ISPA forecast mirrors 2002
By David Perry -- Furniture Today, December 29, 2002
The New Year for the bedding industry is shaping up a lot like the year that is drawing to a close.
That is the official word from the International Sleep Products Assn., which updated its 2002 and 2003 forecasts in October. Those forecasts, the only official ones for the bedding industry, now present virtually mirror images for industry performance in 2002 and 2003.
That is a good news scenario for an industry that is coming off its first down year in a long time. Bedding, traditionally a strong performer in the home furnishings industry, appears to be regaining its growing ways, judging by the ISPA forecasts.
Retail uncertainty
But a wild card emerged late this year. The Chapter 11 filing by Mattress Discounters, one of the nation's largest sleep shops, brought the news that about 100 stores would be closed. That raises the prospect that the industry could lose at least some of the volume those stores generated. But given the heavy promotion bedding already gets, the loss of those stores won't have any impact on overall sales, some bedding executives contend.
ISPA released its revised forecasts for 2002 and 2003 before the filing by Mattress Discounters, and before the sale of another Bain Capital affiliate, The Mattress Firm, to a Florida-based investment company.
The revised forecast for 2002 calls for a 4.5% gain in the dollar value of bedding shipments, with unit growth of 2%.
And the revised forecast for 2003 envisions a 4.2% jump in the dollar value of bedding shipments, with units growing by 2%.
The updated 2002 forecast actually projects a slightly stronger year for dollar shipments than had earlier been forecast. In April 2002, ISPA saw a 4.3% gain in dollars for 2002. The new forecast nudges that up to 4.5%.
But the updated 2002 forecast sees a weaker year in unit performance. In April 2002, ISPA forecasted a 2.3% unit gain for this year. The latest forecast takes that figure down to 2%.
The new 2003 forecasts are more conservative on both dollars and units. The earlier 4.5% forecast for dollar growth has been dropped down to 4.2%. And the April forecast of a 3% gain in units for 2003 has been dropped down to a forecast calling for a 2% unit gain next year.
Those are modest adjustments, but they reflect growing concerns about a shaky economy and how bedding will fare in a retail climate that is uncertain at best.
While some bedding analysts believe the industry can beat the forecasts next year and record a much stronger performance, others say the year could be a very tough one for bedding. A new mix of variables — a reeling stock market, talk of war with Iraq, plunging consumer confidence, and a very challenging retail climate — poses significant hurdles for anyone trying to predict the future.
The erratic nature of business this year has left executives scratching their heads in puzzlement.
"There is no rhyme or reason to what has been happening," noted Ed Lilly, Serta president. "There has been a surge in one month and a disaster in another. Consumers see the decline in the value of their portfolios and are delaying the purchase of products they can put off."
He predicted the final quarter of 2002 will be "very tough" for the industry.
"Based on what I'm hearing," said King Koil President Larry McKay, "the industry is down substantially this year. I think next year will be a challenging year. I don't see an increase of 4% as an industry next year."
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