New Serta on the rise
Sherman's team keep eyes on the path and the star
By David Perry -- Furniture Today, January 2, 2005
Hoffman Estates, Ill. — A three-picture panel facing Bob Sherman's desk in his office at Serta International here sums up his company's philosophy of doing business. It shows a dense stand of trees intersected by a path.
"We see the path through that bunch of trees," said Sherman, gesturing to the image. "And we stick to it."
The path to the top of the Serta organization now ends in Sherman's office. He and other key members of National Bedding Co., most of them Sealy veterans, started down the trail 16 years ago when they formed the company as a licensee making Serta products. At that time they had no idea where their journey would take them.
But so assiduously did they stick to their plan of building business that they eventually transformed the Serta organization and wound up controlling about 80% of its sales. That led NBC to sign a service agreement this year with the remaining Serta licensees that turns responsibility for the Serta organization over to NBC.
Thus Bob Sherman, NBC's president, finds himself the day-to-day operator of the nation's No. 3 bedding producer, one that he vows to take to the top of the mattress pyramid.
Humble beginnings
If that sounds like an ambitious goal, it should be weighed against the achievements already recorded by NBC, which is renaming itself Serta International. Few people in the bedding industry have built more from a humble start than Bob Sherman and his partners at the former NBC, Burt Kaplan and Richard Yulman.
Kaplan and Yulman are former Sealy licensees who sold to Ernie Wuliger during the Sealy wars in the 1980s.
Sherman worked for the legendary Wuliger after Yulman sold his Sealy Albany, N.Y., operation to Wuliger in 1987. Sherman spent 16 years with Yulman, first at his St. Paul, Minn., Sealy facility and then later in Albany, before joining Wuliger's new Sealy team. He was the Midwest regional sales executive for Wuliger from 1987 until 1989.
That gave Sherman an inside look at Wuliger's operating strengths, some of which he later adopted at NBC. Although he doesn't consider Wuliger a mentor, Sherman and NBC are in a way following in Wuliger's footsteps.
To be sure, there are significant differences between Wuliger's takeover of Sealy and NBC's takeover of Serta. Wuliger's was unfriendly while NBC's, according to Sherman, was friendly. But in both cases, an aggressive, ambitious and talented licensee steadily gained clout over a period of years and eventually became large enough to acquire control of the licensor.
NBC's climb to the top of the Serta organization started in Beloit, Wis., where one of Serta's smallest and least successful licensees was located. It was the first acquisition of the newly formed Midwest Bedding Co., established by Sherman, Kaplan, Yulman, Barbara Bradford, Jeff Allen and Frank Lain.
"We bought probably the worst Serta factory in the U.S.," Sherman recalled. It was doing $4 million when Midwest Bedding acquired it, a figure the new owners quickly doubled.
"We would sell in the mornings and then produce mattresses from noon until 9 p.m.," Sherman said. "That's how we got started."
Kaplan and Yulman, key Sealy licensees for most of their bedding careers, wanted to stay active in the industry.
"They really know the mattress business," Sherman said, "but they didn't want to run their new company on a day-to-day basis." That assignment fell to Sherman, and it's one that he has held ever since.
Bradford, senior vice president of marketing and merchandising, plays an important role. She started working for Kaplan in 1971, finding a gift for sales that she didn't know she possessed. She eventually became a top Sealy sales executive and today has key marketing responsibilities at Serta International.
Focused marketing
The new owners of Serta Beloit took a focused approach to growing their fledgling business. Rather than trying to sell every retailer a few beds, they sought to become more important to key dealers.
"We would go to a couple of retailers and say, 'How would you like to be the No. 1 retailer in your market?' " Sherman said.
The approach centered on executing the basics of the five-point Serta marketing star, which remains prominently displayed in Serta International's conference room to this day. The five points are: national brand advertising, retail advertising, product display, sales education and service.
"We feel we have to do all of these things better than anyone else," Sherman said. "We feel there is not another company out there that does all these things as well as we do. We live, breathe and die by the Serta star."
Trail of acquisitions
That determination helped Midwest Bedding outgrow its regional roots and take on the national nature suggested by its new name: National Bedding Co. It blazed a trail of Serta acquisitions in the '90s: the Southern California licensee in 1991, Memphis in 1996, Pittsburgh and Boston in 1999.
In 2003, NBC purchased Sleepmaster, then Serta's largest licensee, which was in Chapter 11 bankruptcy. Sherman called that move "a defensive buy" to protect NBC's stake in the Serta brand.
"We bought all those factories with our initial investment," he said. "We have kept the profits in the business from day one. We have very low debt. We are lean and mean."
He also noted the acquisitions of Serta licensees were friendly; those licensees were interested in selling. Today, Sherman says, his company remains interested in talking to licensees who might be interested in selling.
With the acquisition of Sleepmaster in February 2003, NBC controlled 80% of Serta's volume. Eventually, the company found itself in talks with the remaining Serta licensees about taking control of Serta. That happened in September 2004, when the licensees signed a service agreement with NBC.
That put the NBC team in charge, a development that was followed by the departure of Ed Lilly, Serta's long-time president, and Susan Ebaugh, the company's chief brand officer.
NBC decided to close Serta's corporate headquarters in Itasca, Ill., and to relocate key staff there to NBC's Hoffman Estates campus, a move that reflected the changing power axis at Serta.
About 20 former Serta Inc. employees have departed. But Sherman said his company has maintained all of the services that were formerly offered by the Serta corporate organization, and has added some new ones.
New team, building
The new Serta team is planning to build a Serta International headquarters near its existing Hoffman Estates location. The new facility will be home to approximately 110 employees.
After he gained control of Sealy, Ernie Wuliger sold the business to an investment firm and left the company where he had spent his career.
As for his future, Sherman said, "I have no immediate plans to hang it up. I've worked for this company or family for 30 years. Together we have over 180 years of bedding experience."
NBC's new name, Serta International, reflects the responsibilities Sherman and his team have now assumed for guiding and serving a group of Serta licensees around the world.
-
New Serta on the rise
Jan 5, 2005
VIEW ALL GALLERIES
