You have probably heard by now that Mattress Firm has filed for Chapter 11 bankruptcy. The good news is that they are planning to pay all of their suppliers what they are owed, so everyone can exhale and go about planning your business. The bad news is that they are going to be closing down 700 stores so they can reconcile some bad real estate which means many will lose their jobs. That’s always the worst part with something like this.
I’ve had a lot of conversations with people about how all of this happened. Too many stores, mismanagement, the break up with Tempur-Pedic, no consistency with their marketing, I’ve heard it all. At the end of the day, I guess it really doesn’t matter because what’s done is done. Now everyone has to figure out what comes next right?
The big question I keep running into is “Will Mattress Firm and Tempur-Pedic get back together after a very nasty separation.” It’s hard to imagine that would happen given all of the lawsuits, hurt feelings, egos, and supply agreements on both sides but never say never. Fact is that both companies would likely benefit a great deal from a reunion. For Tempur-Pedic, they would pick up about 3,000 retail locations which could plug some holes on the map for them and deliver a significant boost to their top and bottom line. For Mattress Firm, they could bring back that great Tempur-Pedic brand that drove their traffic for so long and shore up those big ticket averages. But are they better off keeping things the way they are?
Mark Kinsley and I dug into this a little on our most recent Dos Marcos podcast so check that out HERE but allow me to recap that for you. Tempur says that they are doing great in their company-owned stores. Scott Thompson has made some public comments about the fact that in those stores they are running up 200% year over year and their average tickets are much higher than what they were seeing at Mattress Firm which I don’t doubt, but how many of those stores do they have? It’s going to take a lot more of those company-owned stores to make up for the lost Mattress Firm volume.
After speaking to Steve Stagner, CEO at Mattress Firm, I got the impression that he was not opposed to the idea of Tempur-Pedic coming back but wants to make sure that the product value is there for the consumer. They are testing a few of their own brands now and getting some great results with big margins and they are seeing some of those big-ticket transactions come back. But can it replace the net benefit you get from the Tempur-Pedic products and brand strength?
This issue is way more complicated than I am making it here but when you write a blog, you can hit the easy button anytime you want. What do you think the chances are, will they get back together? Somebody call Vegas and see what the line is please. 🙂
I’m sure you have been reading about AmazonGo cashierless stores. If not, Amazon is planning over 3,000 of these stores in the next few years so you can walk in, pick up your merchandise and simply walk out with your charges waiting for you on your Amazon account before you make it to your car. (If you like reading about Amazon check out THIS post from my buddy Brent Beshore and his team at Adventur.es; there is plenty of information in there to keep you busy for a few hours.)
So is it possible to do a mattress store with no retail salesperson? I know that it has already been tried but I am unaware of anyone doing that successfully today. After thinking about this for a while I thought I would share some of my thoughts on how somebody could actually pull that off.
The mattress product assortment has to be really narrow. Maybe even all one price in three different firmnesses, and let Goldilocks find that “just right” feel for herself. If you try to expand past that you will just cause confusion therefore indecision. As for your pillows, protectors, and other items follow the same path. The downside for some of those sleep essentials will be shrinkage. If you have samples of pillows that they can use from bed to bed a dishonest customer could end up walking out with them. You could, however, put some cameras in the store like Wal-Mart does these days showing that they are being recorded; maybe that will stop the bad guys. Sheets would be easy enough, just provide a hand sample so they can pick their favorite quality and feel.
You have to nail the fulfillment side that’s for sure. If you have your products on Amazon, that would be easy enough. Just follow the Tuft and Needle formula and run it all through your Amazon platform and they will process the order, bill your customer, warehouse it all and deliver it for you no problem.
Your point of sale has to do the job of the RSA. You need to be able to educate your consumer on the benefits of your products and why somebody should shop with you instead of with someone else. (This will disqualify many of you out there because you don’t build value in your products or stores which can be clearly seen in your advertising. Does that upset you? Sorry for the smack of reality.) Could you do a virtual assistant where you could facetime people in the store, sort of like a help bot when you are shopping online but a real live person? How about tablets strategically placed with video thumbnails to bring the consumer deeper into the selling funnel. Topics? (Nothing over one minute please!)
Tell me about this product; what does it do and what proof can you provide me with?
What makes it better than others at similar price points?
Why shop here?
FAQ’s to include return policies, delivery details etc.
Other keys to success? Either a digital or traditional brand could mean a lot here. If you carry something that a consumer is familiar with it will help build some trust for the consumer if they aren’t totally comfortable buying in this type of store.
Make it a cool space. Pipe in some great music, fun graphics and calming smells to establish some texture in the store. If you deliver a simple to navigate, hassle-free shopping experience you will be rewarded.
What do you think, could this work? Likely not for the master suite purchase for most, but it would be great for a slice of the buying public. Maybe this concept is working and I just don’t know about it, if so tell me about it in the comments section.
It was a humbling experience to serve as this year’s Seena Magowitz Foundation Honorary Chairman. I knew that it was going to be a big commitment but these guys are trying to cure pancreatic cancer. That’s a pretty good place to invest time don’t you think? I’m very glad I did because it has had a profound impact on me.
It all started with a breakfast On Saturday, September 25th, when I was able to meet Dan’s Diamonds; a group of very brave people that are survivors of the disease. Dr. Dan Von Hoff or Dr. Dan Von Hope to many, gave a talk on his research and the progress he was making, and then the survivors in the room expressed their gratitude to Dr. Von Hoff, to Roger Magowitz and to myself for what we were doing to support this cause. My thinking at the time was, “Thank God I agreed to be a part of this, I really want to help these people!”
At the Discovery Dinner Sunday evening, Dr. Von Hoff delivered a keynote address and gave us all a small glimpse of what he and his team were doing at tgen to find a path towards early detection and a way to ultimately cure the disease. Dr. Von Hoff has so many titles and awards I could write about those for pages. But it’s his heart for the people with the disease that drives his mission. He is without a doubt one of the most amazing people I have ever met and I know that his research will eventually lead to a cure, and his compassion will give some peace to those inflicted.
Next came THE talk of the night from Stan Vitikas. Stan has been living with pancreatic cancer for 11 years and in a very emotional speech, he shared with the audience that facing death has changed him. “Why am I alive? If not me then who?” Stan has raised over $70,000 to find a cure and his speech that night gave everyone in the room a reason to be grateful for their own life and he encouraged everyone to support Roger Magowitz and the foundation’s efforts. If you want to be inspired by Stan, give this video a look and see for yourself what real heroes look like.
I was up next. Normally when I give a speech, I get a little nervous before I go on stage but over the years I have been able to manage that pretty well. This time was very different. Stan had me and everyone else in the room so choked up that I wasn’t sure I could get through what I had to say. Then Karl Glassman, past Honorary Chairman of the event, current CEO of Leggett and Platt, and my friend took the stage to share a few thoughts and to introduce me. When it comes to people that I admire and respect Karl is at the top of the list for me, and for many. I didn’t get a chance that night to really communicate how I feel about him and his wife Cathi, and how grateful I was that he agreed to bring me on stage because his introduction was so incredible, I pretty much forgot everything I was going to say. Karl had recently met Senator John McCain while testifying in Washington in front of a Senate Sub-Committee. Senator McCain has been an advocate for tgen for a long time and told Karl that getting tgen to Arizona was one of his biggest accomplishments in politics. Karl was recently looking through some of Senator McCain’s writings and pulled a quote from him that he used to introduce me and after you see that, you will understand why I lost it a little at the beginning of my talk. To say that I was humbled by that is an understatement, and to say “thank you” just doesn’t do it, but….thank you.
During my speech, I talked about how we set a goal to inform more people about pancreatic cancer. With the help of my good friend Mark Kinsley and partner on the Dos Marcos podcast, we put together an advisory board filled with the top leaders in the industry to get the word out. These guys helped us promote a video we call Why Wait and pushed this message to over 165,000 people. I can’t thank you all enough, you really came through! After the update I finished up with a few thoughts so read a brief recap below but watch the video and get a feel for that moment:
Be empathetic towards people because it will connect you to them in a very meaningful way. What if you were the one that found out you had six months to live? Would you want people to give their time and treasure?
Live your life. Are you spending time on the things that matter most? If not, why not?
Put your problems in check and let the people surviving pancreatic cancer serve as your inspiration.
There is always hope.
My thanks to Roger Magowitz for having faith in me to do this job and for his passion to find a cure for pancreatic cancer. I have learned a lot over the years working with Roger on this foundation and it has forever changed me! Also a big thank you to Liz McBeth event director and to Nicole Rechter who was recognized this year with an award for her work on the foundation. Also, we can’t forget all of the volunteers, you made this a huge success. To everyone that attended, you had many other places you could have been, and there are other ways to spend your money so thank you for choosing the Magowitz event. Finally, to my parents Nick and Dee Quinn for making the trip to Boston and for teaching me what it means to serve others, and to my wife Bridget for being so amazing and supporting me in everything I do, I love you all.
So there is no cure YET but when it happens, there is no doubt that the mattress industry will have played a HUGE part in getting that done. Just think about that for a minute. I’m so proud to be a part of it with all of you.
Watch Johnny Clegg, a world-renowned musician and pancreatic cancer survivor perform live.
Opening remarks from Roger Magowitz and Derek Hall, CEO Arizona Diamondbacks.
Normally when I’m on a plane I get out my work and try to make the most out of my time away from distractions. This week, however, I sat next to a guy named Adam “SCRAM” Gobbo and we started to talk. If you’re wondering about the “SCRAM” in his name, it isn’t a given middle name, it’s a call sign that he earned after being a pilot in the United States Air Force, flying F16’s and protecting his country. (Thanks again for your service Adam!)
Aside from the cool factor of being a jet fighter pilot, Adam is a really smart business strategist and it’s clear that his time in the Air Force has given him some great perspective. I asked Adam what he most enjoyed about flying a plane like the F16 and part of his answer had to do with the simple fact that you get to go really fast. (Keep in mind the F16 is a supersonic jet that can hit a top speed of 1,500 mph.) He said it’s incredibly exciting, but making a mistake at that speed can cost you dearly.
It really made me think about some things that have happened to me in business. I get so focused on the target that when I get bumped off course sometimes I don’t even realize it. Before you know it, you’re putting out fires and dealing with crap that slightly deters you from the original plan, but it’s enough to cause you to fail. It might be that you end up getting bogged down just managing the day to day business. Maybe it’s a person or a company culture that prevents you from staying on the path. If you’re not totally committed to being LOCKED IN on your target you will find yourself flying over a foreign country that you’re not supposed to be in. What does being totally committed look like anyway? Just identify where you’re spending your time and that will tell you everything you need to know. Keep a notepad on top of your desk and literally log what you’re doing 2-3 times a day, and see how much of it’s dedicated to those projects that will get you the big result you’re after. Life happens fast and because of that, it doesn’t take long to fail if you’re off course even a few degrees. What path are you on? Is it taking you to a place that’s going to make a difference in your life? For your business?
Thanks, Adam for letting me pick your brain and for a great plane ride to Dallas. I’m glad I didn’t bury my head in my computer on this trip because my new friend really got me to thinking about a few things; hopefully, I added some value back to him as well. Actually, I am pretty sure I did because he sent me a note a few hours after we landed telling me that he subscribed to Q’s Views so he can get up to speed on the mattress industry. It’s exactly like his current job of selling $7 million dollar spy camera’s that are mounted on warships right? 🙂
Normally I would try to talk about something like this merger fairly soon after it happened but I had a something much more important to do, which is to attend the Seena Magowitz Charity Golf Tournament in Boston this week. I will be writing about that next week but just know this, if you’re not attending this event yourself you are missing out on something that is pretty incredible. Congratulations to Roger Magowitz and his entire group for putting on what I think was the very best one yet; more next week.
As you already know by now, Serta Simmons Bedding is merging with Tuft and Needle and that is some pretty big news for our little industry. My phone has been blowing up with people wanting to talk about this so I thought I would share some of those conversations with you. For this one, I also reached out to several large retailers, industry analyst and thought leaders, to get their opinion so here are some of the quotes from that cast of characters.
“We are thinking about bringing in an e-commerce brand so we will give Tuft and Needle some thought.”
“If we were to add it to our floor, the brand would need to drive people to us and we don’t think that Tuft and Needle is that kind of brand.”
“I don’t think that we can sell Tuft and Needle products at the same price they are online and still make the kind of margin we need to make and we would not sell above what they have it for online.”
“Serta and Simmons aren’t that strong at retail and now that they are going to be more direct to consumer; it’s going to hurt their distribution.”
“This industry is changing very fast, you just have to find the opportunity in it all.”
“Just wait until the guys at Tuft and Needle collide with the culture of SSB. That’s not a fit and culture is a bid deal.”
“The management team at SSB can’t get it right as things stand today, if they merge with Tuft and Needle that makes their business much more complicated so I don’t think they can handle that successfully.”
“Why are they calling it a merger, why don’t they just call it what it is which is SSB purchasing Tuft and Needle?”
“This is great for Tuft and Needle and for SSB because they both get something they don’t have.”
Will you bring in Tuft and Needle now that SSB might be distributing those products? “I don’t think they can meet my margin requirement. I’m pretty greedy.”
I certainly don’t know what will come from this but strategically it could be good for both parties IF they execute. For Tuft and Needle, they could have access to a much larger manufacturing footprint and retail distribution network for their products. They should also be able to buy raw materials at a discounted rate. I have met both Daehee and JT and I am very happy for them as they have always been great to me. This is a HUGE event in their lives so guys…enjoy the hell out of your ride!
On the SSB side of things, they are going to have access to a strong digital marketing team that can bring them forward in the supply chain and give them some help on understanding how to create a more meaningful relationship with their customer. SSB can develop other products that can be shipped in a box to consumers and supplement their business with a strong direct to consumer channel to compete with their largest competitor Tempur-Sealy.
If I were Advent, the private equity owner of SSB, I would seriously consider a hard push to buy Mattress Firm. (Which I’m sure they are.) Why not? They are the largest supplier to Mattress Firm, have a lot to lose in terms of retail distribution if someone else buys it, and now that they have a strong digital approach, they could control the consumer experience with their brand in a very significant way. Sleep Number is doing a pretty good job of that don’t you think? Yes they will lose some other retail placement but that is in the short term and can be mitigated IF SSB CAN DRIVE VALUE in their products with the consumer creating leverage with other retailers.
What do you think? Was this a good move by these companies?