Bedding Outlook -- Big 4 project strong dollar growth for '06
Unit growth will be much harder to come by
David Perry -- Furniture Today, December 23, 2005
*Also see F/T Consensus Forecast: Robust dollar gains
Challenges abound in coming year
HIGH POINT -- Bedding prices will be higher in the new year, driving strong dollar growth. But unit growth will be much harder to come by, as the impact of broader inflationary pressures takes a toll on consumers. These are some of the key views of the leaders of bedding’s Big Four: Sealy, Simmons, Serta and Spring Air. Together, those companies command almost 60% of all bedding volume. Executives at each of those companies cite varying keys to the business next year, but a common theme is that specialty bedding will continue on the ascent. All members of the Big Four have specialty bedding lines, in addition to their broad innerspring offerings. Sealy CEO Dave McIlquham sees a number of factors that will drive higher dollar growth in 2006, but believes unit growth will be harder to come by. “We expect to see continued category revenue growth through 2006, driven by an ongoing increase in the mix of high-end bedding (above $1,000 queen retail) and the impact of recent price increases implemented following the foam shortage and inflation in chemical costs,” McIlquham said. “However, unit volume growth will be modest as broader inflationary pressures, including winter heating costs, cause some consumers to postpone their mattress replacement purchases.” A bright spot next year, in McIlquham’s view, will be specialty bedding. That category “will continue to represent a larger percentage of the market, as retailers expand their assortments, particularly in the visco and latex foam segments,” he said. Tim Oakhill, senior vice president of marketing at Simmons, also sees specialty sleep continuing to gain ground. “The bedding industry will remain highly competitive and fragmented next year,” Oakhill said. “We anticipate that visco will remain strong and other non-coil technologies will gain market share. In July, we introduced our Caresse visco line and it has been extremely well received by many of our key dealers. “We’re also adding materials such as visco, latex and natural fibers to a number of our traditional pocketed-coil mattresses, which will offer the ultimate in comfort and reduced motion transfer.” “It will be kind of a so-so year for the industry,” said Bob Sherman, president of Serta International, noting that he largely sees a repeat of the kind of year the industry has been experiencing this year. The introduction of new bedding lines with fire-resistant materials will raise average unit selling prices, Sherman said, but producers will face “a huge learning curve” in that area. Serta, the first national producer to implement FR bedding throughout its line, has a significant advantage over its competition because it has already made the switch, in Sherman’s view. Sherman said the industry has not had a robust year in 2005. “Overall,” he said, “we believe units are down this year. Dollars are up due to increases in average unit selling prices. The introduction of visco-elastic foam products has helped there.” Spring Air President Jim Nation sees more price hikes coming in the new year. “I think it will be a year of adjustments and turmoil,” he said. “If producers haven’t raised prices, they are going to have to raise them in 2006, if they want to be around in 2007. Maybe there will be a little loosening of foam pricing in the next few months.” He says that the higher bedding prices in the marketplace spell potential trouble for the industry. “I question whether consumers will respond positively to higher prices,” Nation said. There may be fewer promotional beds in the marketplace next year, but that doesn’t mean the promotional business will automatically take a hit, he said.
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Big 4 project strong dollar growth for '06
Jan 1, 2006
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