No Rest for the Successful

2. No Rest for the Successful • According to the International Sleep Products Association (ISPA), almost 39 million mattresses and foundations were shipped during 2015, a 4.5% increase over 2014. • Wholesale revenues were more than $8 billion, a 6.8% increase, and the average unit selling price (AUSP) increased 2.2%. • Although Q3 2015 sales data were strong, Q4 2015 produced a few monthly negative numbers; however, overall Q4 2015 unit sales increased 0.3%, wholesale dollar value increased 1.8% and AUSP increased 1.4%.

3. An Optimistic Outlook • ISPA’s Q1 2016 Bedding Market Quarterly (replacing the former monthly Bedding Barometer) reported a 2.3% decrease in unit sales, a 0.2% increase in wholesale dollar value and 2.6% increase in AUSP. • Because of fewer sales during Q1 2016, ISPA’s 2016 forecast from October 2015 of a 4.0% increase in unit sales and a 6.5% in wholesale dollar value was lowered during July 2016 to a 3.5% increase in unit sales and a 1.5% increase in wholesale dollar value. • ISPA’s July 2016 forecast for 2017 bedding & mattress sales is the same as October 2015, or a 4.0% increase in unit sales and a 6.5% increase in wholesale dollar value.

4. Billions in Bedding • Among the top US bedding producers, Tempur Sealy enjoyed a 5.4% increase in net 2015 sales, totaling $3.15 billion; however, during Q1 2016, net sales decreased 2.5% to $721 million, but net income increased 69.2% Q-O-Q to $39.6 million. • Select Comfort, another top 5 US bedding producer, generated $1.21 billion in net sales during 2015, a 5% increase; however, its net income decreased 26% to $50.52 million. Q1 2016 results were flat, with less than a 1% increase in net sales, or $353 million. • Nine bedding retailers appeared in Furniture Today’s latest Top 100 US Furniture Stores. Combined, their sales increased 20.7% to $5.77 billion, with Mattress Firm, +38.6%; Mattress1One, +41.3%; and America’s Mattress network (Serta), +14.6%.

5. Sleepers’ Satisfaction • According to the J.D. Power 2015 Mattress Satisfaction Report, most consumers replace their old mattress because it is old or worn, at 47%; followed by desiring a more comfortable mattress, 36%; and “mattress had reached a certain age,” 31%. • As is the case for many retail sectors, most consumers visited a retailer’s Website for information, at 39%. Recommendations from family and friends were 36% and visiting manufacturer’s Website, 30%. • A 2016 survey from the Better Sleep Council found that shopping for a mattress was 15th on a list of consumers’ most stressful activities. The top two were a root canal and a job interview, with shopping for a new lawn mower the least stressful at #16.

6. The Impact of Online Sales • A major challenge for brick-and-mortar mattress retailers is the growth in online mattress sales, often referred to as “bed-in-a-box.” Casper is probably the most well known of these companies, generating more than $100 million in sales since April 2014. • Millennials are the market segment that brick-and-mortar mattress retailers are most likely to lose to online retailers, as a 2015 study found that 27% of these young adults who were actively shopping for a new mattress preferred to buy it online. • Some of these bed-in-a-box manufacturers, such as Soft-Tex and Boyd Specialty Sleep, have created promotional packaging, including a wheeled-box, so brick-and-mortar mattress and furniture retailers can compete with their online rivals.

7. Setting the Stage for More Sales • According to an October 2015 study from Fleetzen, an app-based, same-day delivery service of large, bulky items, 73% of surveyed consumers said they were likely to buy from a retailer that provides same-day delivery. • Extensive research has revealed how the right kind of store background music can generate more sales. For mattress retailers, slow-tempo music is best and classical music tends to drive the sale of higher-priced items. • According to a May 2016 Sleep Savvy magazine article, mattress retailers can increase their conversion rates when they help customers select the right pillow first, and then show them mattresses.

8. Advertising Strategies • Bedding & mattress retailers can follow the example of Art Van Furniture in Michigan with a Ladies Night Out event, hosted by a local female midday TV or radio personality, and offering a raffle on attendees’ most-desired mattress and refreshments and entertainment. • Many bedding & mattress retailers are able to generate more traffic and sales by offering juvenile bedding products. Emphasize the value of healthy sleep for children, suggest accessories as gifts and market during back-to-school, especially for college students. • Partner with a local health club or spa and cross-promote with coupons/discounts. In sales and advertising messages, emphasize the value of exercise to aid in better sleep and the value of a sound sleep to have the energy to enjoy workouts and other physical activities.

9. New Media Strategies • Since the prime target audience for mattress sales is adults, 25–44, a strong social media presence is imperative. Content should focus on mattress and materials types and videos that educate consumers prior to their store visits. • Ask customers and social media visitors to share their dreams, uploading photos or videos that visually represent what they remember. Invite a sleep or dream expert to write a series of articles explaining the importance of dreams and their general interpretation. • Bedding & mattress retailers can support their communities (and with the help of their customers) to provide cleaned, used mattresses or appropriate new sleep products to homeless shelters or similar facilities and share photos and videos on social media.