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?
14 thoughts on “Tempur Sealy and Mattress Firm Get A Divorce”
Mark,
Well said! I am starting my 35 year in this industry and I hope and pray that the moves that are playing out don’t result in lots of lost jobs. Let us all hope for the best for all parties involved.
Darrell, you make some good points about the price-value equation. Consumers are in the driver’s seat and the industry needs to prove the value in all its products. Do you mind clarifying the statement: “roll packable non-tempered pocketed coil units coming from China subsidizing Leggett in many instances.” I am confused about the part that says “subsidizing Leggett.” Thank you.
Darrell, I have in a past life worked for the bedding group at Leggett and Platt and I can tell you first hand that Leggett and Platt doesn’t contract with Chineses companies. They have significant capacity to build innersprings with the largest manufacturing footprint in the world. If you see something like that on Alibaba they are saying it to give themselves some credibility. If Leggett needed more capacity they would just call up the guys that make the machinery that produces coils, which they happen to own, and get more built. I agree with you however, that Chinese units are of poor quality in some cases. I want to make sure you are working with good information.
Darrell, that information—all of it—is incorrect. You’re invited to visit me in Carthage, Missouri and experience the truth. I mean it. Leaders shouldn’t play fast-and-loose with the facts. You should make the trip.
Here are the facts:
All mattress manufactures who are customers of Leggett & Platt, and located in the United States of America, receive innersprings from one of our five domestic facilities located in Carthage, Missouri, Ennis, Texas, Winchester, Kentucky, Monroe, Georgia, or High Point, North Carolina. We do not import innersprings from China and for years have been fighting the Chinese’s nefarious dumping practices. Our efforts are well-documented.
As you may know, Leggett & Platt has manufacturing operations all over the world and those facilities serve local markets. We do not, under any circumstances, import innersprings from China. What you’re seeing on Alibaba is misinformation, for which the Chinese are notorious. Also, I’m not sure what you mean by an 18” unit—it’s unclear what you’re describing. Open coil units do indeed require the safety offered by an unbaling machine, but fabric-encased coil units can be unrolled by hand on the factory floor and, due to electronic tempering, regain their original height and maintain firmness. We have mountains of firmness-loss testing data proving what I’m reporting. I’m happy to send that information your way. Also, visit BeddingComponents.com.
As mentioned, this is an open invitation to visit any of our five domestic innerspring manufacturing facilities and meet some of our 9,000+ American employee partners. There you’ll see the logistics behind how we use domestic manufacturing to supply all of our USA customers with the world’s best innersprings and bedding components. As a retail leader, I think seeing the truth first-hand would be time well-spent.
Most educators, such as you, also like to expand their knowledge base and correct misinformation, so I trust you enjoyed learning the facts about Leggett & Platt.
Great read Mark. I share your perspective. I think this could be good for other vendors if they have the proper product placement. The unrealized impact to valued employees at both companies will be fealt soon and that is very sad.
This is a lose lose situation. There is certainly more to this story that will come to light in the upcoming months. Tempur Sealy sales can not be easily turned to alternative vendors. Additionally, advertising dollars spent by MF will not bring about the same return without these key brands present. This is a classic case of personalities getting in the way of good business principles.
What about the WIN/WIN? How about for a moment we focus on Newton’s third law which states ” for every action there is an equal and opposite reaction”. Assuming demand remains strong with consumers those Tempur-Pedic sales have to go somewhere. So for once the small Mom & Pop catches a break and picks up some extra $2500 sales and his business improves so that he and his employees can stick around for a while longer. This also holds true for the large Tempur-Pedic retailers in the marketplace and the benefit to them and their employees participating in these additional sales.
Excellent point Paul, and one that people aren’t really talking about. Including me! In my experience, when a big retailer like Helig Meyers or Levitz back in the day, went out of business, you rarely saw a pick up in that volume in the key markets. Not that this translate here. As a matter of fact, I just had a call with a very large retailer last week that has doubled their Tempur-Pedic volume. You may be onto something here. We will see.
Mark, who will this help?
Certainly nobody at either company in the short term. I am confident that they think it is in their best interest long term or they would have been able to avoid it. It might help the other retailers out there if Tempur-Pedic turns up the volume on their marketing spend to drive more business that has been lost or if Tempur gets out a checkbook to buy some more placement or help key partners expand. It could also benefit MF since they are now forced to build their own brand up which is a better place for them to be long-term vs. depending on the marketing strength of Tempur-Pedic. What do you think Carla?
Thank you Mark for your observation. If I can say something I think this marriage has been a mistake, because customers shouldn’t be allowed to grow so much in a company portafolio. It is imperative to breack the risk. I have experienced the same when I was driving my little company, and I learned this hard lesson straight in my wallet, because it took two years to come back to where I was before. Manager’s mistakes are now translated in lost jobs. And probably times to recover will be the same I have experienced.
It is going to be hard on them both Mario there is no doubt. Tempur-Pedic is going to have to find a lot of business out there to replace what they have lost which will no doubt disrupt a lot of what is happening at retail. Mattress Firm is going to need to bring a product in that can deliver those $3,000 and up sales for their people to earn a living on. Both have an uphill battle in front of them but are certainly capable of figuring it out one way or another.
This is critical situation! Mark, who will this help?
Initially nobody William. But that happened a while back so both companies are back on their feet and finding a new groove. Question is where does it end up. We know that there is some interest by both parties to get the band back together but there are a lot of skeptics when it comes to that. We shall see! Thanks for reading. You might check out this post about that very thing. https://mquinn.com/2018/10/mattress-firm-files-chapter-11-does-that-lead-to-a-reunion-with-tempur-pedic/