What’s On Your Christmas List?

How fired up would you be if you were to see a news story about the top 10 most requested Christmas items from kids this year, and a new mattress actually made that list? Let’s just have a little fun with this and play the game of “what if”. So what would kids have to believe in order to actually WANT or request a new mattress for Christmas? (I am going to speak to the 10-16 age group here because the little ones are going to want the toys no matter what you do!) A mattress/better sleep can…..

  1. Help me get better grades so I am not struggling as much in school.
  2. Make me perform better on the field or court so I can play great offense and defense and win more games.
  3. Assist me in choir or band so it is easier for me to memorize my music.
  4. Make me a better actor for the school play so I can get up there and deliver a  performance that will bring the house down.
  5. Help me to be someone that others want to be around because my attitude would be awesome and people like to hang around other positive people.

naughty list Whats On Your Christmas List?

Do these things get us on that list? Maybe not, but in some cases maybe it does. My daughter is 13 and she plays softball, volleyball, and basketball as well as attends a school that is famous for sending home large amounts of homework. Her days and nights are very full so when you ask her about how she values sleep, you will hear a very passionate response. My son is 11 and his story is the same and I know that many of you have kids just as busy. When they climb into their bed, what kind of experience is that?

Think about it this way…we are not relevant to the consumer unless we are speaking their language. Do kids know that good sleep can deliver these kinds of benefits? If they did, could we inch closer to making Santa’s list? I bet we could if kids VALUED sleep differently. I know I am not crazy because I have heard stories from the Tempur-Pedic team about kids asking for their beds for Christmas and I have actually seen that first hand. Well done guys.

The point isn’t literally to get on that Christmas list, but to make sure that what we are doing to position our products happens in a way that we are connecting with people where they are, in their language, speaking about things that are important to them. I know if we did that with kids we would at least have a shot at making the list.

So tell me, what do you want from Santa this year?!?

 

Mattress Firm Goes Coast To Coast

By now, if you are in the mattress industry you know that Mattress Firm (MF) has announced their purchase of Sleepy’s for an estimated $780 million which equates to about $742,000 a store. This will give Mattress Firm a total of 3,500 stores delivering approximately $3.6 billion in revenue. Wow.

If you have been listening to Steve Stagner the CEO of Mattress Firm, you know that they have been rolling up some of the best retailers in the country hoping to create the first real national sleep shop.  Well…they did it. This is a huge accomplishment for the Mattress Firm group and one I hope they take a few minutes to enjoy because they have a huge task in front of them. So what does this mean for everyone? Here are a few observations:

  • In the past the bedding producers have always had the ultimate leverage because they were the biggest companies in the industry. Not anymore. Serta/Simmons and Tempur/Sealy are going to have to rethink how they deal with these guys. 
  • My guess is that Mattress Firm is going to be able to gain even more of an advantage over other mattress retailers out there with more exclusives, most favored nation pricing, and whatever else they are asking for. This doesn’t mean that other bedding retailers can’t compete, but MF will have an edge that they didn’t have before if they push hard enough.
  • Suppliers currently selling to Sleepy’s are likely pondering their long term fate if they are not also selling to MF. Assortments will shift and some will suffer the fate of consolidation. Others will find a way to create value and be part of things going forward.
  • Now that the big are getting bigger, the local/regional players should be getting even more attention from producers out there. (This has been happening over the last few years and will likely get even more intense now.) If you are not selling to MF then the local relationship means even more if you are looking to develop your business.
  • MF is so big now that there are not that many players out there that can actually service them sufficiently from coast to coast. If MF isn’t happy with what they are getting from the big guys, it makes you wonder if they will start sourcing things on a regional basis.

 Mattress Firm Goes Coast To Coast

MF is going to have to be careful navigating the clash of cultures. This is not their first time acquiring another sleep shop chain so they definitely have some experience in how to integrate, but this one is going to be their biggest challenge yet. Sleep Train for instance is a large company with great leadership and a VERY strong culture but MF and Sleep Train shared many core values, even if they achieved the results in a different way. Sleepy’s has accomplished a lot over the years so their results are also impressive, but the culture is significantly different than what MF has created. When I say that I don’t mean that one is better than the other, they are just very different and I think that this union will be a bigger challenge.

I talked to Steve Stagner yesterday and he is confident in the deal and the value it is going to deliver to his shareholders. “We have been marching  towards a coast to coast presence for a while now and we have finally made it happen. It is an exciting time.” When I congratulated him on the accomplishment he said “it is all because of my people” and there is no doubt he believes that. He better, because he is going to need them now more than ever to make this thing work!

PS In full disclosure I have known Steve Stagner and we have been friends since grade school, my brother and father were both equity partners with Steve in the MF Atlanta franchise, and I have many friends working at MF corporate so I am biased in how I look at this acquisition. I know that they have a lot of talent working there and I am very happy for them. To all Mattress Firm AND Sleepy’s employees I say congratulations!

Being Grateful Is Being Happy

My brother Jeff sent me this link a few days ago so I thought I would pass it along to you. It is a blog post about being grateful written by Kristin Wong and posted to Lifehacker. In it you can learn how to be more grateful and why. You can feel more in control, it increases your happiness, helps you fall asleep, makes you feel more resilient and the list goes on so check it out!

My personal note to you today is that I am grateful for many things and YOU are on the list. Seriously. I feel very fortunate to be in an industry with so many good friends, and doing what I love to do and many of you are the reason that I am having such a great time. I am thankful that I get to write this blog and have an audience of people tuning in every week to hear at least one guys perspective on what is going on. So for everyone that takes a few minutes to read each week I say THANK YOU!!

 Being Grateful Is Being Happy

For today…burry all of the junk that doesn’t matter, avoid the petty arguments with family, don’t drink too much Thanksgiving cheer, and put the stretchy pants on and get after it. From my family to yours…       HAPPY THANKSGIVING!!!!!

 

 

Why Is ISPA Really Changing Their Sales Reports?

In this recent announcement posted on Furniture Today, the International Sleep Products Association (ISPA), announced that they were changing the way they report industry numbers. The three primary changes are:

  1. Report quarterly vs. monthly
  2. Improve accuracy of foam mattress imports by weeding out pet beds from human beds.
  3. Stop breaking out the categories from innerspring vs. non-innerspring or “specialty” bedding products.

It’s that third one that I want to talk about today. I sent an email to Ryan Trainer and Mary Helen Rogers at ISPA asking why they decided to stop breaking out the categories. This was part of the response I got back from Ryan:

“As you know, the spring/non-spring breakout evolved at a time when the industry was fairly clearly divided into 2 segments:  traditional mattresses (i.e., innerspring segment) and the newer memory foam, latex, all foam and air mattresses (the non-innerspring segment).  At that time, the segments in general represented the non-premium and premium ends of the market.  Over time, however, the gap between these segments began to fill in as lower-priced foam mattresses entered the market, gel began taking market share at lower prices and the new hybrids exploded.  As a result, the innerspring/non-innerspring distinction no longer provides an accurate profile of premium and non-premium mattress sales.” Here are a few thoughts on these comments:

  • If the original intent was to talk about premium and non-premium mattresses, then why didn’t the report  just say that? The real reason the report was broken down was so the industry could see what types of products were driving the growth. If people were implying that those categories represented premium vs. non premium, it was an unintended consequence.
  • I think it is a very big jump to say that innerspring/non-innerspring was an accurate way to say premium and non premium. There has always been a significant amount of premium innerspring business being done by many bedding producers out there. Weren’t Serta, Sealy, Simmons, Stearns and Foster and Kingsdown selling high end innerspring products, not to mention many others? Did ISPA really allow the report to be published for that long in the current form KNOWING that the majority of their audience was interpreting it as premium vs. non premium?
  • If there was any interpretation that  innerspring/non-innerspring somehow translated to premium/non premium then shouldn’t ISPA simply clarify that to the analyst following the industry that were confused on the subject? This has been going on long enough that I am guessing most of them understand it by now anyway.

willis2 Why Is ISPA Really Changing Their Sales Reports?

When you drill down further, the argument continues to fall apart because ISPA has been reporting specifics on sales BY PRICE POINT that clearly defines what the premium and non premium business looks like. In light of that, I asked ISPA why they wouldn’t just continue to report innerspring vs. non-innerspring as they have for years, and point anyone that needs more clarity on the subject to this very comprehensive report? They weren’t sure.

According to ISPA numbers, this is what is going on with innerspring vs. non-innerspring:

ISPA DOLLAR COMPARISON

  • 2013 vs. 2012-innerspring  up 8.1% non innerspring down -4.3%
  • 2014 vs. 2013-innerspring up 8.7% non innerspring up 7.6%
  • 2015 vs 2014 as of September-innerspring up 14.1% non innerspring down -3.8%

Who gets hurt if ISPA continues to report innerspring vs. non innerspring sales given these trends? Did somebody complain about the current reporting because the momentum has shifted and it creates a negative perception about their business? I only ask these questions because the reasoning behind the reporting changes makes no sense to me so this is where that takes me.

Tempur-Pedic is one of the largest specialty bed producers out there and they are doing well. 3rd quarter 2015 results show a sales increase in North America of 8.2% and margin improvement from 35.6% to 38.8% but I wonder how much of that is due to their new hybrid offering Tempur Flex? The numbers for Sealy Optimum, i Series, and Comforpedic etc. must be really off if the category is down that much.

I have talked to some industry analyst that aren’t too sure about the changes either, and don’t understand the explanation behind them any more than I do. The introduction of the specialty category brought about a seismic shift that was worth measuring in order to fully understand the landscape of the marketplace. Now that there is a trend in the other direction creating a similar shift, is ISPA going to stop reporting it?!?  Isn’t understanding the decline of the category just as important as understanding the climb? Would the car industry simply stop reporting truck sales if they started to fall off?

Tell me what you think, why is the change taking place and have I been unfair in my representation of the issue?

 

 

                                            

Profit Pressure Equals Downsizing

The latest round of axe swinging is complete and this time it is the Serta/Simmons Bedding (SSB), work force that are the victims. My understanding is that close to 100 employees were given their notice as the executive team tries to figure out how to streamline their business and improve those bottom line results.

downsizing Profit Pressure Equals Downsizing

SSB has a little different situation than Tempur/Sealy from where I sit. With Tempur Sealy you have a very strategic portfolio of brands. Tempur-Pedic with the strongest specialty sleep line in the industry. Sealy with a good brand and product line that can take you from velocity price points into the lower upper end, and the Stearns and Foster line  that positions them well in the luxury category. With SSB on the other hand you have two companies with a very similar product strategy where they essentially compete in every category.

Managing brands is difficult for even the most skilled marketing people, so consolidating these two groups and asking the sales force to navigate that effectively is going to be tricky. When a rep is trying to figure out which brand gets placed at a $999 price point and both groups have strong hybrid offerings, who gets the nod? I know that each situation is different, but I worked for a company that did this 20 something years ago and I’m telling you, its not as easy as it sounds. Anyone remember “Share The Vision”?

We have two industry outsiders that will be running these companies in 2016 with Michael Traub for SSB and Scott Thompson for Tempur/Sealy. I posted a blog about the challenges outsiders face when coming in to the mattress industry which you can read HERE. Traub and I later laughed about this as he gave me a hard time about my comments. I reminded him however that I didn’t say an outsider could not be successful, I said that many have tried and failed because they over simplify the business.

There have been some very ambitious comments made about growing profit in these organizations and to get there you will likely have to do things like reduce overhead (cut people), value engineer products (code word for de-spec), reduce co op spending and increase brand spending, raise prices, and the list goes on. Not easy to do in an environment where you have so much retail consolidation giving more leverage to the retailers out there, a move to the internet for non branded mattresses and an increase of private label interest in the industry. They will be wise not to over play their hand. (Read more about why I think the “S” brands are less relevant today at THIS LINK.)

For the HR people that had to carry out the downsizing, I feel for you because I know that isn’t easy to do. And for the people that got let go at both Tempur/Sealy and SSB over the last few months, my prayers go out for all of you and your families today but keep the faith because you are on your path, and something good can come out of this for you if you choose it.