Four retailers describe varied paths to success
David Perry -- Furniture Today, June 18, 2012
AVENTURA, Fla. - There are many paths to success in the mattress business, a panel of top bedding retailers revealed here.
The panelists provided insights on their businesses, which represent a broad range of retail models, from full-line furniture stores to a bedding specialist, and from a leading department store to an up-and-coming online retailer.
The panelists included Terry Flach, vice president and general merchandise manager for big ticket business and home at Sears, Hoffman Estates, Ill.; Daniel Dietz, CEO of online retailer Olejo.com; Kristi Morris, merchandise manager and buyer for bedding and bedroom furniture at Steinhafels, Waukesha, Wis.; and Barrie Brown, president of Hastens and another retailer, Sleep. You deserve more, both in San Jose, Calif.
Brown is a bedding veteran who formerly headed Mattress Giant, a sleep shop chain that addressed promotional and medium price points. Now, as a Hastens dealer, he is focused on the high end.
One of the benefits of that new focus, Brown said, is that that's where the puck is going these days. He noted that sales at the $2,000 price point and up have grown from 8% for a major sleep shop chain in 2003 to 45% for the chain last year, when that segment was larger than the segment for sales below $1,000 (43% of sales) and the $1,000 to $2,000 segment (12% of sales).
With his Hastens store, Brown seeks to provide a differentiated shopping experience, offering only the best products and being transparent with the consumer by providing all the key information they need to make good purchasing decisions, he said.
Mattress consumers today are "confused beyond belief," Brown said. They often go to the Internet and leave more confused than when they started. "Not everything on the Internet is true," Brown noted. And too many retailers talk to their customers using manufacturers' terminology, he said. His approach is to discuss sleep more than features and benefits of the beds.
Dietz presented a different type of business model, that of an online retailer. He said Olejo.com, an e-tailer of mattresses, bedding and furniture, has experienced rapid growth. When the company started in 2008, it boasted just three suppliers and 200 SKUs.
"We had the idea that we could take a traditional brick and mortar industry and bring it online," he said.
Now, the company has 200-plus brand partners and offers more than 80,000 products. It has a full-service call center staffed for sales and customer service and has "thousands of satisfied customers."
Dietz said Olejo.com is winning with a customer-focused model.
"The customer is the one with the credit card," he said. "Everything we do is for them. We have an emphasis on training and customer service. And we have an understanding of how to buy a touch/feel product online can be taught. We hire the right people to interact with the customer, even over the phone."
Olejo.com also thrives by focusing on what works. "We build, test, measure and refine," Dietz said. "We make changes very quickly. We test and measure everything. Then we use the data to our advantage."
In her presentation, Morris said Steinhafels is excelling with its "passionate commitment" to the bedding category, which now represents more than 25% of total business, versus less than 3% in 1991.
Steinhafels has 16 stores, with eight full-line furniture and mattress stores and eight mattress specialty stores. The retailer plans to open two mall mattress specialty stores this fall, Morris said.
One of Steinhafels' success stories is in the specialty sleep arena, where "we have chosen to aggressively pursue opportunities in all foam and hybrid mattresses with set retails of $999-plus and high gross margins," Morris said. The company has longstanding partnerships with Simmons and Tempur-Pedic and more recently added specialty sleep beds from Serta.
"We remain very nimble," Morris said. "Speed wins."
Steinhafels also has done well with power foundations, boosting its attachment rate with Tempur-Pedic from 16% to 40% in 18 months, Morris said.
The panelists also responded to audience feedback on various retail bedding questions. Flach commented on results showing that half of the audience members believe that the industry seeks to turn higher end bedding into commodity purchases.
"That's the way of life in America," he said.