Bedding Today

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.

High Point Market Fall 2008 offers opportunities for savvy mattress retailers

So here’s the deal: We can’t control the puny economic climate that besets the industry these days. But we can aim to improve our business.

That, I believe, will be the hallmark of activity in mattress showrooms at the High Point Market this week. Retailers who shop the market with an open mind have the chance to add products and promotions that might help boost their business. Retailers who don’t show up have the chance to sit at home and whine about lousy business.

(Speaking of whining, my recent column on the need to choose “winning” over “whining” struck a chord with many of you, judging by the e-mails I received. And that message seems especially appropriate at market time.)

The High Point Market lacks the breadth of mattress introductions that are seen in Las Vegas, where the mattress industry shows in force. But this High Point Market does feature some interesting mattress offerings, and it offers retailers a chance to examine them in a relaxed setting.

Headlining the brand-new products here is Martha Stewart’s “The Good Bed” line of open coil and encased coil mattresses. It will be shown in Market Square, one of my favorite showroom buildings with its well-worn wood floors and cozy courtyard.

While I haven’t seen Martha’s beds in person, they look clean and classy in the pictures on her Web site. I expect this line to gain some traction in the market.
Mattress retailers will also want to visit The Bedding Center in Plaza Suites.

Five Star Mattress, the price-cutting line that made waves in Las Vegas, again is setting up shop there. So is Therapedic, which remains committed to the High Point Market and is featuring its I-Care Elite line, which has some strong consumer hooks.

Also in the Bedding Center are some local players: Joya Sleep Systems, I-Care Sleep Products (which makes the version of the I-Care line marketed by Therapedic) and Carolina Mattress Guild. CMG had a strong market here in April and aims to keep its momentum going.

Elsewhere in the downtown market district, Natura expands its green offerings with medium and high-end models in the natural and organic categories, and Bemco offers some interesting promotional packages. Primo International and Coaster are worth a look in the mattress import arena. Hypnos offers striking high-end models.

And no list of High Point mattress exhibitors would be complete without a nod to the big guy down the road: Sales leader Sealy, which shows at its Archdale campus.

Mattresses remain a highly profitable, dynamic category on retail floors around the country. They continue to generate profit dollars that are keeping the lights on in a number of stores.

So why not check out the mattresses in High Point? I’ll see you in your favorite mattress showroom.

High debt levels, poor sales taking toll in mattress arena

Here’s a real-world challenge for you: A reporter for one of the country’s great newspapers (hint: two of its reporters found fame in the Watergate scandal) calls and asks about the state of the mattress business these days. What do you say?

A. “No comment.”
B. “Why are you reporters always looking for bad news?”
C. “The industry is cautiously optimistic about a rebound
in 2010.”
D. “We are in the middle of a really, really horrible year.”
Before I give you the correct answer to that question, which was posed to me the other day by a reporter for The Washington Post, let’s take a few moments to consider where we are as an industry these days. Short answer: It’s ugly out there.
The recent Chapter 11 filing by Mattress Discounters of Upper Marlboro, Md., was unwelcome news for an already jittery industry. Simmons gets a major haircut there, it appears. And that ever-active industry grapevine suggests another major mattress retailer could be the next to file. On the wholesale side of the business, there are rumors that a couple of big players are struggling.
The debt levels on both the manufacturing and retail sides of the industry are significant, one bedding leader recently told me. And this poor sales climate gives everyone much less room to maneuver.
Steve Newton, CEO of Mattress Discounters, explained the company’s plight this way: “I think it’s all driven by the current economy we face. People are not buying mattresses. They’re not buying any furniture goods, and they’re not buying mattresses in particular.”
That’s what Newton told The Washington Post reporter who wrote a story on the bankruptcy filing. That same reporter called me and asked for my perspective on the filing, and on industry conditions in general. And that led me to offer the comment about the “really, really horrible year.” Yes, “D” is the correct answer, or at least it’s the answer I gave. Hey, what can you say to a question like that? It’s never a good idea to dodge a question. Honesty is always the best policy when answering reporters’ questions. Trust me on this.
I was also asked about the Discounters filing by a reporter for Distressed Debt Report, a financial publication. Frankly, I didn’t even know there was a Distressed Debt Report, but that call is another sign of the times. I bet the reporters for that publication are pretty busy these days.
Is there any good news out there?
There are some winners, but there are more losers these days, I think. Let’s face it: We are in a time of turmoil. True, this is a prolonged slump. But historically our industry has been a strong performer. We just need that history to start kicking in, one of these years.