked out,” Hahn said.
“Our whole competitive focus is the man-made fiber producers, not foreign-grown cotton,” said Hahn. He noted that the demand Cotton Inc. creates for the fiber in the U.S. helps imported products as well, and since 1991 imported merchandise containing foreign-grown cotton has contributed to Cotton Inc.’s funding.
“The demand we are creating for cotton merchandise in the U.S. is being met by imported products. It’s true that the U.S. cotton maker competes with Chinese producer, but we want to build a bigger cotton market so they have something to compete for.”
As for the rising price of cotton, Hahn said it’s more of a demand issue than one of supply. Although he said that there are world shortages, “demand has remained strong.”
“But I also see polyester prices moving up, and sticking,” Hahn said. “That, to me, says there is a demand for textile fibers out there that is pretty doggone healthy. A rising tide lifts all boats, and right now we have a few more boats in the water.
“Price is always an important aspect of our business,” he added. “But in the Sixties, when cotton was selling for five times less than polyester, that’s when polyester had some of its biggest gains in market share. DuPont was able to show textile mills how they could become more profitable processing their product rather than cotton.”
When apparel made from man-made fibers were at their peak, primarily spurred by wash-and-wear, cotton’s share fell to as low as 34 percent in 1975. Since 1980, however, cotton’s share has increased every year.
While Cotton Inc. was officially formed in 1970, the year it began tracking share, its roots date to the mid-Sixties, when, seeing a need for an entity to promote and market their product, a handful of cotton growers petitioned Congress to set up a funding mechanism. That action ultimately led to the passage of the Research and Promotion Act of 1966, and helped to create the Cotton Producers Institute, the forerunner to Cotton Inc.
The organization is funded by an assessment program levied on the 30,000 U.S. cotton growers and, since 1991, imported textile products containing cotton grown in other countries. About 75 percent of Cotton Inc.’s funds come from U.S. growers, 25 percent from imports.
On the U.S. front, for every bale of cotton sold, about $2 dollars goes to Cotton Inc., while the imports yield an average of a couple of cents per item to the organization.
“Our chief competitor from the start has been the fibers divisions of DuPont, Wellman, Hoechst Celanese, and all the other fiber producers,” Hahn said. “DuPont, for instance, spends more promoting fibers for women’s wear than we spend in this entire company.
“That,” said Hahn, “has been a big issue. When these big fiber companies come out with something new, they’ve got armies of guys to send into a mill and help them process new fiber. We have an entire technical service staff of about 11.”