To kick the year off, BedTimes published a list of 16 reasons that the mattress segment does better than other home furnishings categories, even in the roughest times.
That “sweet 16” was drawn from a report, “The Mattress Industry: Lessons for the Entire Furnishings Industry,” authored by Jerry Epperson, a founder and managing director of Mann, Armistead & Epperson, an investment banking and advisory firm in Richmond, Va.
But Epperson is no Pollyanna. While he’s generally bullish on the strength and future of the bedding industry, he notes that there are some worrying trends.
With the adage that to be forewarned is to be forearmed firmly in mind, this month we bring you Epperson’s (thankfully much shorter) list of potential problems for mattress manufacturers and their dealers.
1. During the past three decades, furniture stores have struggled, losing their market–leader position in a number of categories—appliances, consumer electronics and floor coverings.
“In our opinion, the rapid growth in bedding specialty stores threatens to do the same with the mattress category,” Epperson says. “Complicating this possibility is the growing importance of mattresses to the overall profitability of furniture stores. …Without a healthy, profitable mattress department, we believe more furniture stores could fail.”
2. While baby boomers have been a boon to mattress producers, they are aging. “By the end of this decade—when the first baby boomers pass age 65—we expect a slow, gradual decline in their spending on mattresses and other home furnishings,” he says.
3. Members of Generation Y are just now beginning to set up housekeeping and, like generations before them, will probably buy smaller starter homes. “As a result, we expect to see growth in the full–size mattress category resume over the next decade,” Epperson says. “Further, as Generation Y begins to have children, this may trigger growth in twin–size bedding, as well.” Manufacturers and retailers still will be selling beds, but may have to get used to the lower price points that accompany smaller sizes.
4. Thus far, the impact of imported mattresses in the United States has been minimal but, Epperson says, “The question remains, ‘Can they break into the highly successful retail model that now requires minimal inventories; fast, reliable deliveries of quality merchandise; recognized brand names; and exclusive merchandise for the retailer?’ ”
5. What’s next? The introduction and intense marketing of Tempur–Pedic memory foam and Select Comfort airbeds created interest among consumers, and traditional innerspring manufacturers built on that by adding such technologies to their lines. “As important as these new constructions have become, we believe that they are likewise vulnerable to new technologies and advanced marketing,” Epperson says.
6. In recent years, the mattress industry has experienced a new round of “roll–ups” of licensees by major bedding brands, often done with the help of private equity investors who can bring valuable management knowledge and capital to the industry, Epperson says. However, he adds, “if current trends continue, the mattress industry will have few entities that utilize regional licensees in the future. In addition, the role of family ownership will continue to diminish, and the industry will have more debt.”