Catching up on my Furniture Today reading this morning, I came across an article on Sleep Number that really made an impact on me. In addition to being named the fastest growing retailer among FT’s top 100 U.S. furniture stores, they appeared in the top 10 in four of the five performance measurements used to compile the index of growth leaders. With $1,324 per square foot in sales and a gross margin of 63.8%, this company is on fire.
It doesn’t seem like long ago that they decided to sell to traditional channels of retailers like sleep shops, but that didn’t work so they pulled their products. Then their stock price fell below a buck and nobody knew what was going to happen to them. Sleep Number started closing some stores that were not performing, opening new locations, focusing on new product development, and turned up the heat on their marketing program and guess what – IT WORKED.
I am writing about Sleep Number this morning because I really don’t think they get enough credit or attention in our industry. Consider for a minute the trend of product personalization; these guys are writing that book in the mattress industry. They are by far the largest seller of beds when it comes to being able to adjust the surface comfort and position of the mattress. Not only that, but they just launched a product that will allow a consumer to heat or cool ANY mattress surface, making the experience in the master suite that much better. They also continue to innovate with their sleep accessories programs and marketing initiatives as well as their efforts to understand sleep and the direct relationship to the mattress. Their team deserves some kind of award for thought leadership, if you ask me.
They are also good neighbors and participate in the industry by sitting on the executive committee of ISPA. Also, my buddy Pete Bills is currently serving as my Vice Chairman on the Better Sleep Council. I will tell you, if the rest of the Sleep Number company is full of quality people like Pete, they are going to have a great run.
The typical conversation in industry circles includes comments about what Serta, Sealy, Tempur-Pedic, and Simmons are up to. That is because they are selling to the traditional channels of distribution and competing directly with one another. In a way, the Sleep Number company sort of flies under the radar because they are in a closed-loop system. They control the brand experience – from the commercials they air on television to the moment the product is delivered in the home. Because of this, they can’t blame the RSA for a bad presentation or the retailers that carry their products for poor delivery or not giving them enough floor space. They control 100% of their own destiny and have only themselves to blame, or receive credit, for the outcome.
My hat is off to Sleep Number for where it has been, and where the company is today. They have successfully navigated rough waters and find themselves on top. After meeting Shelly Ibach, their current CEO, I am betting they stay there for a while. It is great to have this kind of company in our industry – I think it makes us all a little bit better.
What do you think? Does Sleep Number own personalization? Will others catch up to them?