Are Your Profits Sustainable?

I have been really thinking hard about where the industry is right now and the foam category has me a little perplexed. It is sort of funny if you think about it because not too long ago, the industry had successfully commoditized innerspring to a point that it was all about a $59 twin lead in the paper, right? Look where we are with foam these days, I think these guys have some serious issues to deal with; see if you agree.

If you’re Tempur-Pedic you are selling a Cloud Prima at $1,699 for a queen mattress that is 10″ thick. That bed is built with a comfort layer, support foam, and a base layer.  It appears that this bed is well liked with 94 people giving it 4.5 out of 5 stars.

If you’re Casper the price is $950 for a queen mattress that is also 10″ thick. You have open cell foam, memory foam, transition foam and support foam. Looks like more people like this one with 6,814 people giving it 4.5 stars out of 5.

Finally, if you’re Zinus you are selling a mattress at $229 in queen that is 12″ thick. (This is not a typo sorry guys.) You have 3″ of memory foam, 2″ of comfort foam, 3.5″ of high-density foam and 3.5″ of high-density base support foam. Consumers also like this one with 4,576 people giving 4.5 out of 5 stars.

When pretty much every foam block being sold today says that their bed sleeps cool, wicks away moisture, and delivers incredible comfort what do you have left to differentiate yourself?  As I see it, the game is tied if you’re all claiming the same things. What does the consumer see? Are they able to discern the differences in ILD firmness or the density of the foam? Not only do they not understand it, most of them don’t care so what are they looking at to make their decision? Reviews? Marketing stuff?

The bottom line is if you are Tempur-Pedic you have to prove to the consumer that you are almost twice as good as Casper with your Cloud Prima and almost 5 times as good as the Tempur Cloud Luxe Breeze. Remember, the reviews on Casper are every bit as good as what I saw from Tempur-Pedic.

You think that Casper has it easy at $950? They have to prove that they are 4 times better than Zinus who also has thousands of consumer reviews at 4.5 stars.

I’m sure we can all agree that effective marketing is propping these companies up making them important to retailers and delivering great margins for the shareholders. Tempur-Pedic has to keep their foot on the gas when it comes to a big ad spend because that is what gives them leverage. After losing Mattress Firm, do you think they are going to be able to spend as they have in the past? (My sources tell me that they have already been cutting back on their marketing over the last 6 months prior to the split.) Casper is the same way if you think about it. No offense to the friendly ghost but the product is not that special, mostly now after raising prices and removing the latex. They are a marketing machine that is also vulnerable.

Where is the real value? How long will you be able to maintain your position if other products are selling at 1/4 the price with very happy customers? For now, these popular brands can enjoy their place but is the model sustainable? If I was a consumer and you tell me that there are three beds between 10-12″ thick, all with memory foam claiming the same things with great reviews, at some point you’re going to need to explain to me how the most expensive option helps me sleep better or something else that can justify the price. Does Tempur-Pedic have an amazing foam pouring operation that totally dominates anything else in the industry? I have been told that they do but at the end of the day, how much does it matter?

For all of those people out there reading this that have senior management that doesn’t understand the value of creating intangible value in products and brands, you might want to send this to them. I don’t care if your B2C or B2B, BUILDING VALUE MATTERS in all things. Do you need any more proof than this?

If you’re selling a bed in a box or something in the luxury category, you put yourself in the best position to win long term if you have a UNIQUE product, with a compelling story that represents REAL AND AUTHENTIC value to the consumer. Make sense?

I never claim to be right, just want to share my thoughts to inspire a conversation so if I have this wrong, let the debate begin!

PS After I had written this post I came across this ad from The Dump. This certainly puts the exclamation point to it. What their commercial HERE.

 

Tempur Sealy and Mattress Firm Get A Divorce

I could have gone with a different headline like the press release from Tempur Sealy this morning saying that there was a “Termination Of  The Mattress Firm Contract” but I think this relationship was more like a marriage. Aren’t most great business relationships?

When something like this happens, everybody gets hurt; especially the kids or in this case the employees. According to recent reports, Mattress Firm accounts for 25% of Tempur Sealy’s business wich equates to about $750 million. They are a public company so you know that their stock is going to take a big dive today and people will likely lose their jobs as a result. Tempur Sealy is not going to be able to replace that kind of volume for a long time and when you stir this in with the e-commerce guys out there pushing hard on the memory foam category, they will have their hands full in 2017.

If you consider this from the Mattress Firm perspective,  you have an army of retail sales associates that were incredibly loyal to the Tempur Sealy brands, especially Tempur-Pedic. Mattress Firm leaned into Tempur-Pedic in a HUGE way when it came to advertising dollars and their people were RAVING fans; maybe even to a fault. Most product presentations would begin and end with a Tempur-Pedic bed because Tempur had earned that attention with their marketing program. Let’s face it, Tempur-Pedic made their products easy to sell. Most of the retail sales force is going to wake up today trying to figure out how they are going to replace their income that came from sales at and above $2,500 in queen. There are not many products out there that can deliver those kinds of big ticket register rings.

No matter how you spin this it is a classic case of LOSE/LOSE. There will be a lot of speculation as to who’s fault it was, which side lost the deal,  and which person caused the problem in each organization. The blame game stinks and is rarely productive and when you boil it all down, the outcome here is bad for just about everyone. At least in the short term.

So what’s next, is marriage counseling a possibility? Doubtfull. These companies are hard at work today creating a new strategy. Looking for a way to minimize the bad and find opportunity in the chaos. Now is the time to look forward and prove out the thinking that brought them to this place. I am a firm believer that they are where they are supposed to be and everybody will figure it out.

I would encourage the rest of us watching this unfold to reserve judgment on what has transpired because unless we were at the table, I seriously doubt we would understand how it could have been avoided. Having said that, I am certain there will be a lot of Monday morning quarterbacks today. I hope the best for the PEOPLE at both companies and for good things to come out of it where possible. Helluva start to 2017 wouldn’t you say?

 

5 Comments

Bold Predictions And My 2017 Challenge To You

Mark Kinsley and I just recorded another podcast for sleep-geek.com that should publish in a few weeks, and in it we make some bold predictions for 2017. Making predictions is really pretty stupid when you think about it because there is very little upside to getting it right and when you get it wrong; well, your wrong. The fear of looking stupid has never stopped me before so here it goes, one bold prediction for you on what the mattress industry is going to do this year.

Once again my good buddy Dave Perry delivers an article that we are going to use as the foundation for this blog post. Furniture Today says that units will be up 2.4% and dollars will be up 4.2%. ISPA says that units will be up 3.5% and dollars up 6%. I say they are both under stating the year by a few points and we have a shot at high single digit growth. Here are a few of my reasons:

  1. I think that 2016 was a hot mess. Assign whatever meaning you want to that but it was tough on many fronts wouldn’t you agree? Consumers didn’t really react to our category the way many of us thought so I believe there is some business that is going to come to us that was waiting on the sidelines.
  2. The election is over and there seems to be some boost in consumer confidence hitting a 13 year high with this post election bounce. “Those expecting business conditions to improve over the next six months increased from 16.4 percent to 23.6 percent, while those expecting business conditions to worsen declined from 9.9 percent to 8.7 percent.”
  3. From what I am hearing, some of the traditional big brands are coming out with new marketing campaigns that will continue to shine a light on the category. They are going to spend some money and the messaging is good from what I’m told. Add to that the e-commerce guys and what they are spending, the increase in “voice” should push us along.
  4. The focus on sleep as a “health thing” will not hurt us either. Arianna Huffington is doing some great work on sleep awareness with this new book The Sleep Revolution which puts a solid focus on how sleep connects to quality of life. I am also seeing my friend The Sleep Doctor Michael Breus, everywhere in the media lately so keep it up Michael. TESTIFY.

Maybe these things drive us to great heights and maybe not, but I like the optimism behind it. If you want to be one of the people taking advantage of the upswing I offer you this opinion.

Many of us are going to Las Vegas market in a few days. If you are a retailer my question for you is what are you looking for on your trip? If we buy the same products that everyone else has, bring consumers into a store that pretty much looks like every other store, run advertising that resembles what the competition does, and deliver a similar selling experience as the guy down the street, then we are going to get THE SAME RESULTS we have always gotten. (My pitch/solution follows so look out.)

If you want to WOW your customer with a mattress line that feels unlike anything else in the market, has a selling story unlike anything else in the market, delivers BIG margin, has a best selling SKU that retails for $5,000 in queen, and brings with it some of the most innovative selling tools ever created in our industry, then send me an e-mail at mquinn03@gmail.com. We want good partners that are looking for great results and don’t want to do what everyone else is doing, so if you know anyone like that send them my way please. I have enjoyed the last few months traveling around the country, meeting with some of the top bedding retailers out there, and I am happy to say that Spink and Edgar has some big stuff happening. If there is a fit, we would love for you to be a part of it.

For everyone else not retailing beds I say go for it this year. Push harder, and do things that your customers aren’t going to expect. If you bring the same old game nothing will change. Be bold this year and you can make the kind of impact that your shareholders will love you for.

Can’t wait to see everyone in Vegas so safe travels and put on those walking shoes, it’s going to be a long but great week!

PS If you are in the market for great adjustable bed bases then give my friends at DK City a look. They just announced a partnership with one of the leaders in the category, Leggett and Platt. I have been working with both groups for the last several months and this is going to be great for retailers so check it out in the Leggett and Platt/Fashion Bed space B1396 or DK City space at A934. They are showing some bases that fold up and are perfect for e-commerce, great for storing in a warehouse and very easy to install.

 

 

Does Tempur-Pedic Really Rank Last In Their Class?

I received my Furniture Today email and was very surprised to see THIS ARTICLE  from my good buddy Dave Perry recapping the most recent Consumer Reports (CR) article on the mattress industry. So what did it say?  That the top dog, the guys that created the entire memory foam class have dropped to last place based on “several factors.”  To make that even more interesting, the #1 and #3 ranked products are Casper and Tuft and Needle at a mere fraction of the price.  Serta did well with an iComfort Savant landing at #4 but Sealy Optimum was down at #24 on the list.

If your one of the big brands your probably going to attack the publications testing methods and you would be right to do so. It has been suggested for a long time that there are problems with the way CR looks at our category but, it is what it is. Do consumers believe all of this? From what I have read, the relevance of this publication is shrinking every year because there is an even better way for a consumer to vet their next mattress purchase and it’s called the consumer review.

Things that make you go HMMMMMMMMMM.

Things that make you go HMMMMMMMMMM.

Today, if you want to learn more about the product you are going to buy you can simply look for opinions on one of these 10 review sites or even better, visit You Tube and watch someone deliver a close-up look on video. This way of shopping has become the great equalizer in the mattress business and has allowed companies that may not have the name brand recognition of Tempur-Pedic or one of the “S” brands to realize great success because the consumer has voted in their favor. So if you discount the Consumer Reports article and then look to the reviews to tell the story, you still end up with Casper and Tuft and Needle leading the pack, so go figure. ( I speak about brand recognition vs. brand preference in a past post titled “Can You Feel The Shift” so check that out if you are compelled.)

I am not a fan of foam beds to begin with but I have to defend Tempur-Pedic and Sealy on this one. I don’t know what Consumer Reports is looking at but I have been in the industry over 25 years, tried most of the beds I am writing about today, and I am having a hard time understanding how Casper and Tuft and Needle have come out on top here.

Is it possible that they are getting these reviews because they are the cool kid and seen as disruptive by the business media? Is it possible that their minimalist approach to making a bed just performs better and the rest of the industry is over building their products? I wish I had the answer but this just doesn’t pencil for me.

What do you think, did Consumer Reports get it right? Dish the scoop if you have the inside!

 

 

9 Comments

What Kind Of 2017 Will You Choose?

If you’re like me you spend some time at the end of each year reflecting on what happened, what you did right, what you could have done differently… probably lingering too long on what you could have done differently. After this process is over, I normally switch gears and start thinking about the future. What is 2017 going to bring for me, my family and my businesses? I have a few thoughts on how I think we should approach that this year. (You need to read all four of these.)

its-your-year1

  1. When it comes to setting any goal just remember that it needs to be realistic, specific and attached to a very solid way to measure it. Also keep it written down and in a place that you will see it often and then share it within your circle if that makes sense. It is always good to have the support of those around you because we rarely accomplish anything important without a little help.
  2. Don’t be a pansy. Set some goals that are attainable but think big this year. My wife gets so irritated with me because I have these HUGE expectations about every project I tackle and very often end up disappointed because I fell short. HOWEVER, even if I don’t hit the home run every time, I end up with a lot of base hits along the way and that scores runs too. Be realistic on what you want to accomplish but don’t be afraid to think big. I truly believe that with a project my brother and I are launching in February/March that we are going to sell lots of product and inspire thousands if not millions along the way and literally change the way people think about a mattress. Too much? My business partner Simon Spinks told me that together we could change the world. I actually think he’s right.
  3. If you had a rough year, get over it. Seriously, I know that sounds harsh  but you can’t live in the past and allow that negative thinking to impact where you’re going. Let me take you through an exercise my favorite college professor Dr. Tim Clypson taught me. Step 1: Get a piece of paper and write down all of the negative crap that happened to you in 2016 or anything that seems to be weighing you down. Step 2: Go outside with lighter in hand and torch that mother.  (Tim had us wad the paper up and throw it in the trash can because we were in class but I think he would support my more dramatic approach here.) Dwelling on the bad stuff only brings more bad stuff. My wife Bridget is my biggest cheerleader and is there to lift me up when needed, kick me in the butt when needed, and club anyone that does me wrong. Spend time with those people in your life and lean into them. It’s a game changer.
  4. Give to others and be grateful on your journey this year. I can’t possibly put into words what living this way means to me. I’m not saying I am the perfect model of this but I do make time to give to others that need me and I start every day being grateful for the good and the bad. All life’s experiences impact me, I have to choose how.

Happy New Year to all of the Q’s Views readers out there and know that I am pulling for each and every one of you to have an epic kind of year. Enjoy the last few days of the holiday season and then strap on your butt kicking boots and make 2017 the kind of year they will write about in books.

1 Comment