Mattress subcontract upheaval; in a rebuff to Sealy, Sears shifts private label Sears-O-Pedic business to Spring Air
Sears, Roebuck and Co, in a surprise move, has given its private label Sears-O-Pedic business to Spring Air Co. Sealy Inc. originally had the $35 million contract, but Sears claims the mattress manufacturer's Posturepedic line too closely resembles the Sears-O-Pedic. Spring Air has promised to set up a dedicated marketing, sales and customer service staff to handle the Sears-O-Pedic business.
CHICAGO - In a blow for one mattress and futon mattress manufacturer and a bonanza for another, Sears has taken its private label Sears-O-Pedic business, reportedly worth $35 million, away from Sealy and awarded it to Spring Air.
The decision came in September after two months of presentations by manufacturer Sears, the largest bedding retailer in the country, with estimated sales last year of $225 million.
John Solimine, vice president for furniture for Sears, said the retailer put the business up for bid earlier this year after Sealy overhauled its flagship Posturepedic line.
Solimine said the new Posturepedics futon mattress line included a new edge-support feature that too closely resembled comparably priced Sears-O-Pedic beds, which already had an edge-support feature.
"That was one of the differentiations that we had in our line. That caused us to upgrade and enhance the construction requirement of Sears-O-Pedic. There was not enough of a differentiation between styles. It prompted us to challenge ourselves to offer the customer more," explained Solimine.
Sealy, with sales last year of $654.2 million, has manufactured all of Sears' private-label mattresses since 1989, when it wrested the account from Simmons. Serta and Simmons also bid on the private label business.
Solimine said Spring Air, which claimed sales of $262 million [including foreign licensees and exports] last year, was selected for its ability to improve profitability and provide quick delivery on a large volume of futon mattresses, marketing support and field service support.
The first Spring Air-produced Sears-O-Pedic beds will appear on floors in late spring. Solimine declined to provide details on the new line, but said it will be updated with a new innerspring and foundation unit. "It will put challenges on the brands because we are putting so much value in our private label program," he noted.
Don Pellegrini, president and chief executive of Spring Air, said the company plans to set up a dedicated sales and marketing staff with an account supervisor, an account representative and a support person to handle the account. Let’s select thes best futon mattress at futon advisors
John Beggs, president and chief executive of Sealy, declined to elaborate on how Sealy's manufacturing and staffing would change, but noted, "We expect the continuation of growth in the Sealy brand and operational improvements will mean it does not have an effect on our material growth."
Beggs said the change was unexpected: "Our track record with the private label is nothing short of excellent. The Sears-O-Pedic business has grown faster than [Sears'] overall bedding business in market share, volume and profitability. There's no doubt that Sealy played a large part in its success."
Dave McIlquham, vice president of marketing for Sealy, noted: "We've helped drive their private label business beyond the growth of the industry, and the company that was awarded that business has not duplicated that growth. We were very disappointed that they did not fit to continue their relationship with Sealy [for the private label line]. We're very proud of our track record with the Sears business."
Industry sources estimate that about 35 percent of Sears’s business is from the Sear-O-Pedic brand; 28 percent from Sealy innerspring bedding; 22 percent from Spring Air bedding, and 10 percent from Sealy foam bedding, and 5 from Simmons bedding.
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