Bedding could enjoy a strong year
Some producers are less optimistic, but all expect positive results
By David Perry -- Furniture Today, December 14, 2003
High Point — An improving business climate will help the bedding industry boost sales of better bedding and will produce solid unit and dollar growth next year.
Leading bedding producers say the industry should shake off its recent roller-coaster ride and head straight up throughout the new year. Some are even saying that 2004 could be a breakout year for the industry. Others say that might be a bit too optimistic.
But overall, bedding executives sound a variety of positive notes as they assess business prospects for 2004.
Momentum is building
"Demand for bedding will continue to strengthen throughout 2004," said Dave McIlquham, president of Sealy, the world's largest bedding producer. "Industry shipments have rebounded in the third quarter and I expect these trends to continue. Average unit selling prices again will increase faster than shipments as manufacturers continue to focus on the premium and luxury segments, and the consumer economy continues to recover."
Serta President Ed Lilly sees similar good signs. "The long-talked-about economic turnaround is here, and next year should see strong retail growth as the economy improves and consumer spending increases," he said.
Lilly said retailers can boost bedding sales by boosting promotional efforts.
"Retailers that increase advertising dollars will drive significant traffic," he said. "In addition, stores that create a positive shopping experience will be able to close more sales and will have the synergistic advantage of good word-of-mouth advertising."
Bob Hellyer, president of Simmons, said, "There appears to be positive momentum building in the third and fourth quarters at retail. That momentum should carry through next year. The industry introduced many innovations in the latter part of 2003 that should drive business. 2004 should be a great year."
Jim Nation, president of Spring Air, sees "a good year" in 2004 for the mattress industry.
"Employment will start to come back in the spring and will lead to better consumer confidence," he said. "I think there is a tremendous pent-up demand from the housing market that hasn't been realized yet. Housing has outperformed bedding units. You will see units start to come back. I see business for the bedding industry being better in 2004."
Nation also predicted the fire-safety issue "will not be a factor until 2005."
But Englander Vice President Dave Clark said flammability will enter into the equation next year. "It will pose some challenges to get flammability protection instituted," he said. "I'm hearing about a lot of new options on flammability products. We are still shooting to introduce our first fire-resistant products in April."
Overall, Clark sees 2004 as being a better year than 2003.
"The economy is showing signs of turning around," he said. "The political picture will become clearer in the next few months, whichever side you are on. A lot of the uncertainty is going away."
And that should help sales of big-ticket items, he added.
Larry McKay, president of King Koil, thinks 2004 could be a breakout year.
"All of us have felt that the last two years have been very challenging," he said. "We feel, based on improvements in the economy, that we are probably overdue for a banner year in the mattress business. We think 2004 will be a very strong year."
Better bedding in demand
The trend toward better bedding is escalating, in McKay's view. "There is a consumer who wants the very best and is willing to pay for it, if the beds look better and feel better," he said. "That trend will only continue."
Gerry Borreggine, vice president of sales and marketing at Therapedic, offered this view: "Typically, new housing starts spur growth in the home furnishings category. However, that has not been the case the past two years. New housing has been up, but home furnishings has been down. The construction industry is again forecasting bullish growth in 2004. That, coupled with the pent-up demand consumers should have for our category, would seem to indicate that it will be a strong year."
But he added a note of caution: "I think many retailers will be playing it close to the vest. The indicators haven't been good to retailers over the past two years. It's hard to expect that it will change in 2004."
Borreggine said that while many manufacturers have optimistic forecasts for 2004, "the business will go only as far as it is carried at retail. The fortunes of the industry this coming year will rest squarely on the shoulders of the retailers."
Kerry Tramel, president of Lady Americana, said the industry is positioned to reap a good year.
"Every indication is that 2004 will be the best mattress year of the last four," Tramel said. "Recent economic numbers are some of the brightest we have seen in the last 20 years, and even more importantly, consumer confidence is on the rise. It looks as though discretionary dollars will flow more freely in 2004. It will be up to all of us to make sure that those dollars get spent on bedding!"
Also seeing favorable economic conditions is Ed Scott, president of Restonic. "I am confident the economy is heading in the right direction," he said. "Assuming that this positive momentum continues, I believe the bedding industry's unit and dollar sales will grow appreciably, perhaps in the 2.5% and 4.5% range, respectively."
Market pressures
Kingsdown President Pat Flippin sees a continuing fight among producers and retailers to take market share from someone else. "I don't see any dramatic increase in next year's retail volume," he said. "I see a fight for market share."
Flippin said the falling prices of case goods are making it harder for the industry to sell high-priced beds. "You may have a chance with a $2,000 case goods suite to sell a $2,000 mattress. You may not have that chance with a $1,000 bedroom suite."
But he said Kingsdown's growing success with better bedding will continue.
"I see the trend continuing upward on our $1,000 and up path," Flippin said. "Our DormoDiagnostics program continues to grow."
In the specialty sleep arena, Select Comfort's Bill McLaughlin, chief executive officer, expects 2004 will be a good year.
"Consumers will continue to value quality sleep," said McLaughlin, who heads the airbed producer and retailer.
"I predict it will be a good year in bedding as consumer demand catches up with a recent history of strong housing."
David Fogg, president of fast-growing Tempur-Pedic's retail division, said specialty sleep will drive growth next year. "In 2004, I think we'll continue to see the growth of specialty bedding, and that will be at the expense of traditional bedding," Fogg said. "Pretty much all the growth we will see in units will be in specialty bedding. I think we will see declines in innerspring units next year.
"Specialty sleep is a more ergonomic way to sleep. It is also more comfortable and healthier way to sleep."
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