by Nationwide Marketing Group’s “State of the Business” presentation during PrimeTime featured five executives who talked about what’s happening at their companies and in the industry right now.
Charlie Eitel, Serta Simmons Bedding’s new CEO, talked about the company’s recent restructuring after filing for bankruptcy earlier this year.
“The business was too complex and there was too much of an emphasis on direct-to-consumer and not enough on our physical retailers,” he said. “Looking at DTC brands, results have been dismal in the industry, and we’re coming back relevant, simple and consistent.”
He added that all brands will be treated equally and that the company’s advertising will no longer be aimed at consumers. Instead, the funds will be allocated to help its retail partners.
“Thank you all for the support,” he said. “There is a lot of work to be done, and we’ll be starting with taking back market share.”
Michael Campbell, owner and CEO of Leather Italia, said that furniture stores remain over-inventoried and that although retailers have tried discounts, that is done at the expense of margins.
Costs are in line with pre-Covid numbers, which is normalizing the margin basis, and many believe that a clean start is coming in 2024, he said.
He offers four action items for retailers:
- Make sure you have a sufficient cash flow to be able make purchases
- Keep inventory on hand if you can
- Think about your fixed-cost management
- If you have slowed down, start spending money on advertising again
He said that in terms of a macro outlook of the industry, retailers see opportunities to expand product categories, invest in their stores and bring in new technology.
“Retailers remain positive, and many feel 2024 will be a rest for business,” he said.
Resident’s Managing Director Bob McCarthy took the stage to talk about the company’s rapid growth to a Top 5 mattress brand since its founding in 2018.
McCarthy said the brand is the No. 1 driver of traffic to mattress stores — sending around 350,000 consumers to retail stores in 2022. The company is also working on increasing margins with the introduction of higher-priced models, like Ultra, which it introduced in Vegas, that will lead to higher tickets.
The sheer amount of advertising Resident does — it spends $250 million per year on it — earned the company 44 million website visits and counting. And the company’s marketing conversion is 2.5 times that of the industry average.
In the first half of 2023, Resident had 18 million website visits. During that same period, retailers sold over 82,000 Nectar mattresses. So, if 81% of the consumers who purchased Nectar started out online, that would mean over 66,000 can be tied directly to their marketing.
What’s more, if you consider that 74% of people who looked at Nectar didn’t actually buy it, the buying journey — which started with Nectar — led to over 17,000 consumers that bought something else.
With these numbers, McCarthy explains that Nectar can bring in around eight new customers a month for the average mattress retailer.
Steve Rusing, executive vice president of U.S. sales for Tempur Sealy International, started his presentation by talking about the recent cyberattack that caused the company to shut down its IT systems while it checked on data privacy.
He says it was a challenge to communicate what was going on during this time because TSI is a public company and couldn’t release details for risk of sharing insider information.
However, the company has overcome the cyber event and made its first priority to get Sealy’s website back up because those models are built to order. Tempur’s site was second on the list, and Rusin says the lead times are only behind one week because of the shutdown.
“Our takeaway from this is that it’s a matter of ‘when’ and not ‘if’ when it comes to cyber events,” he said. “We put together a plan for this kind of situation three years ago, and it paid off. Make sure you have a plan and that all employees understand their role.”
He went on to talk about how the bedding industry has been in a bit of a recession for the past few years and that experts are forecasting modest growth over the next year. However, he says it’s tough to forecast because it feels like we’ve been in a downturn for a while.
He then laid out the best path retailers can take to drive business and be successful this year.
- Brand names drive traffic and conversion. Don’t underestimate the power of a brand.
- Focus on premium products because consumers are stepping up. The customer looking more at value will return, he says, but for now, you should get your fair share of shoppers buying premium.
- Elevate the shopping experience with branded walls and messaging that carries weight.
Overall, the speakers agreed that the industry is in a tough spot right now, but everyone is trying to work together to get through this and hopefully start anew in 2024.
