Direct-to-consumer channel makes big inroads in bedding
By David Perry -- Furniture Today, October 21, 2005
High Point — High Point In this series of stories, Furniture/Today Executive Editor David Perry takes a detailed look at some of the key issues and opportunities facing major channels of distribution in the bedding marketplace. The stories expand on an overview of the bedding distribution picture that appeared in the Sept. 26 issue.
— There's a new kid on the block in bedding.
The direct-to-consumer players are gaining ground rapidly, posting a 5% market share in 2004, according to Furniture/Today's latest bedding distribution report. It was the first year the category was large enough to list separately.
The obvious winners are the big boys: Select Comfort and Tempur-Pedic, each of which has a direct marketing component in its business model.
Their soaring growth has not gone unnoticed in bedding boardrooms.
"This is the biggest story on the distribution front," said Jim Nation, president of Spring Air. "What lessons can we learn from Tempur-Pedic and Select Comfort, both of whom have direct-to-consumer components of their business?"
David Fogg, senior vice president of national accounts at Tempur-Pedic, sees more growth for the direct-to-consumer channel as more consumers buy online, from catalogs and through 800 numbers.
Bill McLaughlin, CEO of Select Comfort, says that the direct channel can be "an especially powerful tool" when combined with a multi-channel distribution network such as the one offered by Select Comfort.
But he does say the direct channel must be put in perspective.
"The direct consumer base will always be larger for commodity and low-involvement products, such as books and DVDs, than it will be for higher-involvement products providing higher levels of innovation and technology," said McLaughlin.
"However, as consumers get more comfortable purchasing online, there remains considerable growth potential for all product categories through direct channels," he added.
Kevin Toman, until recently president of Restonic, sees plenty more growth ahead for the channel.
"The dramatic change in distribution is the consumer-direct channel," he said. "That will continue to explode."
"Direct to the consumer is a channel with great growth potential," said Gerry Borreggine, Therapedic president.
"The channel is usually tied to a unique, or perceived to be unique, product feature and benefit," he continued. "It will be an interesting channel to watch as its key players — Tempur-Pedic and Select Comfort — either continue to grow prodigiously or begin to fail."
Eric Hinshaw, CEO of Kingsdown, noted that one much-discussed direct channel — the Internet — is not a force in bedding at retail.
"There isn't any market share on the Internet now," he said. "Not that there won't be. But now the Internet is a major source of information."
Tim Oakhill, senior vice president of marketing at Simmons, sees some challenges for the direct channel.
"Bedding is tactile," he said. "Can you represent that with pictures on a screen? If retailers don't get the tactile piece of the puzzle figured out, they will see return issues.
"They will need to talk value to make up for higher returns," Oakhill concluded.
-
Furniture stores still bedding kings ... barely
Nov 6, 2005 -
Sleep shop surge: No signs of snoozing soon
Nov 6, 2005 -
Specialty sleep products likely to stay hot
Dec 22, 2004
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