Before I get started I wanted to alert you to our most recent podcast where we interviewed Gerry Borreggine, the CEO at Therapedic. Gerry and I have been friends for over 20 years and it was a lot of fun to talk to him about his time in the industry and how he kidnapped Brian Wilson from the Beach Boys and locked him up in his basement. Okay, that didn’t really happen but it almost happened…just listen and laugh. Don’t miss this one.
Want to be a step ahead of the game? Let’s see if we can’t figure out where this business is going and be a part of that change instead of a victim of it. I have speculated in the past about certain aspects of our future state but never like I am going to attempt to do in this post so take a look and push back where it makes sense. So what does a mattress store or department look like in the future?
Less is more: I think we’re learning some lessons from the guys online like you don’t need 50 beds to drive sales. Is choice a good thing? You bet it is, but how much choice do you really need? If you have ever been a part of any consumer research projects you will know that shoppers freak out when they first see all of the beds they have to choose from. “Where do I even begin?” We already know that the process is confusing for her and when you have a sea of beds to pick from it just adds to the problem. Not only that but there is industry research that suggests most rsa’s have great close rates when it comes to showing their four favorite beds. After that, those rates closing rates drop considerably. What if you were to put every sku through the following filters? Does it feel TOTALLY different than anything else in my line? Is the technology, therefore, the consumer benefit COMPLETELY different than anything else in my line? Is the bed tech legit or just more marketing BS? Does it offer something compelling to the consumer that I don’t have with another product? How profitable is it compared to everything else I have? Run with this exercise and see what you come out with. If you reduce sku’s you can shrink your store size/rents and inventory cost. Doing this could allow you to allocate more money for customer acquisition which would drive sales.
Product shift: The brands in this industry have always blurred together. (See this past post for some more clarity on that subject.) It used to be that the “S” brands created an awareness with the consumer that drove some trust and preference. I’m not saying that brand awareness has no value but I can tell you that it means a lot less than it used to. Brands are not advertising much these days, almost nobody knows what they stand for, (including the people running the companies) and with the consumer ratings and review sites, the trust factor can be satisfied in many other ways. So if you’re a retailer paying a premium for some of those brands, it just doesn’t make sense. There is a move away from brands and into private label and I think that trend only grows. Companies like Purple, Leesa, and Casper are the guys spending the money these days and should they choose to sell the brick and mortar guys, they are going to be able to make a better case for floor space than most. If you are not spending $50 million a year in building your brand then you had better deliver a product that is unlike anything else out there. It needs to be compelling, profitable, easy to sell and sought after by the consumer. If you are selling foam, latex, or springs without a very unique selling proposition to create some separation, then things are going to become much more difficult. If I just defined your company, you need to make sure that you are the low-cost supplier and have the marketing chops to help your retail partners create their private label programs.
Serve your audience: The consumer is getting smarter every day because they are being armed with more and more information. The review sites arm them with data (not all of which is good), and given the trend to shop online and avoid the mattress shopping experience, retailers are going to have to figure out better ways to create a process that sets them aside from everyone else selling sleep products. It might be the use of technology to fit someone for the right products, or a better way to actually prove that the products that they buy really do work. But that experience is what will draw people in and create the word of mouth marketing necessary to make you the preferred place to buy. If you want to earn the business you’re going to have to serve the consumer in new ways that add value during the shopping process or years later in your post-sale relationship. That’s right. Stop thinking about this as a transaction and more like a relationship and you will get to the good stuff.
Good enough: The growth of e-commerce in our category will be limited only by the percentage of consumers out there that believe a bed purchased online is “good enough” for them. Based on my experience with consumer segmentation research, the groups listed below are most likely the ones that will buy their mattress online.
- Value shopper: That price sensitive buyer that is only after the best deal.
- I can sleep anywhere: This is the consumer that isn’t all that worked up over the comfort of the bed and is happy catching Z’s just about anywhere. They want a good bed but would rather spend their money on other things.
- Short timer: This is the consumer that is shopping for a short-term solution. They could be in transition from their parent’s house to a dorm or apartment or buying a bed for a guest room or second home. These guys aren’t going to keep the bed for long or sleep on it all that often so what they buy isn’t that big of a deal.
The consumer groups likely to buy at their local store:
- Refuge seeker: This person looks at the master suite as their ultimate getaway at the end of the day and their mattress is a very important part of that special place they can go to unwind.
- Luxury lover: Some people just want the best and they are going to want to see that mattress for themselves, touch it, feel it, and know that it’s something special before they write that big check. (I mean swipe that card, does anyone write checks anymore?)
- Healthy sleeper: For the consumer that really understands that sleep is a health issue or for someone that might have a health problem. These guys want to test the products out to make sure that they find the solution they are looking for.
All of this to say, it’s possible that the brick and mortar store really becomes the place that consumers go in search of a special service that can only be delivered by a human, and to see a product that is higher in price and not likely to be sold sight unseen. The average unit selling price in stores will likely push higher, as e-commerce guys grow their business at $1,200 price points and below taking that market share from traditional channels.
Ticket growth: I think that we’re just now beginning to see the possibilities of top and bottom line growth that come from products like pillows, protectors, sheets, and other items connected to the mattress purchase. Developing great selling process, compelling displays and merchandising assortments aren’t just for the cutting edge retailer, they are going to be mandatory programs if you really want to thrive in the category. Let’s not stop with the typical products however, when you consider the entire eco-system of sleep think about your possibilities. Food, drinks, music, meditation, chairs, books, candles, apps etc. There are so many items in the market that can help consumers get better sleep and they could all be supplied by a mattress store in the future. Afterall, think of the money you’re going to be able to spend on new items after you move into smaller stores and reduce your mattress sku’s. 🙂 If your intention really is to help your customer sleep better, can you really do that by just selling them a mattress and pillow?
Sorry for the long post this week but there was a lot to say on this topic. So what am I missing? Tell me in the comments section. Serve this one up in your weekly meeting and see where it goes; it may surprise you.