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Will furniture stores give up bedding dominance?

David Perry, Executive editor -- Furniture Today, April 20, 2003

Ready for a quick bedding quiz? Only one bedding distribution channel posted market share gains in both 2000 and 2002. Which one was it?

I'll bet many of you picked the warehouse club channel, but you would be wrong.

Some of you might pick the alternative retailing channel, which includes Internet sales and direct marketing, but you would be wrong too.

Yes, that old standby — bedding specialty stores — remains on the ascent, despite the well-publicized problems encountered by a couple of major bedding specialists last year.

According to the latest edition of our ongoing research into bedding retail distribution channels, the results of which are on pages 36 and 37 in this issue, the bedding specialty store channel gained three percentage points of market share from 1998 to 2000, and grew by another percentage point from 2000 to 2002, to 33%.

That puts it only seven percentage points below the furniture store channel, which lost two percentage points of market share in the last two years. If those trends continue, bedding specialty stores will be the largest single channel by 2008, dethroning furniture stores.

The bedding producers who helped us with our latest distribution survey had some interesting comments on what is happening at retail. Several of them cited declines in the furniture store channel, with one producer saying that many furniture stores "have grown complacent in bedding." Considering the star status that bedding enjoys in generating profit dollars at retail, that is a surprising development. I guess some furniture retailers just don't want to boost their profits any more.

But some producers noted that regional furniture stores are actually gaining share, a trend that may be masked by an overall slide in the furniture store category.

There is no doubt that bedding specialty stores remain on the upswing. Obviously, they cannot afford to shift their focus. They promote bedding day in and day out, offer a broad selection of models, and many have developed skilled sales forces. That's a powerful combination.

The warehouse club channel is also gaining ground fast. Unlike bedding specialty stores, it did not gain share in both 2000 (when it was flat with 1998) and 2002, but its two percentage points of growth from 2000 to 2002 was the biggest such gain in bedding in our latest distribution study.

Each percentage point of market share was worth about $76 million last year. That means warehouse clubs gained about $150 million worth of business from 2000 to 2002. Interestingly, that's about how much the furniture store channel lost in that same period.

Will these trends continue? It all depends on how retailers treat bedding. The hard-chargers, sleep shops and warehouse clubs, are certainly setting a fast pace.

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