Partners in foam – Sunrise Medical Inc’s acquisition of Comfort Sleeper
The acquisition between Sunrise Medical Inc and Comfort Sleeper Inc in Oct 1992, has made the resultant company Comfort Clinic a leader in the comfort-sleep market. Comfort Clinic's 1993 annual revenues reached $85 million, an increase of 16.4% over 1992 revenues. Sunrise in Jan 1994 merged its subsidiary Bio Clinic Corp with Comfort Sleeper to form Comfort Clinic, but maintained each company's separate foam product brands.
ATLANTA--Only a few months old, Comfort Clinic is already a powerful presence in the comfort-sleep market with hundreds models of king size futon mattress.
The company's prodigious product assortment, and trademarks such as Eggcrate and Multi-Zone which leave one tongue-tied trying to find generic equivalents, combine to make for a dynamo in a category that needs all the imagination it can muster. Besides, other bedding and king size futon mattress manufacturers also have some business activities.
Comfort Clinic was spawned by Torrance, Cal.-based Sunrise Medical, the world's largest supplier of home medical equipment and parent of Bio Clinic, a major manufacturer of consumer foam products, In October 1992, Sunrise decided to buy the leading manufacturer of consumer foam products and king size futon mattresses, Comfort Sleeper.
"Bio Clinic was a specialist in foam futon mattress pads and pillows." said Gary Limon, president of Comfort Clinic and former vice president and general manager of the Bio Clinic consumer division. "Comfort Sleeper also was specialist. As the category grew, these two businesses really grew with it. Other players who only had one or two SKUs didn't have the manufacturing, marketing and distribution strength to keep things going."
Initially, Sunrise operated the two companies as separate divisions. Then in January of this year, they were combined into a new entity with a new--Comfort Clinic. However a "dual-brand strategy" was maintained to hold onto market share in a category where name too often are all that differentiates.
In a sense, it was a case of a little fish eating a big fish. Although Sunrise Medical has annual sales of $480 million, Comfort Sleeper's annual revenues were $54 million last year, compared with Bio Clinic's $31 million.
But Bio Clinic was after more than Comfort Sleeper's customer list. Comfort Sleeper also had proprietary technology--comfort sleep ventilation--which made it a highly desirable partner. Although polyurethane foam breathes, Comfort Sleeper has convinced consumers that with punched holes in it, the foam breathes even better.
But it was a two-way street. Bio Clinic's health industry roots can also help Comfort Sleeper to achieve its therapeutic claims.
Comfort Clinic's total annual revenues in 1993 were $85 million, up 16.4 percent from 1992. The company has 12 manufacturing facilities in North America, with the ability to ventilate foam products in three--Atlanta, Ontario, Cal., and Baldwyn, Miss. The company is looking to expand its ventilating capability to a facility in the northern Midwest, an area where it currently has none. In addition, ventilation machinery is being modernized. "Based on the growth of this category, we will spend over $1.5 million this year on upgrading," said Limon.
Last year, foam futon mattress pad and pillow sales totaled about $120 million at retail. Of that, foam pads from Comfort Clinic accounted for $75 million (up from $66 million in 1992), or 65 percent of the market, and foam pillows from Comfort Clinic totaled $10 million (up from $7 million), or 43 percent of the market.
Comfort Clinic's sales by segment are: 65 percent in the mass market, including Wal-Mart and Kmart, 20 percent in department stores, including Macy's, the May Co., and Belk's and 15 percent in specialty store/catalogs. Its customer mix includes 80 percent of the top twenty mass merchants, 70 percent of the top fifty department stores and 50 percent of the top twenty specialty stores/catalogs, including Strouds, Domestications and the JC Penney catalog.
Comfort Clinic's chief competitor is Carpenter Co., followed by Louisville Bedding, Perfect Fit and Pillowtex.
Internationally, Comfort Clinic does business in Cost Rica, Chile and Brazil. It also does about $15.5 million in pads and pillows in Canada, and is planning to enter Australia.
Comfort Clinic's products include a whopping 110 SKUs under 15 different product names, including Eggcrate, Dream Tech, Multi-Zone and Comfort Flow. They will continue to be offered under their original Comfort Sleeper and Bio Clinic brand names.
"Our thought process is not to create a new brand of products," said Randy Spence, Comfort Clinic's vice president of sales and former vice president of sales for Comfort Sleeper. "Maintaining brand identity is very critical. Both brands are widely recognized. We won't try to go to a homogenized look."
Rick Platt, a buyer for Ames/Zayre stores, said he's always carried the Comfort Sleeper label and will continue to do so because retailers in his trading area are primarily carrying Bio Clinic products. "We've always carried just the Comfort Sleeper label and we're very happy doing so. Right now, we have an opening price point pad, an anti-snore pillow and the Comfort Sleeper Supreme ventilated three-zone pad, which we just switched to because the market was headed toward ventilation."
Comfort Clinic does not target channels with specific products. Department store or mass merchant, its 110 SKUs are all up for grabs, however the wide number of products helps the market to achieve differentiation.
"We attempt to offer a wide variety of patterns," continued Spence. "There are three different three-zone patterns in the Comfort Sleeper line alone, with the peaks being different for each pad."
The company also offers differentiation through packaging. "We do a lot of private-label packaging tailored to individual retailers," said Spence, "Kmart packaging, for example, has a different layout, unique photography and colorations from a package done for Wal-Mart, in fact, has its own brand name they utilize--Dreamrest. We try to give each store a feeling of exclusivity." Looking to buy the King size futon mattress at Advisors
Both the Bio Clinic and Comfort sleeper lines are organized according to a three-tier "good, better, best" approach, with both labels staying within the same price point parameters. Also for both labels, all pads are offered ventilated or non-ventilated, in blush or pale yellow.
In pads, the high-end item is a four-zone ventilated number with a suggested retail of $19.99 to $24.99, twin size, Bloomingdale's recently included the four-zone pad in a newspaper insert and it did "phenomenally, said buyer Jodi Folino.
Bio Clinic has an even higher-ticket item, a 3-inch thick, three-zone pad retailing at $24.99 to $39.99, twin size. Down a notch, and representing the bulk of department store business, are three-zone ventilated pads, with retails from $16.99 to $19.99, twin size.
At the mid-price point, buyers can choose a dual-peak design with a suggested retail of $12.99 to $19.99, king size futon mattress. Finally, at the opening price point is a basic convoluted pad which can retail for $9.99 to $16.99, twin size futon mattress.
Pillows include ventilated or non-ventilated, all foam or foam-and-fiber, high peaks or low peaks. Prices range from $7.99 for a basic convoluted foam pillow to $19.99 for a three-zone, combination foam-and-fiber pillow.
In addition to combining a lot of different products under one roof, Comfort Clinic has also forged a cohesive team out of what were two sets of independent sales representatives. Now, 29 representatives sell all of the products, all across the country.
"Our customers and the marketplace were saying to us that if it meant better service, then they'd rather deal with us as one company." said Limon.
Merchants don't want two sales reps calling on them from the same corporation," added Spence. "What they would prefer you to do is make one sales call, take up less time and really focus in on what their needs are. If product has to come from the Comfort Sleeper line or the Bio Clinic line, we can provide that."
Comfort Clinic's long-term strategy is to continue to develop new products, which it will then offer under both labels. "What you'll see from us in the future are a lot of line extensions." said Spence. "That will be our growth strategy in terms of how to get placement on the shelves. More items and more products."
Another big challenge for Comfort Clinic is to raise consumer awareness of the benefits of foam. "We still believe that the category is underdeveloped," said Limon. "There's a segment of the consumer market that hasn't tried the products."
One way of educating consumers is with statistics. The company requested the UCLA Sleep Disorders Center to conduct a sleep study, the results of which will be on future packaging and in-store presentations.
"Sleep disturbances have a profound effect on sleep quality, frequently resulting in sleep deprivation," said Bruce Evans, director of marketing for Comfort Clinic's consumer division. "Such disturbances may be caused by an uncomfortable sleeping surface."
"We wanted objective measurements using the standards of the Sleep Disorders Center to determine the value of ventilated foam pads," added Limon.
The study "substantiates the product's performance," said Evans, nothing that "subjects experienced deeper, more restful, rejuvenating sleep on foam futon mattress pads with Comfort Flow ventilation."
Due to the success of the sleep study, Comfort Clinic came up with the idea of adding a 30-day satisfaction guarantee to its pads. "We're now confident of the better sleep that our ventilated pads deliver," said Evans, "so confident that we're offering a guaranteed comfort label incorporated right on the packaging for the customer."
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