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Mattress makers fighting back PDF Print E-mail
Written by Susan Andrews   

FROM THE HGO MERCHANDISER

OTTAWA (24 October 2011) - Mattress margins, historically a source of plump, fluffy profits for furniture retailers, have been thinner since the recession hit in 2008. Conventional wisdom says that can be blamed on shrinking average retail tickets, which in turn can be blamed on big-box stores selling bedding at well below former tickets.

Industry executives believe the average ticket has gone down at least 10%, and some say as much as 50%, over the past three years.

What happened?

As stores witnessed cash-strapped consumers, already more than willing to defer big-ticket purchases, being lured by low prices at retailers like The Brick, many fell into line behind the big boys, demanding of their suppliers ever-sharper prices, as well as customized and limited-distribution products that would set them apart.

Manufacturers mostly accommodated those demands by creating special SKUs to hit certain price points, thereby helping smaller accounts protect their distribution. They note, however, that retailers have been reluctant to pay a premium for those kinds of advantages. Some manufacturers have responded to that, and higher raw material costs, by sourcing components from low-cost countries like China, or by producing one-sided rather than two-sided mattresses.

Paul Bognar, president of Simmons Canada, is among those who think the industry is hurting itself by compromising quality.

"Retail is only part of the problem," says Bognar. "Large retailers continually dangle large volume in front of suppliers. We have seen the rise of short-line suppliers drive wholesale prices to new lows. These suppliers, who import many of their components from China, have caused the loss of Canadian jobs, eroded product quality, and copied technology with inferior performance. That has fed the demands of the national players but has led to massive price erosion at retail and wholesale."

Another point of view holds that efficient manufacturing and savvy sourcing have produced better goods for less money.

Steve Amis, director of sales at Springwall Sleep Products, says, "As producers, we all seem to be able to make bedding with greater efficiencies, increasing the perceived value at less cost than we could 10 years ago. The consumer is getting a better bed for less money than they did 10 years ago."

Amis maintains that because there are more big-box players and fewer independents today, major manufacturers get some economies of scale, while global sourcing limits the rising prices of raw materials and components. And that benefits everyone downstream, including independent retailers, he says.

Click here to download our complete report on the how Canadian mattress producers are fighting to regain their sales and market share in the Fall 2011 edition of the HGO Merchandiser.

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The Beautyrest Classic from Simmons Canada features the company's patented non-flip pocket coils as well as plush yet durable premium foams to enhance comfort, conformability and support.
 

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