Can You Feel The Shift?
When I started in this industry as a manufacturing rep I was told how important the brand was. We were given studies that demonstrated the consumer awareness of our brand and then we were taught how to leverage that with the retailer for more real estate. We convinced those retailers that if they didn’t advertise that blue butterfly, then they wouldn’t get the foot traffic into their store, nor would they be able to sell the higher priced products. Private label was around, mostly at Sears, and of course you had many trade brands ready to be brought in to fill the $299-$699 price points leaving the higher end, profitable stuff to the major “S” brands. But that’s changing.
What does the mattress brand mean today? Tempur-Pedic has taught us that it isn’t about brand awareness; it’s about brand preference. A consumer simply knowing your brand name isn’t enough anymore. Don’t get me wrong, it certainly doesn’t hurt that people are familiar with your brand as it builds trust, but is it as important as it used to be? There are many examples of retailers out there going gangbusters without the “S” brands on their floor and more trying because of the increased margin that typically comes with private label or trade brand products. (Think Bob O Pedic, Hampton and Rhodes, Hotel Collections.) You have the e-commerce guys like Tuft and Needle and Casper showing everyone in this industry that a non-branded product, coming from nowhere, can deliver sales. Lot’s of sales. So what’s changed? Are brands becoming less important today? Here are a few of my thoughts on the subject:
- Be somebody or be nobody, the consumer could care less because SOMEONE will fill the void you leave. Most bedding brands don’t stand for much of anything today. Don’t believe me? Take a poll of just 5 people working for one of these branded companies and ask them what their brand stands for. What do you want to bet that you get 5 different answers, and these are the people that are supposed to know! Try that test with the rsa or even worse the consumer and see what you get? By definition, what is a Posturepedic, or a Perfect Sleeper, or a Beautyrest? Are they driving preference that causes consumers to swing the retail door? (If they are it’s not a lot according to the research I have seen and the conversations I have had with large retailers.) At least Tempur-Pedic has made it crystal clear to their audience who they are. Their brand represents the very best memory foam beds you can buy because you don’t want innersprings that are bad for you. Wait; never mind. Sorry Tempur that was a cheap shot but you earned it. At least Tempur does spend the money and drive traffic to store doors in a meaningful way so you guys deserve some credit for sure. You definitely changed our industry for the better.
- Information is power and the internet has changed everything. Back in the day a consumer would decide they needed a new bed, maybe ask their friends and family about what they should get, look in the paper, and set off to get that grudge purchase over with. Nowadays, the consumer has access to the internet and reviews. Tuft and Needle for example claims they have the “highest rated mattress in the world.” Do you think a consumer might give that a little bit of consideration? They might visit goodbed.com or another review site and learn that many brands they are not familiar with rank higher than the brands they know. Think about it. If you were in the market for a new television, would you buy something that was unfamiliar to you but had really great reviews from consumers? Reviews that were even better than Sony? I bet you would if prices were competitive and I bet you REALLY would if their prices were better. That is exactly how Visio launched into the market and now they have four of the top ten selling televisions. They broke down the wall with very competitive prices and backed that up by delivering on the promise to the consumer. It is happening in the mattress segment in a very similar way.
- Just because you say your product is special DON’T MAKE IT SO. Sorry for the bad grammar but I like that way that sounds. I know that the manufacturing side isn’t going to like this but let me explain. When you get right down to it as it relates to roughly 90% of the business, what differentiates one bed from another? Let’s be very honest with one another, they are mostly made of springs, foam, gel, ticking and some latex here and there. Just about everyone is buying components from the same supplier base and when there is a difference in a foam configuration or a coil construction it is often something that is done just to give the bedding producer a small edge or way to differentiate their story. Is there really a SIGNIFICANT DIFFERENCE from one $599 bed to the next? How about at the $1,000 price point? How about $3,000? Be careful how you answer because we all know that most of what is talked about (if it is even brought up at the point of sale), is so small that it isn’t really considered to be sigelevant by the consumer. (Don’t know that word? It’s what you get when you fuse significant and relevant into one word; I just made it up-BAM.) If there was a compelling difference, don’t you think the market share battle would look a little different? When everyone says their foam is cooler/more responsive, and their beds are more comfortable, who really stands out? Do you realize that just about EVERY foundation sold in the industry is exactly they same and by that I mean it has no function other than to fill space and as a result, does nothing to add value. Just about everybody is using a wood build up or even better, something with steel in it, but they all just fill space don’t they? How is it that just about the entire industry is comfortable being just like everybody else when it comes to 50% of the mattress set? (I have been writing about this issue since 2011 so check that out HERE.) Even in the luxury segment of the business everyone says “hand crafted”, they call out some cool exotic raw material, and promise the consumer that these beds are “just different. “ Here is your checklist to become a luxury brand these days…one part hand crafted “story”, one part unusual component not found in $1,000 beds, one part promise of quality, one part expensive ticking and you have yourself a “luxury bed”. My brother Jeff and I have partnered with the Ellman brothers at Sherwood Bedding to produce our new Spink and Edgar products which will launch in the next 60 days. I will put the Sherwood branded products, their state of the art factories, and innovative manufacturing techniques up against any major “S” brand in the industry. When the consumer sees that kind of quality, the major “S” brand is likely to be much less relevant. It happens all the time where they share floors. Pound for pound and price for price, I will take a Sherwood mattress any day because the consumer gets more bang for the buck and retailers make more money. THERE IS NO MAGIC for most of the products out there, which is what opens the door for others to enter the market. You know if I am being that hard on branded products we had better bring something very special with Spink and Edgar and I promise we will with the product AND the story so stay tuned.
- Show me an industry with commodity products and big margins and I will show you an industry that is ripe for disruption. It happened with eye glasses thanks to Warby Parker, it happened with razor blades thanks to Dollar Shave Club, and it is happening to the mattress industry right now thanks to Tuft and Needle , Casper , and Saatva among others. A consumer wants to believe that they can get something just as good as the leader for much less money. This is the story that factory directs like Original Mattress have told for years and now these e-commerce brands are putting their own spin on it and serving it up digital style. The big difference in what Original Mattress does to what these other guys are doing is that Original makes great products. If other factory direct concepts were as good as Ron Trzcinski and his team at telling the story, that model would have done better nation wide. Some (NOT ALL), of these internet beds are nothing special and the rude awakening is going to come when the very thing that brought them this far is going to bite them in the butt…the consumer review. How is it possible that we are getting invaded by these young start-ups? Go back to the rest of this post and you will find the answer. Brands that have lost their way, consumers have access to good information, and most of the products out there are easy to knock off.
- Just because you have a big stick, doesn’t mean that you have to whack people over the head with it. The big 4 are now the big two and when all of that consolidation started to happen, the concern from the retailers out there was that the larger companies would have too much leverage and the smaller guys would be stuck getting whatever they were handed from the manufactures. One of the things I loved about Ed Lilly, the past CEO at Serta, Inc., was his passion in helping retailers drive their business. One of the slides we had in our marketing presentation said, “We help our retail partners find creative solutions to complex problems.” Is that happening today like it used to? Is there a real partnership out there or are the programs just force-fed to the retailers? Is the service level from the branded producer exceeding or even meeting the expectation of the retailer? Have retailers voiced these concerns and if so, has anyone done anything to improve it? I close out my comments with this one. If the other four points I have made in this blog are true, and then you add in the fact that the perception by some is that the big two are not treating the retailers all that great; there is a problem, and the solutions are all over the place.
I know that there are exceptions to some of the points that I am making here but can you really argue with the sum total of what I am saying? If I were a retailer today I would hold the major brands accountable for the same margin as any non consumer branded product UNLESS they could prove to me that they bring traffic into my stores or that their product was truly unique and compelling in some way. Short of that, they have a very thin argument to charge any premium for their products. A retailer can build value in whatever they want if they train their people properly and educate the consumer during the selling process. (My good buddy Brian Croft at Joplimo Mattress has it figured out and others are doing it every day.) If you don’t have a consumer brand, just be sure to deliver more value for the money with product/service and story, and make sure your brand reputation on line is solid, and you can compete!
Did I get it wrong? Let’s have a healthy debate!
PS Yes my opinion is strong and yes the conclusion of my thinking here benefits my business partners Sherwood and our new venture Spink and Edgar, but that doesn’t make me wrong.
These are just my opinions so nothing here is “GOSPEL”. Look around for yourself, investigate what is necessary, talk to retailers and consumers out there and if you arrive at a different conclusion please draft a response and you can guest blog right here on Q’s Views.