Alternative stores grab 13% of bedding purchases
By Dana French -- Furniture Today, November 7, 2004
Approximately 1.5 million households purchased bedding through an alternative channel last year. The channel, defined in this survey as including all direct-to-consumer, warehouse membership clubs and discount department stores, accounts for 13% of all bedding purchases in 2002 and 2003. Of the households that purchased bedding at an alternative channel, 24% also shopped for a mattress at a furniture store and 31% shopped at a bedding specialty store.
Consumers buying at alternative channels represent a missed opportunity for furniture stores and bedding specialty stores. Of the households that purchased bedding at an alternative channel, 24% also shopped for a mattress at a furniture store and 31% shopped at a specialist. Last year, that translated into more than 350,000 missed purchases, representing more than $150 million in lost revenue.
As in other channels, queen mattresses are the most popular. More than two-fifths of all mattresses purchased through alternative channels are queen-sized. The channel accounts for 11% of all queen purchases. Alternative-buying households spend a median of $400 on their queen purchase, lower than the median of $535 at specialty stores and the median of $600 at furniture stores.
Alternative channels own a significant portion of the twin market, accounting for more than one-fifth of all twin purchases. Alternative buyers spend a median of $397 on their twin purchase, in line with the median of $395 on a twin at a specialist and significantly higher than the median of $225 at furniture stores.
Much like shoppers in other channels, shopping time is short for buyers in alternative channels — 40% spent less than one month shopping before making a purchase and 20% spent one to three months shopping.
Replacement cycles for old mattresses are shorter for alternative buyers than both specialty store buyers and furniture store buyers. Only one-fifth of households purchasing through an alternative channel were replacing a mattress that was 10 or more years old, compared with 51% of furniture store buyers and 42% of specialty store buyers.
Generally speaking, alternative channels are faster than furniture stores at delivery, and on par with delivery times at specialists.
Households that buy at alternative channels place more importance on price and selection than households that buy in furniture stores and bedding specialty stores.
Add-on sales present an opportunity for alternative channels. More than half of households that purchased bedding through the channel also bought a bed, and about one-third also purchased a dresser, chest and nightstand. Between 37% and 48% of the add-on bedroom purchases were made in alternative channels. Furniture stores captured between 20% and 36% of the add-on buys.
Defining the consumer
Households buying in alternative channels cannot be defined by income or age. While bedding-buyers at specialists are skewed towards middle incomes and furniture store buyers are slightly skewed towards incomes under $75,000, alternative channels appear to have no definite income niche. Household incomes of alternative channel buyers are distributed fairly evenly — 27% are under $40,000; 38% are between $40,000 and $74,999; and, 35% have incomes of $75,000 or more. The channel captured the bedding business of 14% of higher income households — those with incomes of $75,000 or more.
Similarly, alternative channels have no significant skew towards a certain age group. In 2002 and 2003, 38% of alternative channel buyers were baby boomers, in line with the boomer's portion of specialty store buyers, but less than the group's portion of furniture store buyers. Alternative channels are most popular with older baby boomers and empty nesters, those aged between 49 and 68 this year. Older baby boomers spend a median of $630 on bedding at alternative channels and empty nesters spend a median of $310.
There are some significant buyer groups, however. Hispanics, the largest ethnic minority in the United States today, show a strong tendency to buy in alternative channels. In fact, 21% of all bedding-buying Hispanic households purchased through alternative channels in 2002 and 2003. By 2050, the U.S. Census Bureau projects that Hispanics will comprise nearly one-fourth of the nation's population. Hispanics spend a median of $390 on their total bedding purchase at alternative channels.
Alternative channels account for 13% of bedding purchases by White households and 17% of bedding purchases by African-American households. White households spend a median of $375 on bedding through alternative channels and African-American households spend a median of $355.
Regionally, households living in the West are the strongest alternative channel customers. Westerners spend a median of $400 on their total bedding purchase.
| Bought at a... | Alternative channel | Furniture store | Specialty store |
|---|---|---|---|
| Less than one week | 30% | 30% | 36% |
| One week | 40% | 30% | 30% |
| Two to three weeks | 20% | 20% | 22% |
| Four or more weeks | 10% | 20% | 12% |
Share of bedding purchases¹
| 1. The percentage of the total number of mattresses
purchased at each channel, NOT the percentage of total dollars spent. 2. Alternative channels include direct-to-consumer, warehouse membership clubs and discount department stores. 3. Other includes department stores, military PXs, furniture rental stores, interior designers and designer showrooms, among others. |
|
| Furniture stores | 38% |
| Specialists | 30% |
| Alternative channels2 | 13% |
| Other3 | 19% |
| Share of purchases,* by size | ||
|---|---|---|
| Alternative channels | All other channels | |
| *The percentage of the total number of mattresses
purchased, by size, at each channel, NOT the percentage of total dollars
spent. |
||
| Twin | 21% | 79% |
| Full/double | 18% | 82% |
| Queen | 11% | 89% |
| King | 11% | 89% |
| Sizes bought in alternative channels* | |
|---|---|
| % of households buying each size | |
| *12% of households purchased more than one mattress
in 2002/2003. |
|
| Twin | 24% |
| Full/double | 22% |
| Queen | 43% |
| King | 18% |
| California King | 2% |
| Daybed | 4% |
| Bunkbed | 6% |
Distribution channels
| % of households that bought at | White | African-American | Hispanic |
|---|---|---|---|
| Furniture stores | 36% | 50% | 29% |
| Bedding specialists | 31% | 17% | 21% |
| Alternative channels1 | 13% | 17% | 21% |
| Other2 | 20% | 16% | 29% |
| % of households that bought at | Northeast | Midwest | South | West |
|---|---|---|---|---|
| Furniture stores | 32% | 43% | 42% | 27% |
| Bedding specialists | 29% | 26% | 32% | 33% |
| Alternative channels1 | 14% | 13% | 14% | 16% |
| Other2 | 25% | 18% | 12% | 24% |
| % of households that bought at | Generation Y | Generation X | Younger baby boomer | Older baby boomer | Empty nester | Senior senior |
|---|---|---|---|---|---|---|
| Furniture stores | 33% | 40% | 39% | 43% | 19% | 34% |
| Bedding specialists | 44% | 28% | 34% | 16% | 43% | 34% |
| Alternative channels1 | 17% | 16% | 10% | 18% | 17% | 15% |
| Other2 | 6% | 16% | 17% | 23% | 21% | 17% |
| By household income | |||
|---|---|---|---|
| % of households that bought at | Under $40,000 | $40,000 to $74,999 | $75,000 or more |
| 1. Alternative channels include direct-to-consumer,
warehouse membership clubs and discount department stores. 2. Other includes department stores, military PX's, furniture rental stores, interior designers and designer showrooms, among others. |
|||
| Furniture stores | 37% | 37% | 37% |
| Bedding specialists | 28% | 34% | 27% |
| Alternative channels1 | 14% | 13% | 14% |
| Other2 | 21% | 16% | 22% |
| Where alternative channel members rank on the 2003 Top 25 Bedding Retailers | |||
|---|---|---|---|
| Rank | Company | Homebase | 2003 estimated bedding sales in $ millions |
| 1. About 14% of Select Comfort's 2003 retail sales
came from direct marketing, 4% from the Internet and 82% from stores. 2. About 62% of 1-800-Mattress's 2003 retail sales came from tele-retailing, 3% from the Internet and 35% from stores. Figures are based on estimated 2003 sales of conventional mattresses and boxsprings, as well as foam bedding, futons, air beds, adjustable beds and waterbeds. Estimated figures do not include sales of headboards, frames, mattress pads, pillows and other related products. All sales information, except for that supplied by publicly held companies that break out bedding sales, are Furniture/Today market research estimates. All data are for calendar 2003. |
|||
| 1 | Select Comfort1 | Minneapolis | $428.2 |
| 4 | Sam's Club | Bentonville, Ark. | $240.0 |
| 17 | 1-800-Mattress2 | Long Island City, N.Y. | $87.0 |
| 20 | Costco | Issaquah, Wash. | $68.0 |
| 22 | Wal-Mart | Bentonville, Ark. | $65.0 |
| 23 | Tempur-Pedic | Lexington, Ky. | $60.0 |
| 25 | Big Lots | Columbus, Ohio | $58.0 |
Spending at alternative channels
| Alternative channels | All distribution channels | |
|---|---|---|
| Twin | $397 | $300 |
| Full/double | $400 | $375 |
| Queen | $400 | $500 |
| King | $550 | $800 |
| Queen spending | |
|---|---|
| Under $300 | 18% |
| $300 – $399 | 23% |
| $400 – $499 | 29% |
| $500 – $699 | 6% |
| $700 – $999 | 12% |
| $1,000 or more | 12% |
Source: Furniture/Today's 2003/2004 Consumer Buying Trends Survey
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