Betting on Hope
March 8, 2010,
The Countess mattress was debuted by Gold Bond, which is pushing higher-quality mattresses at price points of $1,000 and less.
By David Gill
Sales picked up momentum in the latter part of 2009, the Las Vegas Market was well attended and busy, and now U.S. mattress manufacturers feel they can experience something missing from the industry for a long stretch--growth.
These developments definitely helped brighten the Las Vegas Market. "The mood is better," said Larry Rogers, president and chief executive officer of Sealy. "The dealers are cautiously optimistic. Mattresses have always led the way (of home furnishings) out of recessions. We're looking for the consumers to release their pent-up demand."
If that's the case, 2010 definitely looks like the year when the industry breaks the schneid of the past two years. Steve Fendrich, president and chief operating officer, said of Simmons, "We're optimistic that 2010 will be a stronger year for mattress sales than 2009. The industry could see a nice rebound in the latter part of 2010 if the risk of a double-dip recession is eliminated, and we see an increase in housing turnover." Vendors, however, remain wary that the recovery will be slow and that consumers will hold back from spending as they continue to worry about the state of their jobs and their pocketbooks."The economy may be slowly stabilizing, but unfortunately, I believe bedding will still have a challenging year," said Jeff Scorziell, president of Anatomic Global.
The manufacturers are watching several key economic indicators.
"The two indicators we have to watch are GDP growth and home sales," Rogers said. "We are seeing GDP heading upwards, but housing sales remain inconsistent." Increased discretionary spending tied to improved consumer confidence "would give our industry an additional lift, but that will likely not see significant appreciable change in 2010," Fendrich said.
As with the economy as a whole, a recovery in the mattress industry depends on upturns in both the housing and unemployment sectors.
"Industry growth in 2010 will remain stymied until we can get home sales to rise and we can get Americans back to work," said Bob Naboicheck, president of Gold Bond.
For this reason, vendors believe that much of the consuming action will take place in the lower points of the price spectrum. "The opportunity in the current market remains in the $1,000-and-below space," Naboicheck said. "What (retailers) need is high-quality product at that price point and below, where they can make more money." Earl Kluft, president and owner of E.S. Kluft, expects to see more aggressive pricing in 2010. "There is still a market for luxury and consumers are willing to pay for higher-quality goods, but the trend will be towards a more diverse product lineup and competitively priced beds," he said. Price could be crucial for all types of mattresses, including specialty products normally in the upper price ranges. "We have introduced product at a $1,695 price point that is very competitive with other types of non-organic bedding," said Walt Bader, president of Organic Mattresses Inc. Product at such a price point "gives the retailer an edge in their presentation to customers interested in the environment and healthier sleeping." If the lower price points do prove to dominate market activity this year, vendors will have to find ways to be more efficient in their operations.
Noting that the market realities are "all about value, efficient manufacturing and strong logistics management," Mike Zippelli, president of Classic Sleep, said the company has stopped making less-than-$1,000 mattresses domestically, and has partnered with its Chinese manufacturer.
One potential stimulus to mattress sales this year could come with the passage of the Home Improvements Revitalize the Economy (HIRE) Act of 2009.
Currently under consideration in the Ways and Means Committee of the U.S. House of Representatives, the HIRE Act would provide homeowners with tax credits for the purchase of certain home furnishings. "I'm optimistic that the HIRE Act will pass in 2010," Bader said, "and that the mattress industry will be able to harness this tax credit in a variety of cash-for-sleepers programs to increase sales."