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Monthly Issue

From Home Furnishing Business

Why Mattresses Matter

 

Mattresses remain a key profit center for home furnishings retailers.

By Bob George

The bedding category, the focus of this month’s issue of Home Furnishings Business, must be important since we normally do not devote a total issue to a single product category.

Yes, indeed. Mattresses represents on average 17.3 percent of sales for retailers with between $5 million and $25 million in sales revenue and 23.9 percent for retailers with $100 million or more in sales revenue. There are significant variances with some of the smaller retailers eliminating the category while others are reaching 25 percent or more.

The additional revenue is an obvious reason we emphasize the category. However, from a strategic perspective, a more important reason is the vulnerability if that revenue is lost. Simply put, the category is an easy product to sell. It requires limited space, is easy to deliver, and has manufacturer-supported returns. Mattresses also have relatively good margins—47 percent to 52 percent depending on the size of the retailer. More importantly, however, is that it is a profitable business. Challenge your accounting team to develop a pro forma on your bedding category. I am confident you will be pleased with what you find.

So what is the point? The point is that you, the retailer, may not realize what you have until you lose it. There are more than 4,700 freestanding bedding stores in the United States. Obviously this includes the giants like Mattress Firm that has grown more than 60 percent in the past year. But it is also made up of smaller two- and three-store businesses that hope to get the attention of the acquirers. However, until that happens, this group is content to continue in a good-return business model.

Bedding is an easy product to sell. It requires limited space, is easy to deliver, and has manufacturer-supported returns. Mattresses also have relatively good margins. 

What does this mean to the traditional independent furniture retailer?

In larger markets the proliferation of Sleepy’s or Mattress Firm stores has become a common occurrence. In smaller markets the surge is coming. This surge, however, is not so much with the major players. Rather, it is with the small two- or three-store entities.

Now ask your accounting team for the impact of losing 30 percent to 50 percent of your bedding business. These results will not be pleasing. You will see your vulnerability.

So what to do? The answer—do it yourself. Many traditional retailers are finding success with freestanding sleep stores – branded with their names.

Based on our research, there is a consumer segment of plus or minus 30 percent that has a preference for this retail model. Why? The consumer sees such freestanding mattress stores as places with fast service, knowledgeable sales associates, and a wide product selection.

Remember, sometimes the best defense is a well-executed offense.

 

 


 




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