Eitel: Simmons on a roll
Last showing at High Point Market
David Perry -- Furniture Today, October 26, 2006
HIGH POINT -- Simmons CEO Charlie Eitel turned out the lights on Simmons' showings here last week, reflected on his company's strong performance this year, and defended Simmons' position on fire-resistant bedding.
In a wide-ranging interview with Furniture|Today in the final hour of Simmons' showing at the Grandover Resort last Wednesday during the High Point Furniture Market, Eitel said that Simmons, completing its sixth showing at the Grandover, doesn't plan to return to High Point."Las Vegas will continue to be a great bedding destination," he said. Simmons was among the first bedding majors to commit to that venue and he said it has enjoyed strong markets there. He said the High Point Market should be gravely concerned about the threat of Vegas. "Given the option," he said, "people would rather go to Las Vegas."Eitel shared his points as Simmons wrapped up its showing at the Grandover, where it focused on its specialty sleep offerings and a new promotional DeepSleep line. Simmons officials said they were pleased with what they accomplished at market.Asked if the $299 DeepSleep model will hurt the company's image, Eitel said it would hurt Simmons' image not to have it. It is important that Simmons show a complete range of brands and products, he said. "If the retail sales associates feel a company is competitive at velocity price points, they are more comfortable with the total line," he said.Simmons had a problem last year because it didn't offer strong enough values at $699 and below, Eitel said. DeepSleep's $299 starting price point is $100 lower than the company's previous starting price point.Asked to assess the reasons for Simmons' double-digit sales growth this year — domestic bedding volume is up about 15% in the first half — he cited three factors:* Simmons has "more competitive products at all price points."* The organizational changes Simmons made last year, which put a new sales organization in place and eliminated some jobs, "have clearly empowered our local people to do what they need on the spot to grow the business." The old structure was paralyzing in many ways, he said.* Simmons is "operating with a much lower cost structure" and is doing a better job of serving both big and small dealers.He also said that Simmons has "the most demonstrable product story in conventional bedding."Eitel doesn't think that Simmons is getting a sales edge by its decision not to add fire-resistant materials to its national lines. While some bedding producers say the addition of FR materials adds $100 to the retail price of a mattress, he said he doesn't think the difference is that great."I think that we have great values," he said. "I don't think it is the FR situation." He said he is excited that Simmons has been able to drive FR costs down as it works on its FR strategy. He promised that Simmons will have "the best solution in the industry" and it will be as price competitive — or more so — as any other solution.Simmons will introduce FR protection in its 2007 Beautyrest line, set to debut in Las Vegas in January. And the company will be 100% FR-compliant at least 90 days before the new federal mattress flammability law goes on the books in July, Eitel said.Bedding majors Serta and Sealy have already added FR protection to all or most of their lines. A top official at Sealy said at market this week that adding FR protection is "the right thing to do."Asked for his response to that argument, Eitel said: "It's not a law. It costs more money. When it is a law we will be in compliance." He said that it is his job as CEO at Simmons to fight cost inflation. "It's just a business decision," he said. "I would defend it as what I felt was the right thing to do for Simmons."Simmons is continuing to drive down its FR costs, which are half of what they once were, he added.Eitel also addressed questions on Simmons' programs to serve its smaller dealers. Last December, the company announced the formation of a Centralized Dealer Services team of Simmons employees to serve those smaller retailers. The company recently said that program had evolved into one that outsources those services to a telephone service center, with a team of call center employees dedicated to Simmons that now handles the smaller dealers.Simmons officials say the new approach provides better service and that dealer feedback is positive. Eitel was asked what he would say to a Simmons dealer who called Furniture/Today and said Simmons' approach to small dealers is "the worst thing they (Simmons) have ever done.""I would give that dealer my phone number — 770-392-2500 — and ask them to call me directly," he responded. "I will see what I can do to help them."Eitel also said Simmons alone generated about half of the growth the bedding industry achieved in the year’s first half.“We've never had this much momentum,” he said. “In the last six months, we've really had our act together."Simmons will add to its success with its new Beautyrest Black line of luxury bedding, introduced this summer, Eitel said. "This is really well thought-out marketing," he said. "Health-Smart (a Simmons bed with a removable, washable mattress top) wasn't well thought-out. With that wake-up call, we are acting on what we know, not what we think."How big could the Beautyrest Black line be? "I think $100 million," he responded. "I think it will be a legendary brand. I would be disappointed if it wasn't $100 million in 2008."Eitel said Beautyrest Black has limited distribution. "It's not for people who want to run $1,099," he said. Retails for the line start at more than $2,000.When the interview was completed, Eitel headed off to a City of Hope event, and his team was packing up. The Simmons showings at Grandover had come to a quiet end.
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Eitel: Simmons on a roll
Nov 5, 2006
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