The changing mattress market
We talk a lot about change in this industry. Every buying group meeting, every trade show seminar, every social gathering seems to revolve around the subject. But it’s not very often that change reaches out and gives us a collective slap across the face. It’s often very incremental; in fact it is often so slow we often really don’t notice it.
In the Spring 2017 issue of the HGO Merchandiser, we’ve published a report about the apparent Canadian market for mattresses. And in doing the research for that piece, I realised just how much the mattress industry in this country has changed over the past decade.
But first, I want to answer a question that I’m asked often: why am I so interested in the apparent market, which is most simply defined as the value of domestic shipments, less exports plus imports and measured at wholesale prices. The apparent market gives us the simplest model. It’s stripped of margin and mark-ups, taxes, freight charges and other things that are built in the retail sales number.
The apparent market also tells us where the product comes from. Admittedly, there’s a lot it doesn’t tell us, such as what’s the mix between coil construction and non-coil construction.
In our report, we note that after a tough decade the apparent market for mattresses finally climbed back to where it was before the financial markets went sideways. But looking at the numbers in greater detail reveals how drastically the market has changed since 2007.
Before 2007, the mattress market was definitely a ‘Canadian’ one. Because mattresses and box springs are relatively heavy, their production and distribution tended to be fairly regional. This is why the leading manufacturers operated factories across the country – mainly in Ontario, Quebec and Alberta. This made shipping, either to independent retailers or the regional distribution centres operated by the nationals and the major chains, simpler and more cost effective.
This also meant mattresses were not import driven. The recession changed these fundamentals.
In 2016, the largest importer of mattresses into the Canadian market was Tempur Sealy Canada (TSC) and is evidence of the Tempur-Pedic brand’s growing strength in this country. When the then standalone Tempur-Pedic International acquired its Canadian distributor in 2009, the brand was a niche player at best. It’s now one of the fastest growing brands on the market.
It also shows mattress imports from the U.S. broke the $100 million mark for the first time ever in 2016. It would not be unreasonable to suggest Tempur accounts for as much as 70% of that total, considering the growth of its network (which includes Sleep Country Canada, Leon’s, Brault & Martineau and The Bay) in recent years.
However, the downside of this year’s report on the apparent market is the light it has shone on Canadian mattress manufacturing. Yes, it grew last year. In fact, domestic shipments grew for the second consecutive year in 2016. But they are still more than $100 million down from the all-time high set in 2007 at $987.6 million. It’s likely to be a few years before the industry gets back to that level of production.
While the market has clawed its way back, it’s not the mattress market we knew before the recession. It has changed in fundamental ways, and we haven’t even addressed the online mattress phenomenon. I suspect more change is on the way.