Mexican mattress maker growing company from family roots
BY DOROTHY WHITCOMB
Having survived more than six decades of cyclical economic upheavals by adhering to conservative financial practices, Mexican mattress manufacturer Colchones Wendy is well-positioned, company executives believe, to take advantage of an improving economic climate. By consolidating manufacturing into one location, expanding sales territory and adding higher-end retailers to their account roster, they are confident that they have laid the foundation for double-digit growth in 2015.
Headquartered in Guadalajara, Mexico, the company was founded in 1952 by Manuel López Garmendia as a local producer of all-cotton, futon-like mattresses. In the 1970s, he changed the name from Colchonera Jalisciense to Colchones Wendy—after his 3-year-old daughter. Today, the business is headed by his son, Manuel López Castillejos, who has served as chief executive officer since 2001.
López Castillejos began working for the company as a teenager. At 16, he began accompanying his father to bedding markets to translate for him.
For almost a quarter of a century, Colchones Wendy enjoyed steady growth. “At that time in Mexico, anyone who produced a good product and priced it well would find a market, because so much was needed,” he says.
Economic roller coaster
Things began to change in 1976. “About every six years we had currency devaluation, high inflation and a slow economy,” López says. “We coped by taking an austere approach—avoiding both bank and supplier debt—and spending as little as possible. Sometimes we had to become more aggressive in pricing to adapt to the limited means of our customers.”
Even in good economic times, Mexican mattress manufacturers face a daunting challenge. “Half of Mexico’s population (about 122.3 million) lives in poverty or extreme poverty,” he says. “This is a long-term and large obstacle for every mattress manufacturer.”
The recent global recession brought other obstacles. “Furniture retailers and local distributors closed,” López says. “Giving credit became a risk and recovering sales, when they went bankrupt, difficult. You lose either way.”
|Privately owned manufacturer builds Wendy, Sleep Care and Serta brand products in Mexico for various customers. It also serves the hospitality industry.|
|1952 by Manuel López Garmendia|
There have been substantially more wins than losses for Colchones Wendy, however. Its success and longevity, he says, are anchored in the principles with which his father shaped the business 63 years ago.
“From the beginning, we think that we’ve always given value to our customers and to consumers,” López says.
The company’s 750 employees, some of whom have worked for Colchones Wendy for 30 to 40 years, also benefit from a culture that values honesty and long-term relationships. “Manuel’s father was a very humane person and always wanted his employees to be happy and to have a good life,” says Jose Miguel Torres, marketing manager. “Manuel’s management style is also humane. Although the business is focused on results, it’s also focused on communication and collaboration with retail partners and families.”
In addition to his father, López credits Larry Higgins with reinforcing the values that underpin Colchones Wendy to this day. Higgins began his tenure as president of the International Division of Leggett & Platt in 1983 and died in 2005. He is credited by former colleagues, including Tom Wells Jr., president of Leggett’s Machine Products Division, with building “the foundation of our international division through his deep personal relationships around the world and through licensing agreements of our patented bedding technology.”
To López, Higgins was a friend and mentor. “He told me that in every business there are barracudas and those who don’t have to act that way to succeed.”
The relationship between Colchones Wendy and Leggett also created one of the company’s key competitive advantages. “We have the exclusive on the Mira-Coil spring unit here,” López says. “It’s reliable, and we have almost no returns so distributors are confident about carrying our products.” Mira-Coil is a continuous coil spring technology manufactured only by Leggett & Platt.
López also believes his company’s vertically integrated structure is an advantage. All components, including springs, insulators and foam, are manufactured in Guadalajara at a 400,000-square-foot facility.
Foam is an important product for the company. López estimates that Colchones Wendy is the fourth-largest foam producer in Mexico, pouring foam for its own products and selling it to other manufacturers. Manufacturing facilities in Merida and Monterey, Mexico, were closed in the last two years to cut costs.
Mattresses comprise 95% of the 750,000 pieces that Colchones Wendy produces annually. About 20% of that comes from licensed Serta products. Bases make up the other 5% of the total.
López sees the partnership with Serta, signed 14 years ago, as his third competitive advantage. “It gave us a higher priced product and access to new retailers,” he says.
The company produces the Perfect Sleeper, iSeries and Sertapedic brands in Guadalajara and will begin making iComfort mattresses in Mexico this spring.
Perfect Sleeper mattresses are the company’s best-selling and fastest-growing Serta products. Full-size mattresses open in Mexico at $130 for several Sertapedic models and top off at $3,000 for the iComfort Vivacious model. The best-selling price point is $300. In Mexico, full-size mattresses are the standard.
“We thought that iComfort was too expensive to sell here, but we’ve been working with Dormimundo (a chain of 200 upscale mattress stores in Mexico) to educate high-end consumers that they deserve the best quality,” Torres says. “Only about 2% of the population is wealthy, but they buy a lot of product.”
Independent mattress stores and chains like Dormimundo have begun to emerge. Most mattresses, including those from Colchones Wendy, are sold through big box stores such as Costco, Sam’s Club and Walmart.
The company also sells to furniture-store chains and independent furniture retailers. It uses distributors, who sell mattresses door-to-door, to sell its promotionally priced product.
In addition to Serta, the company produces its namesake Wendy brand and a lower-priced Sleep Care brand. “Wendy is our oldest and biggest brand,” Torres says. “There are 300 models, because we sell product into many channels and at many price levels.”
Committed to springs
Innerspring mattresses make up about 95% of the Wendy-branded product. The balance comes from sales of various foam constructions. A hybrid model will be introduced soon. Torres says that these mattresses retail from $120 to $500, with the best-selling price point hovering around $130.
Two collections, Comfort Natural and Quiropedec, hold the most prominent positions in the brand. The Comfort Natural collection incorporates aloe vera, amethyst and bamboo in ticking, with prices from $200 to $500.
Colchones Wendy launched the Quiropedec collection last year to address a consumer preference for very firm mattresses. Prices range from $250 to $400.
Mexican consumers remain committed to innerspring mattresses—85% of beds sold there are innersprings—and have definite ideas about how those mattresses should look. “Mexican consumers want very firm mattresses and aesthetics with many highly contrasting colors,” Torres says.
The company’s Sleep Care brand includes promotionally priced product that ranges from $70 to $180. “We don’t want to cheapen the Wendy and Serta brands, so we sell Sleep Care only through Walmart and door-to-door distributors,” Torres says.
Colchones Wendy’s six sales managers and 30 sales representatives cover all of Mexico. An additional manager is responsible for sales to the hospitality industry, which constitutes about 7% of the company’s total annual sales.
The reps train their retail counterparts to help consumers understand what they are getting for the money they spend on a Colchones Wendy mattress. Retail sales associates also are invited to the plant to see the manufacturing process.
In addition, Colchones Wendy supports retailers with a co-op advertising program for print, radio and television.
The company builds relationships with its dealers by offering two-week trips to other countries as an incentive for meeting volume and floor-placement goals.
Although the company’s total annual sales for 2014 were flat, López expects to see sales soar by as much as 20% this year. He’s convinced that part of that jump will come from the impact in Mexico of an improving U.S. economy.
He believes, however, that his company also has positioned itself to take advantage of more vigorous economies on both sides of the border by expanding its base of higher-end retailers and positioning sales offices throughout the country. “There are parts of Mexico where we have a lot of room to grow, including in and around Mexico City, which is (the country’s) largest market,” he says.
López is concentrating on increasing his company’s market share and thinks that licensed Serta products will help him do that. “We think that we currently have 10% to 12% of the market and are probably the third- or fourth-largest producer in the country,” he says. “One of our main goals (for building market share) is to make Serta a really important national brand in Mexico.”