Specialty stores increasing share of $10.7B bedding market pie
By David Perry -- Furniture Today, October 10, 2005
High Point — Furniture stores continue to lose market share in the $10.7 billion retail bedding marketplace, but they remain the largest channel of distribution. Furniture stores accounted for 39% of bedding sales in 2004, down one percentage point from 2002.
Bedding specialty stores continue to rank as the industry's second-largest channel of distribution, and they continue to close the gap with furniture stores. If current trends continue, the bedding specialists, which gained three percentage points of share, to 36% in 2004, will supplant furniture stores as the biggest bedding channel in the next few years.
Those are some of the highlights of Furniture/Today's latest analysis of retail bedding distribution channels. The newspaper regularly examines the bedding channels and reports on changes in them. The latest report shows how the channels have fared since 2002.
The report also notes a continuing decline in the department store channel, which now moves from a double-digit channel (with an 11% share in 2002) to a single-digit channel (with a 9% share in 2004).
The report is compiled through an examination of the performance of key retail players in each channel, and also reflects the insights of all Top 10 bedding producers.
This year, for the first time, the direct-to-consumer segment is broken out as a channel of its own. It posted a share of 5% in 2004, sparked by the success of direct marketers such as Tempur-Pedic and Select Comfort.
Next is the warehouse club channel. Its 4% market share in 2004 is the same as that channel held in 2002, according to a revised figure Furniture/Today developed for 2002.
The "other" channel, which includes discount department stores and furniture rental stores, accounted for a 4% market share last year. The factory direct channel had a 3% market share.
This report includes a look at each of the major bedding distribution channels, some of the key retailers in each channel, and the insights of leading bedding producers on changing channel dynamics. The retailers are listed in the channels where the majority of their sales occur.
Bedding specialty stores gain share
Insiders' insight:
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"Many specialty store chains have done a good job emphasizing luxury bedding, which has been the fastest-growing part of the market. In addition, they tend to be heavy television advertisers, which is effective for driving traffic. Also, one manufacturer is aggressively opening captive specialty stores across the country, which is contributing to the shift of sales toward this channel."
Chuck Dawson, senior vice president, national accounts, Sealy -
"Specialty stores are being funded and part-owned by bedding majors. In addition, the consumer shops at various specialty-type stores such as Gap and Victoria's Secret. There are many successful independent sleep shops that offer a choice of brands and make a statement. City Mattress and Sleep America are two examples."
Kevin Toman, president, Restonic -
"The major players are growing. They out-advertise their competitors by a whole lot. That advertising drives the business. It's a two-way street. If you advertise a lot, you had better have a lot of locations. And the major players have a lot of locations."
Jim Nation, president, Spring Air -
"Consumers are increasingly seeking solutions to achieve better health through better sleep. Retailers like Select Comfort, who are dedicated to delivering these clinically-proven solutions in a comprehensive way — which includes an inviting and compelling shopping environment, knowledgeable employees, easy-to-understand explanations of product attributes, and unique, superior products that deliver real benefits and value — are meeting customers' increasing needs, exceeding their expectations and earning greater share in the market."
Bill McLaughlin, CEO, Select Comfort -
"The bedding specialty market continues to grow. We have been getting a strong interest from entrepreneurs who plan to enter the bedding specialty market as well as from existing specialty players who want to increase their market share."
Bill West, chief sales officer, Serta International
Channel fast facts
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2004 market share: 36%.
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Change from 2002: Gained three percentage points.
Where the channel was represented on the 2004 Top 25 Bedding Retailers:
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1. Select Comfort, Minneapolis.
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2. Sleepy's, Bethpage, N.Y.
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3. Mattress Firm, Houston.
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6. Mattress Giant, Addison, Texas.
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7. America's Mattress, Hoffman Estates, Ill.
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8. The Sleep Train, Citrus Heights, Calif.
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14. Rockaway Bedding, Randolph, N.J.
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16. Mattress Discounters, Upper Marlboro, Md.
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22. Sit 'n Sleep, Carson, Calif.
Direct-to-consumer: Up and coming
Insiders' insight:
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"The direct channel will continue to grow as more and more people buy online, through catalogs and through 800 numbers."
David Fogg, president of Tempur-Pedic's retail division -
"Direct-to-consumer can be an especially powerful tool when integrated with a multi-channel distribution network, like the one offered by Select Comfort, that allows people to see the products in multiple places and try them before purchase. Select Comfort has successfully demonstrated that, if you can communicate a clear need and compelling product solution in your advertising, there is a significant consumer base willing to buy those products sight unseen — more so, if you can reduce their risk through a fair and convenient trial period."
Bill McLaughlin, CEO, Select Comfort -
"The direct-to-consumer channel is increasing. The direct sales by Tempur-Pedic and by Select Comfort are growing."
Larry McKay, president, Comfort Solutions by King Koil
Channel fast facts
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2004 market share: 5%.
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Change from 2002: This category was not listed separately.
Where the channel was represented on the 2004 Top 25 Bedding Retailers:
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15. Dial-A-Mattress, Long Island City, N.Y.
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19. Tempur-Pedic, Lexington, Ky.
Furniture retailers slip a notch
Insiders' insight:
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"Many furniture retailers have made their stores a destination for bedding by prominently featuring it in their ads, offering a broad product selection, and creating a positive shopping experience for their customers."
Al Boulden, senior vice president, field sales, Sealy -
"I believe that furniture stores are continuing to lose share in bedding. A great deal of furniture is bought at retailers who were not even a factor 10 years ago. Consumers' shopping habits have changed. They are going to different places to buy furniture than their parents did. But you do have the R.C. Willey's, the Art Vans and the Jordan's who are keeping their numbers up."
Larry McKay, president, Comfort Solutions by King Koil -
"Furniture stores still realize what their most profitable category is — while it is true that too many believe that their market share is a finite number and are happy with their current results. Those retailers that continue to work closely with their suppliers to offer innovative, profitable marketing programs continue to see their overall bedding numbers grow."
Kerry Tramel, president, Lady Americana -
"Furniture stores have been able to maintain a credible posture for good selection, service, and pricing. Many of the other channels of distribution have failed on one, two or all of those flash-points."
Gerry Borreggine, president, Therapedic -
"I believe furniture stores have become more aggressive in their advertising and promotional activity. And they, too, are specializing in sleep."
David Clark, vice president, Englander
Channel fast facts
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2004 market share: 39%.
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Change from 2002: Lost one percentage point.
Where the channel was represented on the 2004 Top 25 Bedding Retailers:
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10. Berkshire Hathaway furniture division, Omaha, Neb.
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11. Rooms To Go, Seffner, Fla.
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17. Art Van, Warren, Mich.
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18. Slumberland, Little Canada, Minn.
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20. Levitz Home Furnishings, Woodbury, N.Y.
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21. Ashley Furniture HomeStores, Arcadia, Wis.
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24. Havertys, Atlanta
Department stores drop into single digits
Insiders' insight:
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"Only a few department stores are working the home goods category. In the old days, many people bought at department stores. There is not a need to buy at department stores any more. They were easy targets of the specialty stores. They didn't have the service and selection."
Eric Hinshaw, CEO, Kingsdown -
"They are shopped by a large number of unintended purchasers. There is the opportunity for them to redirect consumers and to educate them about bedding."
Tim Oakhill, senior vice president of marketing, Simmons
Channel fast facts
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2004 market share: 9%.
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Change from 2002: Lost two percentage points.
Where the channel was represented on the 2004 Top 25 Bedding Retailers:
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4. Federated Department Stores, Cincinnati.
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9. May Department Stores, St. Louis
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12. Sears, Hoffman Estates, Ill.
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13. JCPenney, Plano, Texas.
Factory directs losing strength
Insiders' insight:
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"The factory-direct segment has been static. Their story has been overwhelmed by the more appealing messages coming from some of the other distribution channels, such as furniture stores partnering with key leading brands, or direct-to-consumer venues that are promoting unique and exciting products that hold consumer sex appeal."
Gerry Borreggine, president, Therapedic -
"The pure factory directs are a diminishing business. If you include major bedding companies going direct with stores selling all or a vast majority of their products, that could be a growing trend."
Eric Hinshaw, CEO, Kingsdown
Channel fast facts
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2004 market share: 3%.
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Change from 2002: Lost one percentage point.
Where the channel was represented on the 2004 Top 25 Bedding Retailers:
• None listed.
Warehouse clubs hold steady
Insiders' insight:
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"Warehouse clubs continue to hold appeal as a distribution outlet that is capable of huge volume."
Gerry Borreggine, president, Therapedic -
"Warehouse clubs are increasing in influence. The big box stores are gaining market share."
Eric Hinshaw, CEO, Kingsdown -
"They offer opportunities, without a doubt. We are not ignoring the channel."
Tim Oakhill, senior vice president of marketing, Simmons
Channel fast facts
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2004 market share: 4%
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Change from 2002: Unchanged from revised market share figure for 2002.
Where the channel was represented on the 2004 Top 25 Bedding Retailers:
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5. Sam's Club, Bentonville, Ark.
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23. Costco, Issaquah, Wash.
'Other' channel loses ground
Includes catalogs, discount mass merchants and rental stores
Insiders' insight:
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"The rent-to-own channel seems to be growing."
Jim Nation, president, Spring Air
Channel fast facts
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2004 market share: 4%.
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Change from 2002: Including direct-to-consumer, now broken out as a separate category, this channel had an 8% share (revised) in 2002.
Where the channel was represented on the 2004 Top 25 Bedding Retailers:
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25. Wal-Mart, Bentonville, Ark.
