Birds Of A Feather

When I was 28 years old I left Texas and moved to Chicago to start my career at Serta. I wasn’t married and had never lived in a big city like that, not to mention I felt that the job of VP of National Accounts had me way over my skies but hey, nothing ventured nothing gained right? Bottom line is that I was very nervous about it all but thanks people like Ed lilly,Jeff Van Tuyle, Susan Ebaugh, Bill West, Roxanne Franklin, Alan Eisenberg, Scott Tinsley, Dan White, Tim Smith, Bob Sabalasky and many others it was one of the best work experiences I could have hoped for. Another guy that was there was John Rachid. I left Serta after 9 years but John stayed for another 10 or so years to have an incredibly successful career. Until yesterday.

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John announced his departure from Serta and the move to his new position as President of Protect-A-Bed. During John’s time at Serta he drove MILLIONS of dollars of very profitable business at Serta working national and sometimes regional accounts. John was always able to serve the retailer in a way that gave them programs that helped them grow their bedding category, while making money for the company that was paying his check. The most impressive part of his career however, was his heart for his team. John took those relationships very seriously and worked hard to make sure his people were growing and well taken care of.

James Bell, the CEO at Protect-A-Bed, has built a substantial business over the years and has an incredible reputation in the industry. He is just a good guy. Now that he has landed another big fish, he rounds out his team of ex-Serta people. John will join my good buddies Alan Eisenberg and Dan White as they attempt world domination. One of the reasons for this post is to point out the fact that I find it interesting how good people always find a way to come together on projects. James obviously has a very keen eye for talent and it proves that great people are drawn together.

I write this post to celebrate John on his unbelievable career with Serta and the significant contribution he has made to the industry and to everyone that he works with. Congratulations friend.  This is a very big loss to Serta and a very big pick up for Protect-A-Bed so congratulations James and team. You guys are obviously building something special there.

 

Sizzle Vs. Steak

Your sitting in a beautifully appointed steak house, you have enjoyed a few glasses of the 2013 vintage Jemma Cabernet from Ellman Vineyards, (when your friends own a vineyard you have to hook them up when you can), and you are ready for your main course. You have ordered a perfectly aged porterhouse cut of prime beef grilled to your favorite hue of pink. During an unusual lull in the conversation you hear it first. That mouth watering sound of a hot plate sizzling from the main course about to be presented for your approval. And then you take your first bit and realize that not even the Ellman wine will be able to overcome the horrible taste of that steak you had such high hopes for. Alas. Bring on the truffle infused macaroni and cheese please.

During my time in this business I have heard many sales people tell me”it’s the sizzle not the steak.” In many cases this means that we are to prop up the marketing glitz so we can distract the consumer from the sub par product that is being presented. Is this what we are seeing in the e-commerce space today?

sizzle

I am not saying that they are all bad products but I will say that I have tested several mattresses that are being sold on line and they are less than impressive. Some just aren’t that comfortable and when you look at the websites that some of these beds come from, they claim to save the consumer a lot of money while delivering superior quality. Really?

My good buddy Dave Perry features a story in the July 11th edition of Furniture Today about the Casper and West Elm relationship. Casper is now going to partner with West Elm and start selling its beds at 77 US brick and mortar locations. Dave suggest that this could be a mistake for Casper according to some industry insiders, because they will now have to compete with other brick and mortar retailers in the market in terms of look and feel. I suggest to you that the move into this particular store was very strategic for Casper because to my knowledge, West Elm has no other beds for Casper to compete with. It’s true that a consumer could shop Casper at West Elm and then leave to compare it to beds found at a sleep shop down the street HOWEVER, there are a lot of customers that will never go through that kind of hassle and will purchase that bed on the spot. Could Casper sell into a larger chain given its brilliant marketing approach and reputation? I think it probably could for the right deal. But if you place a Casper next to other competitive products you have to wonder how it would do. Can somebody conduct a taste test please and let’s see what the survey says.

The big advantage these e-commerce guys have is that the consumer is buying from them in a vacuum.  There is a big advantage to a bedding producer when they own 100% of a retailers floor because they don’t have to beef up product to compete with the other manufactures. Isn’t this pretty much like that?

All of this talk about food and drink has turned my attention to other things. I have a nice bottle of Russian Rive Pinot Amanda waiting for me from the Ellman Vineyard. In this case the the steak is every bit as good as the sizzle.

Ellman Family Vineyard Russian River Valley Pinot

Ellman Family Vineyard Russian River Valley Pinot

Ever Dream Of Being The Man Of Wood?

Yesterday my brother and I got into a disagreement that I need your help to resolve. We were talking about my last post where I call out some of the bed in a box guys as liars. His comment was that my choice of words was a little harsh. Then I read it to my wife and she was fine with it until I got to the meme that said, “I’m always disappointed when a liars pants don’t actually catch on fire.” At that point she started to agree with my brother. What do you think? Am I playing too rough with this or is my choice of words appropriate? Tell me in the comments section! On another note, take a look at my friend Wes Harrington’s site New Sleep.  They sell direct and even have a video that addresses this issue directly. They even use the “shoe” analogy I did. I didn’t see it before writing my post but want to give proper credit so check it out.

Now for today’s business. When I was at Leggett and Platt we created an ad that ended up being one of my favorites. There was a photo of a little boy standing on the beach with his towel wrapped around his neck serving as a cape, striking the full on super hero pose with hands on hips. The caption read, “Did you ever dream about being the man of wood?” There is a new push by Leggett to speak about the benefits of having steel in your box spring vs. only wood. If you go to steel-strong.com you can watch a quick video on why box springs made with steel have a higher perceived value than those made only of wood.

Here are the statistics:

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One could argue that there are people in the market today having great success selling wood foundations. One could also argue that the box spring doesn’t come up all that often when selling a mattress, so much of the time it is a mute point.

Some additional thoughts on the subject:

  • First of all, I really want to know how many attempts there were by Mark Kinsley to break that wood slat over his knee. Did they saw it in half first? Hmmmm.
  • I have long believed that we don’t say enough or build enough value in the foundations supporting our products. At Spink and Edgar we put natural materials grown on our farm into our steel box springs to try to give the rsa a little something extra to talk about. If your beds are supported by foundations made primarily of steel, does it give you something else to support your value statement?
  • If the rsa believes that steel has an advantage over wood, are you talking that up in your sales training meetings or on your websites?

When I was at Leggett and Platt, the reason we produced a rap video about hybrid mattresses is because Tempur-Pedic and Select Comfort were spending big money to tell consumers that mattresses made with innersprings were BAD and old fashioned. In a way they had a point because the reference to “innersprings” could speak to beds selling at $49 OR mattresses positioned at a $50,000 price point. The attack lumped the low end in with the high end and we needed to separate the quality innerspring beds from the opening price points. There is a little of that same problem with wood build-ups. The very low end uses wood as a foundation and are likely not made as well so the mattress can hit a price point. There are much better wood platforms available but there is nothing to really distinguish those. Therefore from a consumer’s perspective, it could be viewed as the same thing.

No matter what you are selling in your box spring, continue to make it a quality platform. If a bed comes back due to poor construction you hurt your brand, cause great trouble at retail, and become a problem for the consumer. At the end of the day, all box springs have wood as part of the construction so be sure to train your team on why your wood is better, and explain how you quality control your products.

Don’t you know… it’s all about that base. (Sorry. It had to be done.)

 

 

One For All And All For One

No I am not a Musketeer, but I thought it was an appropriate headline for this weeks post. I am starting a new company but I need your help to vet the idea. I am going to manufacture running shoes but I want to be really disruptive in my approach. For this company I am going to make only one style of running shoe, but will produce it in a variety of colors and sizes. People have been complicating the world of running shoes for far too long so I intend to put a stop to that and convince people that one style of running shoe will be comfortable for everyone that runs. I understand that consumers “THINK” they need different levels of comfort and function in a running shoe, but there is no reason that the shoe that works for the overweight neighbor that just started to run, won’t work for the speedy veteran. Think this business model will succeed? It is in the mattress industry.

When you consider age, sex, weight, lifestyle (active/passive), and a subjective opinion about what is soft vs. what is firm, it is remarkable that any company is able to SELL the idea that one bed will fit all. Here is my real beef with this approach; it’s TOTAL BS. (When my pastor says BS in church he means biblically substandard. We’re not in church.)

Ask the real champion in this industry, the rsa, what they think about the idea that consumers can all fit into one comfort profile. Maybe we should reach out to the guys at Kingsdown to see if they feel stupid for profiling thousands of people to gain a more scientific understanding of consumer comfort preferences. Is it possible that the largest retailer in the country that sells more beds than anyone got it wrong when they decided to arrange their floors using color to designate various comfort choices?

I know that these e-commerce guys are selling a lot of beds and I have no issue with that. I actually have given them a lot of credit for what they have accomplished. But the ones LYING…..that’s right I said LYING…to the consumer when they say that one comfort fits all need to check themselves if you ask me. Listen to what this consumer had to say about the bed they bought on line. I am going to XXX out the name because I don’t want to single one of the companies out.

Aching everywhere

“I bought the XXXX mattress from all the hype on social media and on the subway. Unfortunately it was not at all what I expected. Truthfully how can a mattress be for all when everyone is different? I woke up every morning super sore. The mattress is extremely firm. I gave it a month and just couldn’t do it anymore. The customer service was great though. I’m returning it and it’s being picked up this weekend.”

liar

The approach to the consumer obviously works in most cases but I really don’t like it when companies lie to the consumer to sell products. Will they continue to sell their beds. Sure. Is it necessary to lie to get a deal? I think there are better ways. Let’s face it, when a consumer that has a crappy mattress gets one of these beds in a box and gives it a test, it is likely going to feel better than what they had so chances are, most everybody is going to be happy. Just look at the reviews if you don’t believe that. But at the end of the day I would be willing to bet money on the fact that if the same consumer was in a store with that bed in a box next to several other choices of comfort at the same price, there is a really good chance they wouldn’t pick it. What do you think?

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The Rapid Rise Of E-Commerce

KeyBanc published a report of the mattress industry that I thought was very interesting so I wanted to share a few of their insights with you. This research was based on extensive in depth interviews with industry veterans as well as a deep dive on internet trends and company financials where available.

  1. Let’s give credit where credit is due and remember that Tempur-Pedic and Select Comfort were some of the first to attack the direct to consumer channel in the mattress industry and as a result of their success they ended up pursuing traditional brick and mortar retail. Select Comfort abandoned that strategy, and Tempur-Pedic continued on to bring them to where they are today. Both have been very successful.
  2. In 2016 the reports shows a projection of $755 million for the e-commerce channel which would equate to a 4.6% market share vs. a 1.8% market share in 2015. That is serious growth.
  3. Over 50-100 new players have launched new direct to consumer brands so far this year so the growth is going to continue.
  4. If these numbers are right, then the industry will grow by about $800 million in 2016, half of which is e-commerce business.
  5. When you look at who is navigating the digital space the best, the e-commerce guys are winning the battle. When it comes to organic search Casper hits the first page, hats off to the Andrew Gross and the Serta team for showing up on page two, Tuft and Needle hits page 3, and Tempur-Pedic shows up on page 12. If you believe that reviews are important to ringing the register, Casper is winning there as well with almost 5,000 consumer reviews vs. 3,849 for Tuft and Needle, 1283 for Select Comfort and 787 for Tempur-Pedic.

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KeyBanc summarizes this report by saying, “we are incrementally concerned about a meaningful impact on earnings for the traditional players in the year ahead.” Will the e-commerce guys continue to grow? I think so. Will they take market share? Likely. Will it change how bedding brands and retailers look at their own business and strategy? ABSOLUTELY.

I know that this kind of thing is disruptive but I really believe that it makes us better. If we have all of this attention on our consumer product segment I think the category wins. The question to each of you reading this is how are you going to react? Will you be able to think creatively and capitalize on the new opportunities or will it toss you into turmoil? Beware of the ostrich that doesn’t want to believe that this is going to have a significant impact on how we do business because it will. It is. Maybe you can find a new spot for them in the local buggy whip and typewriter shop down the street.