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Middle of market is ‘dying,’ Tempur-Pedic research reveals
March 12, 2012
In a memorable phrase, Mattress Firm executive Craig McAndrews last year identified a "barbell retail" scenario gripping the mattress industry. The two sides of the barbell - the low end and the high end - are doing well, he noted, but the middle of the market is struggling.
Tempur-Pedic's latest market research, released at the recent Las Vegas Market, provides an important update on this issue. The "barbell effect" is accelerating, the company said. And that is decreasing the overall value of the bedding category, it added.
Tempur-Pedic presented some compelling facts to make its case. It said that from 2009 to 2011, wholesale sales in the under-$1,000 category increased by $238 million, while wholesale sales in the $2,000-and-over category grew by $391 million. In contrast, the middle market - from $1,000 to $2,000 - had wholesale dollar growth of just $26 million, the company said.
It offered this sobering assessment of what is happening: "The second largest segment of the category is dying. With it goes a significant amount of profitability."
The company cited several benefits of strong mid-priced offerings. Compared with lower end products, consumers receive higher quality, more durable beds, and get better sleep and greater satisfaction, while retailers enjoy higher average unit selling prices and margins, and benefit from more highly satisfied consumers who continue to fuel the referral business.
Now we all know why Tempur-Pedic is looking at the middle of the market. Seeing a big growth opportunity, Tempur-Pedic just entered that market with its three-bed Tempur-Simplicity line, which targets the $1,499 retail price point.
And we also know that those middle price points are important. As Tempur-Pedic noted, it's the second-largest consumer segment in the industry, behind the low end.
Many of the new bedding lines introduced at the recent Las Vegas Market have offerings in the mid-price range of $1,000 to $2,000, an indicator that those producers hope to boost sales in that price range.
But we also saw several price points far down in the under-$1,000 segment. Sadly, that indicates a focus on lower-priced, lower-quality goods.
What do we want to sell as an industry? I think that's a good question to ponder as we reflect on this barbell that is gaining strength at both ends while the middle suffers.
I don't understand why we keep trading consumers down to lower price points. Our research shows that consumers will pay substantially more for beds that improve the quality of their life. And that's what new beds do - they provide a better quality of life for consumers than that afforded by those old, worn out mattresses. If we can just market better sleep to consumers, we can sell better beds, consumers will get better sleep, and retailers will enjoy increased profitability.
That's a winning proposition, in our book.
P.S. - Listen to my podcast this week on my bedding outlook for 2012. Click here to listen.
Posted by David Perry on March 12, 2012 |
Comments (15)
Industries:
Bedding (Themed)
, Bedding
May 6, 2013
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsRossana commented:
I am a retail mestrats salesman, I have sold adjustable bases for years, but to older clients and the handicapped. By altering my preconcieved notions about who buys power bases, my sales have increased. I use research statistics about sleep to give them a reason to try it, and Mark you are right! The end user becomes a believer once they have tried it, and they imagine themselves healthier, more rested and more productive with this expensive adjustable base under an already expensive mestrats. I sell alot of adjustable bases.
March 30, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsin the know commented:
TEMPUR HAS IT ALL WRONG! THE SIMPLICITY BEDS ARE NOT COMPETITIVE WITH OTHER MANUFACTURERS 1499 OFFERINGS! THEY ARE TRYING TO PLUG A HOLE THAT THEY DUG THEMSELVES...THAT SHOULD BE LEFT EMPTY TOO. THE BARBELL EFFECT IS DUE TO ONE THING ONLE...THE ECONOMY! WE STILL HAVE HIGH UNEMPLOYMENT AND WE STILL A GREAT DEAL OF UNCERTAINTY...THAT BEING SAID, VALUE CUSTOMERS THAT SIMPLY CANNOT PUT OFF A MATTRESS PURCHASE ARE GOING TO THE LOW END PRICE POINTS....OTHER CUSTOMERS ARE MOVING UP AS THE TEMPUR-STORY TRUELLY HAS DRIVEN TECHNOLOGY IN SLEEP AND HAS UPPED PRICE POINTS ACCORDINGLY! (IE. LETS FACE IT...IF YOU CAN AFFORD TO BUY A $1599 BED YOU CAN PROBABLY AFFORD $3000 IF YOU FEEL THE VALUE EXISTS)... SO TEMPUR IS GOING TO TRY TO FILL THE MIDDLE HOLE? MY GUESS IS THAT THEY WILL BE SHOVELING BACK FROM THE TOP END, AS THE BOTTOM END HAS LITTLE DIRT TO SPARE.....REMEBER YOU HEARD IT HEAR FIRST...TEMPUR SHOULD CONTINUE TO DRIVE THE TECH AND THE UPPER END...THIS MOVE BACKWARDS IS DOOMED....
March 30, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsin the know commented:
TEMPUR HAS IT ALL WRONG! THE SIMPLICITY BEDS ARE NOT COMPETITIVE WITH OTHER MANUFACTURERS 1499 OFFERINGS! THEY ARE TRYING TO PLUG A HOLE THAT THEY DUG THEMSELVES...THAT SHOULD BE LEFT EMPTY TOO. THE BARBELL EFFECT IS DUE TO ONE THING ONLE...THE ECONOMY! WE STILL HAVE HIGH UNEMPLOYMENT AND WE STILL A GREAT DEAL OF UNCERTAINTY...THAT BEING SAID, VALUE CUSTOMERS THAT SIMPLY CANNOT PUT OFF A MATTRESS PURCHASE ARE GOING TO THE LOW END PRICE POINTS....OTHER CUSTOMERS ARE MOVING UP AS THE TEMPUR-STORY TRUELLY HAS DRIVEN TECHNOLOGY IN SLEEP AND HAS UPPED PRICE POINTS ACCORDINGLY! (IE. LETS FACE IT...IF YOU CAN AFFORD TO BUY A $1599 BED YOU CAN PROBABLY AFFORD $3000 IF YOU FEEL THE VALUE EXISTS)... SO TEMPUR IS GOING TO TRY TO FILL THE MIDDLE HOLE? MY GUESS IS THAT THEY WILL BE SHOVELING BACK FROM THE TOP END, AS THE BOTTOM END HAS LITTLE DIRT TO SPARE.....REMEBER YOU HEARD IT HEAR FIRST...TEMPUR SHOULD CONTINUE TO DRIVE THE TECH AND THE UPPER END...THIS MOVE BACKWARDS IS DOOMED....
March 26, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsGopal commented:
I'm actually in the market for something like a tempurpedic mattress now. Reading about their intention to introduce a new mid range product makes me want to put off the purchase to see how that segment develops.
March 18, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsPete Primeau commented:
I was speaking to some of my friends who are name brand reps and they had the same observations. I then looked at my business and noticed some of this same trend. At one of my larger dealers we recently reduced the choices in the promotional arena added skus with high value in the middle and instantly we started selling the middle again. I would encourage everyone to look inward at their merchandising and ask your self if I were the customer what would I buy?
March 16, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsSteve Chandler commented:
We sell a lot of all foam bedding and just like innerspring, a cheaply made bed won't last. I agree with Lisa middle of the road is $600 to $1000. (or at least here it is) Where I've seen most manufactures falling off is at $799 to $1099. I believe in this economy that is a mistake. The demand is still there it's the lack of choices killing the market. Our hottest price point is $999. I have to shop hard to offer good beds at that price. But it pays the bills.
March 15, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsarnee isashamed commented:
tempur pedic quality have had hi end mattress 5 years was 3 g and worth it , never a problem no flipping, no low spots ,still great makes almost all reg mattressess look like 16th century , very hi quality and still firm,been in furn biz 40 yrs know quality and have sleep apnea also......
March 15, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsK. Smith commented:
The increase in the upper end has to come from somewhere. The key is to move more people up from the lower end.
Additionally, I have to address a previous post where someone talked about the limited comfort life of Tempur products. Limited? My experience has been that Tempur produces some of the most consistent mattresses on the market.
March 15, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsSteve Wiles commented:
Re: Middle of market is ‘dying,’ Tempur-Pedic research reveals.
Memory foam matts are the "middle market", consumer confidence is largely affected by the limited comfort life Tempur offers. Your own research must be very worrying?
March 15, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsSteve Wiles commented:
Re: Middle of market is ‘dying,’ Tempur-Pedic research reveals.
Memory foam matts are the "middle market", consumer confidence is largely affected by the limited comfort life Tempur offers. Your own research must be very worrying?
March 14, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsSteve commented:
Its been a race to the bottom for the past couple of years wholesale wise. With Serta, Sealy, Simmons and Tempur Pedic bringing out "budget friendly" mattresses. What did they expect?
March 13, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsLisa Stansbury commented:
So we're calling $1,000-$2,000 midrange? I was thinking the mid range death is more along the lines of $500-$1,000. That is without pulling numbers though. Just what I know has been turning. Look at Kluft in Vegas. His business has been growing while others have been decreasing.
The high end customer still wants a high value product. I feel they are doing more research on longevity and brand in general. A lot of negative online reviews of some brands are hurting them. They are mostly a result of retailers that don't handle customer complaints, but that is another fish to fry.
March 13, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsWarren Littrell commented:
Mattress prices have gone up substantially over the pastfew years. Unfortunately, wages have not. I occurs to me that it is not only the upper middle and upper class who require sleep to lead a good quality of life. It is not that the middle and lower middle would not like to purchase an upper-end sleep set but when you are faced with $4 a gallon gasoline and ever increasing food prices then there is only so much expendable income for mattresses and home furnishings in general. Eating and driving to work come before spending on a $2000 sleep set.
March 12, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsDon Vong commented:
Poor middle class, poor middle class!!!
March 12, 2012
In response to:
Middle of market is ‘dying,’ Tempur-Pedic research revealsAndre commented:
Shrinking middle class, shrinking mid tier bedding demand.
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