Prospects dim for bedding rebound
By David Perry -- Furniture Today, August 11, 2008
HIGH POINT — As the mattress industry heads into two of its strongest sales months, hopes are dimming that a significant rebound is on the way this year. In fact, leading producers are not particularly bullish about prospects in 2009 either.
Confronting a daunting economic slowdown, major bedding makers are urging retailers to keep promoting and to remain focused on the fundamentals of their business, including controlling costs.
“We'll get through this,” said Simmons CEO Charlie Eitel. “When you are not in a recession, it's hard to imagine how you will get in one. When you are in a recession, it's hard to imagine how you will get out of it.”
Eitel noted that there are significant debt levels on both the manufacturing and retail side of the industry. “It will require very good leadership to navigate through these times,” he said.
Sales reports this year have painted a bleak picture of the industry's performance. The International Sleep Products Assn. reported that unit shipments for the producers it surveys each month were down 6.3% through June, while the dollar value of shipments was down by 7.1% from the 2007 first half. Those figures suggest that total industry units are down by about 10% in the first half, while dollars are down by more than 10%, bedding observers say.
High gas prices, low consumer confidence and an economic malaise are taking their toll on the mattress business and home furnishings as a whole, bedding producers say. They say retailers need to watch costs, maintain their advertising frequency, promote better bedding and look for add-on sales.
“There is an opportunity to work together to figure out how we can help our dealers sell better bedding and to make the shopping experience better for consumers,” said Steve Fendrich, president of Simmons. “It's a new day.”
Rick Anderson, president of Tempur-Pedic North America, said his company remains focused on telling a better sleep story and won't turn to lower price points to spark sales. He also said Tempur-Pedic is doing well with its new adjustable bed system, which dramatically boosts sales tickets — an important development when store traffic is down. “This is a home run,” he said.
Bob Hellyer, Spring Air's CEO, said retailers must remain disciplined this year. That means continuing to promote and to “stay in front of the consumer,” he said. It also means re-educating consumers and sales associates on the values offered by new bedding lines. Hellyer said of 2008: “It's going to be a great year to have behind us.”
How much will things improve next year? The latest ISPA forecast for 2009, issued earlier this year, called for a 7.5% gain in the dollar value of mattress shipments next year and a 4% gain in units. But those projections were made before the extent of the industry's sales downturn was clear, and producers are now much more pessimistic about business conditions in 2009. ISPA will revise its 2009 forecast this fall.
Several bedding producers said at the recent Las Vegas Market that they don't expect the economy to suddenly switch into high gear in the new year. Problems in the housing sector will take time to resolve, they cautioned.
Eitel said one key to the industry's long-term growth is a national marketing campaign designed to change the image of sleep sets from a commodity to a key to good health and well being. As ISPA's chairman, he is advocating the launch of such a campaign.
“Let's come up with something really great that we can all agree on, something that will make us really proud to be in the mattress business,” Eitel said.
Producers will soon know if an uptick is possible this year. August is traditionally the strongest month of the year for unit shipments, according to ISPA, and September also is strong. Together, those two months usually generate almost 20% of the industry's annual shipments.
