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Bedding's 'new reality' confounded the experts

David Perry, Executive editor -- Furniture Today, January 26, 2003

A funny thing happened on our way to a strong second half last year: It didn't materialize.

Of course, that wasn't so funny. It made for a very challenging year, one that my friend Bob Naboicheck, president of Gold Bond, called "the toughest business environment of our business careers."

That was one of the interesting insights to emerge from a comprehensive survey of bedding executives that I wrapped up as 2002 came to close. The fruits of that survey can be found on pages 8 and 9 in this issue.

The major theme of the executives' comments was the industry's lackluster — dare we say lousy? — performance in 2002. Many expected a second-half rebound; many were disappointed when it didn't happen. As Sealy CEO Dave McIlquham noted, "I don't think anyone expected the last half to be as challenging as it was."

What happened?

I've been calling it "the new reality." The old rules don't apply any more. A strong housing market and low interest rates don't automatically help us like they once did. In this post-Sept. 11 world, things are different. Terrorism and threats of terrorism are always with us. Consumer confidence is shaky. The stock market has been a disaster. Too many consumers are losing their jobs. Business is more unpredictable and harder to read.

For example, you would think it would be the largest manufacturers and retailers who are best equipped to survive tough times, yet one of the largest bedding producers and one of the largest bedding retailers both found themselves in Chapter 11 last year. As Restonic President Ed Scott noted, "Midsize retailers and manufacturers have been better able to navigate in these difficult times."

Ron Passaglia, the highly respected bedding executive now heading U.S. operations for Selther, says the reconfigured structure of the specialty retailing arena "opens the door for a possible shift to alternate channels."

The direct marketers are one channel that a number of observers say is well positioned for growth. Look for companies like Select Comfort, Tempur-Pedic and Nautilus, which address that channel and some others, to continue their growing ways.

Were there any good things about last year?

Kingsdown President Pat Flippin said his company got a chance "to rethink our business strategy to become a better company." When sales rebound, Kingsdown, and other companies that took similar steps, will be in a good position to profit from their efforts.

As we wrap up, let's return to Gold Bond's Naboicheck for the final insight: "It's in the tough times that the most interesting opportunities come about."

Thanks to all the leaders who shared their views. Here's hoping that business this year won't be quite so challenging.

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Execs forecast positive outlook

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