Sealy facing $50M hit but will strike back hard
David Perry, Executive editor -- Furniture Today, January 12, 2003
Ready for some shocking news? I checked with the powers-that-be at industry sales leader Sealy and asked what they plan to do to recover the business they'll be losing at Mattress Discounters and The Mattress Firm.
The response: We're going to kiss that business goodbye. We don't mind losing millions of dollars of business. It will be that much easier to run a smaller company.
Reality check: If you believe the preceding paragraph, you are seriously deluded and definitely should consult a psychiatrist. You certainly have no future in the mattress business. May we recommend used cars?
Sorry to play that little trick on you, but it's good to weed out the mentally unbalanced every now and then. Yes, I would go so far as to say that anyone who believes Sealy will sit back and take its lumps is completely out of touch with today's Incredibly Competitive Bedding Battleground. It just doesn't work like that.
No major or even minor producer worth his salt willingly gives up business without a fight. And the prediction in this corner is that Sealy will fight very hard to generate additional business as the effects of the changes at Mattress Discounters and The Mattress Firm play out in the coming months.
How big a hit will Sealy take as two of its biggest customers add at least one vendor, and one of those retailers closes and sells some stores? Some pretty big numbers are being bandied about by the competition. About $50 million sounds like a conservative estimate to me; some say it will be much higher. That's an estimate of the volume Sealy could lose in a year at Discounters and Firm.
Most of that, unfortunately for Sealy, will go directly to its competitors. Sealy's loss is their gain. That's the steep penalty you pay when you no longer can lock up the branded offerings at your biggest retail accounts.
But that's not to say that Sealy's overall volume a year from now will be $50 million less than it is now. There may be retailers out there who were unhappy with Sealy's former distribution arrangements and now are willing to make a greater commitment to Sealy. There is always opportunity in times of change.
The producers I checked with said they believe Sealy will aggressively seek to seize opportunities throughout the marketplace. "Sealy won't just give up," one producer said. "They'll get some business back with existing customers, and go after new customers."
Frankly, Sealy is in a position to be extremely aggressive. And it has some great things going for it, including the best-known brand in the industry (Sealy), a powerful high-end brand (Stearns & Foster), and some very sharp marketers behind both brands.
Will Sealy take a big sales hit? No question about it. But Sealy will fight relentlessly to grow its business. The interesting thing is that its competitors will be fighting just as hard to grow their business. Stay tuned.
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