Caught in a vortex: Industry must adjust to a new reality
I came across the perfect phrase the other day for the not-so-great year we are experiencing in Mattressville: Vortex of Defeat.
Jack and Suzy Welch, the authors of “The Welchway” in BusinessWeek, part of my regular weekly reading, came up with that phrase in their Sept. 29 column. Writing about what Lehman Bros. workers need to avoid, they came up with the phrase: Vortex of Defeat.
The Welches define that as a “kind of stymieing situation that can easily put people into a downward spiral of self-doubt.”
Well, that certainly applies to the mattress industry this year. We are in the third year of a “stymieing” situation, struggling through sizable unit and dollar declines.
Did you see the September figures from the International Sleep Products Assn.? ISPA’s sample of producers reported a staggering 16.8% unit decline in September and an 11% drop in dollars, compared with September 2007.
What has happened to the usually predictable growth of the mattress industry?
The reality is that we are in a new era in the industry. We have not had three consecutive years of unit declines in modern history, according to my reading of ISPA figures that date back to 1974. We are heading toward our worst year in more than three decades.
Furthermore, the industry has changed so much over that time that I’m not sure we can look at it as the same old industry. The inflation of raw material costs has been unprecedented. The introduction of fire-resistant materials has added a new layer of complexity. The rise of China as a source country for components and finished beds is a relatively new development. Top bedding producers are now owned by private equity firms — not by the mattress men who used to own most of the companies.
Meanwhile, the whole U.S. economic system is in the midst of a huge overhaul.
I was talking to the CEO of a major bedding company the other day about the changing nature of our industry. He cautioned me not to expect a booming business rebound. The very tough sales climate we face now is the new reality, he suggested. We shouldn’t think that a past pick-me-up like “pent-up demand” will unleash a torrent of business in the near term. Our housing market and our financial system must go through significant changes before our economy — and our industry — can get back on a solid growth track, this executive said.
“The best antidote to this Vortex of Defeat,” Jack and Suzy Welch wrote, “is immediate action.” They said the Lehman Bros. employees need to start anew and look to the future.
There is wisdom here for us in the mattress industry, I think. We may not know exactly what to do these days, but we need to do something. And we need to realize that the old mattress world we knew is a thing of the past.
New Time commented:
US is facing a momment where costs of the main raw materials came to tehir bottoms, and even though it is not good enough for industry yet, it should be a signal for the new president, about reinforcing countries structures, about becaming again believers and specially opportunity makers. Now, it is the time to build the conditions for the growth that every wants to see in the future. Now itis the time to take advantage of the vangard USA always had in so many fields.
mattressmaker commented:
Yup, we really need to reinvent ourselves.
Warren Littrell commented:
Jack Welch's successor at General Electric has certainly taken the "Vortex of Defeat" to heart since taking the reins of GE. GE is at an all time low driven their by poor decisions by Jeffery Immelt. We in the bedding and retail business can continue to have declines unless we change the way we try to peddle our products to the American consumer. That also holds true for the furniture business in general. We need to give them more reasons to purchase our wares beyond just price. After 9-11 people began refurbishing their existing homes rather that looking for a new one. Building value into the furniture and bedding industry will lead us out of this current econpmic recession. Cheaper furniture and mattresses at cheaper prices is not the answer in my opinion.
Warren Littrell commented:
Jack Welch's successor at General Electric has certainly taken the "Vortex of Defeat" to heart since taking the reins of GE. GE is at an all time low driven their by poor decisions by Jeffery Immelt. We in the bedding and retail business can continue to have declines unless we change the way we try to peddle our products to the American consumer. That also holds true for the furniture business in general. We need to give them more reasons to purchase our wares beyond just price. After 9-11 people began refurbishing their existing homes rather that looking for a new one. Building value into the furniture and bedding industry will lead us out of this current econpmic recession. Cheaper furniture and mattresses at cheaper prices is not the answer in my opinion.
musemistress commented:
The global economy is maturing as are consumers worldwide. With greater access to information those who are able to sift the wheat from the chaff (in all industries whether designers, manufacturers, retailers or consumers) will grasp the opportunities that arise and will embrace innovation and change to raise the game at every level. The technological revolution has accelerated the pace of change and put pressure on us and how we manage our lives, personal and professional. Ask the consumers what they really think about mattresses failing hygiene and support. Yet the industry relies on this to ensure it has a replacement market actively reminding bed consumers that this is so! Given the importance of sleep and s** to our very existence is it not perhaps time to wake up and seek out a better solution to an age old problem especially now the boomers and their offpring are out there - maybe on their 3rd, 4th or 5th mattress still confused when looking for yet another. The president elect captured the zeitgeist perfectly and it sure worked for him -Change...
Lisa S. commented:
*whispers to Dave*
Since last Tuesday things seem to be getting better. We have more customers coming in the door, which before the election, there were not many! Lets cross our fingers that it keeps getting better.
G McNeil commented:
Here are three realities:
1) July 11th oil was trading at $147 a barrel. It is now at $59 a barrel.
2) Mid July scrap steel was going for $600 a true ton. Current price is $127 a true ton.
3) Lumber, especially from Canada, has stablized in price for the past 7 months.
Question. Where is the relief from L&P on unit pricing? Where is the relief from Carpenter and Foamex on foam prices?
Cost factors are choking the bedding industry and the fact that it has to deal with virtual monopolies for it's main materials has got to change.
