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Specialty sleep products likely to stay hot

David Perry -- Furniture Today, December 22, 2004

HIGH POINT -- Specialty sleep products, which have set a sizzling sales pace in the industry, are expected to do well again next year.

Top 12 bedding producers, surveyed by Furni-ture/Today, also said they believe the industry is well positioned to continue on its upward growth curve, despite the prospects of higher bedding prices.Much of the industry will be watching the performance of Tempur-Pedic and Select Comfort, two specialty sleep producers that are rapidly gaining market share. David Fogg, president of Tempur-Pedic's retail division, predicts that dollar gains will again set the pace in the bedding industry."With President Bush elected, I believe the economy will continue to grow and the mattress industry will benefit," he said. "The average unit selling price will grow faster than we have seen historically because of the industry emphasis on higher-end bedding as well as costs associated with raw materials and (the California flammability standard). However, unit growth will suffer because of the higher prices."Keith Spurgeon, senior vice president of sales at Select Comfort, sees more growth for that airbed producer and retailer."At Select Comfort, we believe that 2005 offers many opportunities for growing awareness of the Sleep Number brand," he said. "More than ever before, consumers are concerned about getting a better night's sleep and are valuing products that feature personalization and customization. The Sleep Number bed is uniquely positioned to offer a differentiated sleep solution for these consumers."Next year, Spurgeon continued, Select Comfort "will continue to focus on profitably expanding our distribution, ensuring that more people experience the benefits of the Sleep Number bed, and supporting the long-term growth of our company."Larry McKay, president of King Koil, sees demographics pointing to a robust year. "We look for a very strong year in 2005," he said. "It will be fueled largely by increases in average unit selling prices. Ten thousand people a day turn 55. Those consumers are in the market for the miracle cure for their back problems and their sleep problems. They will continue to buy better-quality bedding."On the negative side of the ledger, "Raw material increases are eroding profitability for manufacturers and retailers," McKay said. But he said the higher raw material costs won't affect the value proposition offered by the industry next year. "It might in 2006," he added."I expect that 2005 will be a better year than 2004 as the economy settles and the stock market begins to stabilize after four consecutive tumultuous years," said Gerry Borreggine, president of Therapedic. "As the dust settles after a rancorous presidential campaign and election, hopefully consumer confidence will increase. And all boats rise with a high tide, including ours."Therapedic will find success by continuing to position itself as "the primary alternative" to the major brands, Borreggine said. "Our goal is to be the first choice for retailers who are looking for an alternative to doing business with big brands. We are still a flexible group of entrepreneurial owners who can be more responsive to the needs of individual retailers."As an example, he cited Therapedic's revamped Medicoil line, a branded promotional bedding line. "Medicoil is intended to join hands with the retailer, and happily embrace the needs of the consumer who is only able to spend $499, $599 or $699," Borreggine said.Another producer looking for strong business in price points under $1,000 is Lady Americana. Said Kerry Tramel, president: "The rush by many brands to the ultra-premium products that are less affected by raw goods price increases or FR costs has created an unbelievable amount of interest in Lady Americana's $499 to $999 price points. I expect this trend to continue into 2005, and we are well positioned to be the solution for our retail partners who still want to make their margins in their bread-and-butter price points."Kingsdown CEO Eric Hinshaw says bedding will outperform the overall economy. "The economy in general faces many issues in 2005 — a possible post-election lull, oil prices, Middle East turmoil, China, etc.," he noted. "But bedding always does a bit better than the economy."That producer will continue to stress its DormoDiagnostics bed selection technology and its Sleep to Live concept. "As the cornerstone of communications for Sleep to Live, Kingsdown is using the marketing tagline, 'Wake up to a better life,' " Hinshaw said. "And to emphasize the benefits of our Body System bedding, we are focusing on key words that portray the benefits of quality sleep in our visuals and product literature."Restonic CEO Kevin Toman says his group should have a good year, as will the industry. But there are some challenges to overcome, he noted."2005 will be a year of change for the industry," Toman said. "Additional price increases on raw materials and TB 603 (the new California mattress flammability standard) will lead to higher retail price points. Eliminating any unforeseen events, the industry should continue another year of solid growth. To sustain our rapid growth (at Restonic), we have an aggressive marketing campaign as well as new product introductions scheduled for the first quarter of 2005."

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Specialty sleep products likely to stay hot

Dec 26, 2004

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