Simmons not raising prices
By David Perry -- Furniture Today, April 5, 2004
ATLANTA — ATLANTA — Bedding major Simmons, breaking from the pack, says it won't be raising its wholesale bedding prices.
Seeking to protect "the superior profit and increased market share Simmons provides" its dealers, the company told its retailers last week that it has decided not to increase prices despite the "unprecedented raw material price increases" that have hit the bedding industry.
Sealy recently announced that it is raising its wholesale prices by an average of 6% effective May 1. Other producers, citing the rapidly escalating raw material costs, are expected to follow suit.
But not Simmons, its top executives said in a letter to dealers last week. Chairman Charlie Eitel and President Bob Hellyer gave three reasons that Simmons would not raise prices:
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The company launched a "zero waste" initiative three years ago, focused on safety, quality, service and cost. "This disciplined approach to managing our operations has yielded savings by driving non-value- added costs out of our plants."
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"With your support, we believe that we can grow additional sales and absorb enough overhead to help offset a portion of raw material cost increases."
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"We gained significant market share last year and want to ensure this trend continues. We believe we have a win-win partnership and we want to keep it that way."
The Simmons executives said the company's suppliers "have increased the price of wire and wood dramatically" in the past 90 days. In addition, fuel prices have soared, "affecting foam prices and distribution costs," they said.
"At Simmons, we clearly understand the challenge price increases represent once the retail value of a product has been established with the sales associate."
One of Serta's licensees is raising its prices by 7%, said Ed Lilly, Serta president. He hasn't heard from other licensees.
Spring Air President Jim Nation said the raw material increases "can't be absorbed." But that producer has not yet announced any price hikes.
