New accounts, exclusives lift Serta
By David Perry -- Furniture Today, March 9, 2009
HOFFMAN ESTATES, Ill. — When Serta President Bob Sherman took the stage in Las Vegas last summer shortly before rock star Rod Stewart, he spoke to the thousands of retailers filling the tent on the World Market Center campus.
It was a unique opportunity that came with Serta's high-priced co-sponsorship of the Rod Stewart concert, and Sherman made the most of it. First, he thanked Serta's dealers for their support. And then he invited non-Serta dealers to join the bandwagon.
Many have done just that, helping make Serta the fastest-growing bedding major in the industry last year, according to the company. Sherman said Serta grew more than 10% in 2008, easily outdistancing its biggest rivals, several of whom had double-digit declines.
Initial reports put the industry down last year by 11.8% in dollars, meaning that Serta engineered a remarkable growth year while its rivals struggled. Put another way, Serta enjoyed lemonade in a year when most found only lemons.
There are several reasons for that strong performance, Sherman said in a recent interview. Serta added retailers to its growing dealer base and helped its existing dealers improve their margins and close more sales by providing them with exclusive bedding products.
“We are focused on retailers,” he said. “That is a refreshing conversation for them.”
Retailers who have exclusive products and features “will sell with more confidence and enthusiasm,” he said. “The more confidence and enthusiasm you have, the more sales you will make.”
Serta has scooped up a number of new accounts, including buying groups, national retailers and strong independents. That strategy continues.
“We are aggressively going after new accounts,” Sherman said. “That is the first and fastest means of growing our business.”
One key to some of the retail gains has been the presence of longtime retailer Hershel Alpert, a former National Home Furnishings Assn. president and retailer of the year. Alpert, a consultant to Serta, has traveled with Sherman and introduced him to a number of key retailers. “Hershel has been very helpful to us,” Sherman said.
The retail gains have not come without a price, however.
“There is no doubt we gave up some margin to gain business,” Sherman said. Also contributing to the margin erosion, he said, were raw material costs that soared almost 30% in the past six months. In response, Serta has done some belt-tightening. And it continues to focus on margin improvement.
“It is easier to improve profits when sales are up than when sales are down,” Sherman said.
Serta's success in the marketplace has energized the company's employees, he said: “Right now, Serta is a great place to work.”
And that energy has carried over into the marketplace. Sherman said retailers consider Serta “a hot line. If I'm not currently doing business with them, I had better consider doing so.”
While the industry faces the prospect of another year of significant sales declines, Serta is planning to keep its positive momentum. “We just had another sales meeting,” Sherman said, “and I told them, and I believe this from the bottom of my heart, that we will have another 10% growth year.”
One reason for that optimism: The Donald lurks in the wings. Serta recently signed a licensing agreement with Donald Trump to introduce a line of Trump mattresses. Serta will be offering the Trump line to retailers for exclusive distribution in their markets.
He said Serta benefits from a broad product portfolio, one that includes Vera Wang products, the flagship Perfect Sleeper line, which Serta calls “the best-selling premium mattress in America,” and a new green line. “Each line has different features and retailers can have them exclusively,” said Sherman.
And he said that's a message that Serta's dealers enjoy hearing.
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