Publisher's Letter: Siblings or Distant Cousins?

June 2, 2014  by in Business Strategy, Industry   

Furniture and bedding are both members of the family of home furnishings, but the categories are as different as that second cousin you recently met at the family reunion—not different “weird”, but different “interesting.” If we start at the manufacturing sector, we find bedding companies focused on marketing. That doesn’t mean just the perfunctory catalogs, but also marketing messages aimed at establishing the brand’s unique selling proposition. Before the recent explosion of the new materials that launched the premium bedding sector with price points unheard of prior, there was always the bedding technology with pocketed coils and other innovations from the three “S companies” and others. In comparison, the furniture sector often lacks an emphasis on marketing, speaking not to its consumer, but to its partner, the retailer in the distribution channel. Focusing on magic price points rather than product innovation often leads to a continued reduction in quality, features and other key components of product promotion. For decades we have concentrated on $399 to $499 sofas while other industries, like the automotive sector, have focused on innovation. As a result, the car industry has quadrupled its basic price points. In 1964, my new Mustang was $5,000. Today, I could not buy the equivalent of that car for five times that amount. Not only is innovation important; so is the selling and marketing of the innovation—first to the retailer and then to the consumer. Back to the automotive industry as a case in point—did we really need power windows? 

There are flashes of progress; take as an example power in motion furniture. However, this requires that manufacturers and retailers work together as partners. It is a no-brainer to floor all motion slots as powered. We know consumers buy what they see. After trying that nifty power button, all but the most frugal of consumers will opt for the $100 upgrade. Yet manufacturers and retailers must make it happen by putting electricity to the display, flooring a more expensive product, and follow up by training the sales associate on the product’s features and benefits. The results? An increased average ticket. The question becomes, “What is the bottom line for retailers?” Bedding, as a percentage of total sales, can range from 2 percent to 20 percent. What makes the difference? 

It is the emphasis placed on the product category. Treating bedding as a separate business with its own advertising budget, merchandise strategy, and product training can produce results. And it should not be forgotten that an important ingredient is the bedding manufacturer who aggressively supports the effort. Furniture manufacturers should take note that for every $1 invested in marketing there is a return of $20 to $25 in sales. To net better results, perhaps we should emulate our distant cousins rather than merely saying that we are different. Siblings or Distant Cousins?