prompted bedding manufacturers to reevaluate their plans for 1988.
The recent instability in the stock market, compounded by concern over interest rates and deficits, prompted bedding and futon mattress manufacturers to reevaluate their plans for 1988.
But for the most part, bedding executives have determined that the year ahead still holds opportunities for their industry, even if the economy slows. They say they are convinced upscale consumers, the prime customers for high-margin premium and ultra-premium lines, are settling down and spending more money on home furnishings, including bedding and futon mattress. They also contend that bedding is somewhat recession-proof because futon beds are necessary products, not luxuries.
Their challenge is to encourage a greater number of consumers to step up to better-quality products that are more profitable to bedding companies. Growth strategies abound, but all emphasize service to bedding retailers.
Most agree that the best way to help retailers is to transfer the quality bedding story to consumers. They assert that consumers who are aware of the benefits of top-end bedding will avoid low-margin discount lines and opt for the comfort and luxury found at the top of the bedding market.
Roy Unger, President, Serta
"Initially, I was looking for a big year again for the industry in 1988 and an even better year for our company. The stock market crash has caused me to think it through again. I continue to feel we're not going to have a recession in 1988. And 1988 will continue the growth of the bedding industry. We at Serta anticipate once again increasing our market share.
"I think it's a mistake both for retailers and manufacturers to focus on starting prices of premium bedding. I think the important focus is at the price points that consumers really want--the top end.
"The industry is going to continue with competitive pressures. At Serta, we've got to work harder and be smarter. What was good enough two or three years ago is no longer good enough.'
William Brey, President, Restonic
"We're in a pretty uncertain economic environment right now. We're proceeding on the assumption that people will still want to sleep on futon mattress beds, and they are a necessary product no matter what the environment. Of course, if the environment is a good one and the economy is strong, you're going to sell more products than if they aren't.
"We have a budget that calls for us to have 12 percent increases for the next five years. This year, we didn't do that, we were closer to 20 percent. And next year our objective is 12 and we'll beat that by whatever degree we can. Anything the industry does we're going to exceed.
"It is our golden anniversary year--1988. So we have some big programs and plans on the board that we're going to unleash. We can't postpone our 50th anniversary until 1989 in the hopes that the economy is better. We're going to swing away under the assumption that 1988 is going to be a good year.
"A key plank of our strategy is to move into the large national and regional markets. We've made significant inroads this year. And we haven't even scratched the surface. We are not leaving the small furniture stores by any means. They have been the basis of our existence for 30 years.'
Steven Kneeland, President, Ohio Sealy
"I'm not sure what the economy will be. I think the bedding business will still be good. I think Sealy will increase sales about eight to 10 percent.
"The unification of Sealy puts us into a better position than we've ever had. We're expecting big things. We'll be more aggressive in our marketplace. I think our service and deliveries will improve due to the unification.
"Our premium line, our PostureLux, will get more important. I think our new line addresses margins because I think we've upgraded and made a more saleable line. But the retailers set margins, we don't. We have enough lines and SKUs that our dealers are protected.
"I think 1988 is going to be an interesting year, a year when the smart people and the smart merchants can make great strides in market share, and the ones that aren't that smart and who don't take good care of their businesses stand to lose. We have all our organizational strength behind us. We couldn't be positioned better for 1988.'
Rick Rossiter, Vice president of sales and marketing, Stearns and Foster
"I haven't any idea at all of the year ahead. We had planned for a modest increase for next year when we did our budgeting and our forecasting.
"With what's going on in the stock market, I have no idea of what the economy is going to be next year. But I would say we are watching cautiously.'
Don Pellegrini, President, Spring Air,
"We're guardedly optimistic, really. We think that our performance in 1988 will be a tad higher than the industry. I'm looking for something between a 6 and 8 percent increase in dollars and a 4 to 5 percent increase in units.
"(The stock market slide) is going to have some effect. Hopefully, it will be of short duration. Escalating interest rates are another negative. Our projections are tailored to include these happenings. Of course, if there is an amelioration of the situation, we think you can add two points to both dollar and unit sales--which was where we thought we would be before this thing happened.
"Ultra-premium bedding sales will continue to remain brisk. Largely, that segment of the business will be the driving force to increases. However, the areas directly below--what we would classify as premium sales--will also strengthen. As a company, we are directing our attention into those medium ranges as well as into the upper ranges.'
Ray Babitt, Director of retail sales and marketing, Bassett
"Our focus for 1988: to be the quality bedding source on a selective distribution basis so furniture retailers who carry our line won't have to be concerned about embarrassment when they quote a price.”
"If all things remain equal, we're looking for an 8 to 10 percent increase in sales as a minimum figure. We're looking for growth as high as 12 to 15 percent because we're expanding our marketing with the home furnishings retailers. But it's very difficult to determine what's going to happen to our economy with the stock market and interest rates.”
Robert Magnusson, President, Simmons
"Until the market took a nose dive, we were extremely optimistic about 1988. It doesn't necessarily follow that there will be a substantial downturn. I just don't think there will be the improvement we anticipated. The basic economy is strong. If the president and Congress can come together with some kind of agreement that makes sense to the consumer, I think that 1988 can still be an outstanding year, even better than 1987.”
"I think 1988 for Simmons is going to be a continuation of the strategy that we have been following for the last several years. We're attempting to become more important to our existing customer base. Anytime you have a strong branded line of merchandise that is distributed very broadly, severe price competition between retailers creates lower margins. So the cornerstone of our strategy is for growing with existing dealers instead of broadening distribution.
"The major challenge for us is to get our new plants up and operating profitably. We've added this year two new plants, one in Phoenix and the other in Fredericksburg, Va. We're beginning construction on a third new plant in Springfield, Mass., and we'll be relocating a plant in Columbus, Ohio.'
Eric Hinshaw, President, Kingsdown
"I think 1988 is going to be an extremely difficult year as far as the general economy is concerned. I am considerably more optimistic as it relates to the bedding industry.
I think BMW and large house sales will be hurting considerably. Some upscale consumers are going to settle down after the frenzy of the '80s to a more financially conservative mode in the '90s.
"Part of that financial conservatism is going to include buying essential items, such as basic items of home furnishings, including bedding.
"We want to work on better getting our quality story to the consumers, both with point of purchase and with advertising. We've done a better job with our point of purchase than with our advertising.
"The challenge is going to be convincing consumers when they are ready to buy a bed that they need to spend the extra couple or three hundred dollars to buy the quality they need.'
Joel Burke, Director of marketing, Therapedic
"We're looking for continued growth in 1988. I think the push is going to be toward premium bedding--a category that started this year, basically. People got away from 50-percent off sales, 60-percent off sales. Retailers are starting to sell product based on quality, and I think that's going to continue.
"We've got to get a bigger share of the bedding market, that's been our major challenge all along. We have to go head to head with the big guys, which we have done before.
"The industry challenge is to improve the perception of the bedding industry in the consumer's mind. It's beginning to be done through promoting quality of product. Prices are going to go up, no doubt about it. It's going to get more expensive to buy a good set of bedding.
"But it all hinges on Sealy. In this business, everything revolves around what Sealy does. Now that the infighting in Sealy is over and they can get back to the business of making money, all the rest of us can, too.'
Paul Sullivan, National sales manager, King Koil
"I suspect 1988 is going to be a very good year for King Koil. I would like to think we are going to be ahead of the industry average.”
"Our challenge is coming up with strong promotions and sales-oriented events to help retailers sell merchandise. I think we have a tendency on the manufacturing side to think that when we fill the retailer's warehouse, we've done our job. That's not true. Our job is to empty that warehouse.”
"Right now, all manufacturers are being hit with increased costs and price increases on components. That's going to have to be taken back into price points across the board. I think that 1988 is going to bring some price increases from all manufacturers. I don't think you'll see discounting as deep on premium goods, either.'
Daryl Tarbutton, President, Bemco
"I think in the home furnishings industry, the greatest opportunity and challenge for 1988 will be how to effectively obtain more of consumers' disposable income. One of our primary goals is to establish Bemco as a manufacturer, and our retailers as leading marketers within the furniture industry.
"Doing this makes our dealers more successful. We, in turn, can compete more successfully. We've implemented over the last two years a total marketing system to maximize dealers' bedding profitability. We take a national theme and develop a professional system of materials and incentives to help the dealer sell top-end bedding.”
"In conjunction with the total marketing system, we implemented a customer-design marketing program tailored to the individual dealer, as in a sleep week or a truckload sale.”
"So our total priority is our retail dealer. We're dedicated to improve the value of our products and programs to help the retailer achieve a greater percentage of consumer disposable income.”
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