Pent-up demand offers opportunity
But second-tier producers still see challenges ahead
By David Perry -- Furniture Today, December 21, 2009
HIGH POINT — The mattress industry will benefit from pent-up demand next year, but gains will be modest. It won't be easy to shake off the effects of the recent recession.
Those are some of the predictions of second-tier bedding producers who responded to a Furniture/Today questionnaire seeking their views on business prospects next year.
The producers, who labor in the shadows of Top 10 producers but say they bring unique, profitable products to retailers, offer a fairly restrained view of the sales climate facing the mattress industry. Some are even predicting unit and dollar sales declines in 2010 — although not of the magnitude of those seen this year.
Here are their predictions for 2010:
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Bob Naboicheck, president, Gold Bond: “I don't anticipate anything more than incremental growth until the third or fourth quarter of next year. Until home sales rise and employment gets back on track, consumer confidence will remain low and that will continue to impact our industry. Overall unit sales will most likely be flat or have a modest gain by a few percentage points, held back by the sluggishness in most major real estate markets around the country.
“The action and indeed the opportunity for the industry is in the $1,000 and below space. That is where the retailer needs the most help right now. There is still some customer traffic here, but the margins are razor thin. What they need is high-quality product at that price point and below, where they can make more money.” -
Rick Robinson, president, Spring Air International: “Every major retailer we've spoken with is projecting their business to be flat at best. We believe the industry will be down again in both units and dollars versus 2009, but the percent of decline will be in the low single digits. On a more optimistic note, we think 2010 also will be a 'turning point' year which will usher in a conservative upturn in 2011, barring any further unforeseen national or economic crises.”
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Mike Zippelli, CEO of Classic Sleep Products: “We are going to have another tough year on our hands from a numbers perspective. I think unit sales will slightly rise and dollar volume will be up slightly as well. I think the only really positive thing is that most manufacturers have restructured their expenses and product lines and have increased manufacturing efficiencies to limit the impact of yet another soft year.”
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Marco Magni, vice president of global sales, Magniflex: We believe that the worst has not yet passed and for 2010 we expect a shrinking of the market in general. Also the financial situation will create a reduction of players in the industry, and that will stabilize and create opportunity for those that remain. I think the companies that offer great value and are priced competitively will not only survive, but thrive, in these conditions. As a global brand, Magniflex has advantages over U.S. producers because, in other parts of the world, markets are growing and that gives us a fair amount of strength that we leverage for our dealers in the United States and Canada.”
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Jimmy Orders, president of Park Place Corp.: “As goes housing and unemployment, so goes the mattress business. I believe housing will continue to lag most of the year unless further economic stimulus is applied. Do not take that as a recommendation on my part for further stimulus, as out-of-control spending by our government is now a looming issue for all Americans. The consumer continues to act rationally by increasing savings and cutting unnecessary spending. Everyone knows several people who are going through the hardships of unemployment. This is a cancer that will be with us for some time to come, certainly well beyond 2010.”
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Kurt Ling, CEO, Pure LatexBliss: “We believe there is pent-up demand. However, we believe the consumer that will enter the marketplace next year will be conscious about every dollar they spend. We believe they will pay more money for more product, but not under the same assumptions as in the past five years.”
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Daryl Tarbutton, president, Bemco Associates: “There are fewer mattress retailers, and few retailers means less advertising. That means less stimulation of consumer awareness and that means less total business.”
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Peter Tarquinio, CEO of South Bay International: “We expect to see stronger sales, especially in specialty bedding. We believe there is pent-up demand that will be released in 2010.”
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Ron Passaglia, president, Restonic: “Everyone is hoping for a rebound in business. That's the good news. Not everyone will have a rebound. That's the bad news. There will be an aggressive scramble to regain lost units. Overcapacity will create a stronger-than-normal fight for retail floor space. Price, value and focused and targeted goals will be the only way to take part on the good news side of the equation.”
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Avi Barssessat, CEO, Hollandia International: “The overall industry should start to show a more robust recovery in the latter part of 2010. However, as we sell more of a luxury product in the U.S., I suspect that our customer will be back in the market sooner, more reflective of the rebound of the stock market and the anticipated bonuses on Wall Street. Bedding, even in the luxury sector, is a more 'responsible' spend during tough economic times and we see a scenario where the higher-end customer will spend money on their homes before restoring more expensive vacations or other luxury goods.”
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Kerry Tramel, president, Lady Americana: “Our industry will remain challenged in 2010. Any opportunity for appreciable growth will come in the second half of the year, if at all.”
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Stuart Carlitz, CEO of Eclipse and Eastman House: “2010 will reflect increases in both unit and dollar volume, due to improved consumer confidence in the second half and pent-up demand resulting from the weak 2008 and 2009.”
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Kevin Toman, president, Englander: “The first quarter will be difficult. We should start seeing a gradual turnaround and uptick in sales by the end of the second quarter.”
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Ralph Rossdeutscher, president, Natura: “The industry will come back a bit. We do have pent-up demand. Units will come back, as they have been off so much.”
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Walt Bader, president, OMI: “On a national scale, I believe that the HIRE Act will come out of committee and pass in 2010, and that the mattress industry will be able to harness this tax credit in a variety of Cash-for-Sleepers programs. This will have the same stimulus effect as cash for clunkers programs had with the automobile industry.”
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Earl Kluft, president, E.S. Kluft & Co.: “The economy is still incredibly fragile and I do not think anyone with certainty can forecast what 2010 will be. I think as an industry we can forecast a small increase in units but dollars will be flat; although, we will welcome any uptick when it may occur. If there is any positive movement we are seeing at a modest level, it is the luxury consumer is starting to feel more confident about making bolder purchases again. They are still hesitant about having a fractional share of the jet or an ultra-luxury vehicle, but they are not willing to sacrifice sleep with a less than ultra-luxury mattress.”
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Jeff Scorziell, president, Anatomic Global: “The economy may be slowly stabilizing, but we believe bedding will continue to shrink in 2010, taking mattress sales down again. We see the industry promoting more aggressive pricing to prop up sales. We also believe the value proposition needs to be protected and that the imports will struggle with this issue due to their poor quality history.”
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Bedding leaders see challenges for 2012
Dec 22, 2011 -
Second-Tier Producers Hopeful About 2011
Dec 24, 2010
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