Tier Two producers expect more of the same

David Perry -- Furniture Today, December 19, 2011

HIGH POINT - The bedding industry can expect more of the same next year, with conditions remaining essentially unchanged from this year.
     That's the view of Tier Two bedding producers, gearing up to do battle once again with their larger competitors.
     Despite that challenge, the producers see opportunities for growth in key categories, such as specialty sleep and luxury bedding. They generally believe dollar growth next year will outpace unit gains.
     Here's what the Tier Two producers had to say when responding to the question, What is your outlook for overall bedding business in 2012?
     ► Mark Akerman, vice president of sales and merchandising, Enso Sleep Systems: "Our industry will continue to experience a slow recovery. Without any meaningful growth in new household creation, there will not be any fuel to drive anything but modest unit growth. If we can keep the focus on selling better quality goods in every segment of the industry, then we should be able to see average unit selling price growth continue."
     ► Denny Boyd, president, Boyd Specialty Sleep: "I think the industry will see increases in both units and dollars next year, but mostly in the lower single digits. There is significant pent-up demand for mattresses that has accumulated over the past several years, but I don't foresee it being realized in 2012."

► Jamie Diamonstein, president, Paramount Sleep: "I think 2012 will bring more of the same. I think that retailers and manufacturers will continue to be challenged by a weak economy. Given that this is an election year, I do not believe we will see much change from the government to stimulate business unless they come up with a ‘cash for old mattresses' incentive. We are faced with high unemployment, a housing market that has not recovered, lending institutions that are paralyzed by new government regulations and quite frankly a government structure that has political agendas and no interest or understanding of how to turn this economic malaise around." Jamie Diamonstein, Paramount Sleep

► David Farley, CEO of Anatomic Global: "Anatomic Global believes that consumer trends and attitudes from the past two years will continue without any dramatic changes or surprises in 2012. This means that swings in day-to-day consumer confidence and value-driven behavior are a part of the ‘new normal.' We are not planning on either a double-dip recession or a general economic recovery. Rather, we believe consumers will stay the course for the next year." David Farley, Anatomic Global

     ► Neal Grigg, president, Carolina Mattress Guild: "We will continue the slow improvement in overall business but don't expect to see a significant resurgence of volume."
     ► Bill Hammer, president, Shifman Mattresses: "2012 will continue to be challenging due to a weak housing market and an election year. Companies that focus on quality and value will have a very good year."
     ► Ken Hinman, senior vice president of sales and marketing, Jamison Bedding: "Prices will continue to deflate. We'll see increases in raw material costs but they will be more modest than in 2011. Consequently, unit sales will outperform dollar sales and there will be continued consolidations or attrition among both manufacturers and retailers."
     ► Earl Kluft, CEO, E.S. Kluft & Co.: "The American economy continues to flounder and that bodes poorly for any recovery in our industry. While I believe that units will be down next year, stronger sales in higher ticket specialty sleep and luxury mattresses will preserve industry sales dollars in 2012 so that the year will finish essentially flat. The high-end consumer is still buying a quality mattress, which is considered an ‘acceptable' luxury because it helps them get a better night's sleep and improves their health. That consumer may not feel right buying a new piece of jewelry or a sports car, but they will put their dollars into an investment in better health."

► Kurt Ling, CEO, Pure LatexBliss: "I believe we are going to see a stagnant first half of 2012, but a pickup in volume in the second half of the year. Overall, we should see a 5% uptick based on dollar gains. The barbell effect - seeing stronger performance at both the low and high ends of the market, with a weak middle - will remain the story in 2012. "The key driver of activity next year will be latex and gel. These two segments will be the factor in floor changes next year. What I am seeing in the market is that a progressive retailer will have shifted his floor to be weighted as much as 60% toward specialty products. Even less progressive dealers have moved from 30% to 40% specialty. That presents opportunities for Pure LatexBliss, so we are very optimistic for our own performance next year." Kurt Ling, Pure LatexBliss

     ► Marco Magni, president, Magniflex USA: "Magniflex is a global brand and when we look at performance through that prism, we believe the U.S. bedding market is going to see modest growth next year. The U.S. will come out of its current economic crisis sooner than the rest of the world. You were the first to experience the recession and will also be the first to recover. The U.S. consumer and its economy remain the most resilient in the world."
     ► Bob Naboicheck, president, Gold Bond: "The ‘new normal' for our industry is ‘flat.' Essentially flat numbers on unit sales and a couple of points positive on volume, only because pricing is higher. We are doing nothing but treading water until the housing market comes back. Whatever sales gains a manufacturer might cobble together are a result of what they can take from a competitor. Not a great way to do business, obviously. The one glimmer of hope is specialty products and baby boomers. Foam, latex and gel are propping up sales and a good mattress seems to be one acceptable luxury for baby boomers."
     ► Ralph Rossdeutscher, president, Natura: "While the overall number of units of mattresses will remain flat, specialty producers like Natura will continue to see good and consistent sales growth because of our large footprint in latex and gel. The consumer understands the health benefits of these specialty beds and is driving sales in these categories that will lead to higher margin and volume levels in the coming year."
     ► Steve Russo, CEO, Southerland: "We see another year of a challenging macro-economic environment in the U.S. We also believe that battles for market share will likely continue to propel the race to the bottom in our industry."
     ► Dani Serven, project manager, South Bay: "It is very favorable in the specialty bedding arena."
     ► Ben Thorud, senior vice president, Ashley Furniture HomeStores: "We are very confident that the bedding business in 2012 will continue to accelerate, especially in the specialty arena."