Successful sales and a papal visit make for a memorable year
BY DOROTHY WHITCOMB
It’s been a banner year for mattress manufacturer and licensor Bedding Industries of America.
The North Brunswick, New Jersey-based company is preparing to celebrate the 150th anniversary of its flagship Eastman House brand, saw significant gains in sales for both its core business and its mattress licensing program, and moved closer to its goal of harnessing the power of the Internet to streamline its own operations and boost sales for its retail base.
|Company||Bedding Industries of America|
|Specialty||Manufacturing and licensing, direct sales|
|Founding||Started by Jerry Gershaw in 1957.|
|Ownership||Stuart Carlitz became 50% partner in Therapedic Sleep Products Inc. in 1995. He purchased BIA in 2001 and serves as chief executive officer.|
|Learn more||Bedding Indusries of America website|
And then there was Pope Francis. His visit in September to Philadelphia, hometown of Stuart Carlitz, chief executive officer, prompted the company to donate enough mattresses for the comfort of the Holy Father’s entire entourage. The result was a public relations bonanza.
A bright future ahead
Bedding Industries of America was founded by Jerry Gershaw in 1957. Gershaw developed the Therapedic brand at BIA and then spun it off into Therapedic International, a licensing group based in Princeton, New Jersey. Carlitz worked with Gershaw from 1984 to 1989. He then left Therapedic, but, in 1995, he returned as a partner. In 2001, Carlitz exercised an option to buy Gershaw out, becoming BIA’s sole owner. Gershaw, now 91, is in good health and remains a consultant.
Although Carlitz acknowledges that the course of BIA’s history has not always run smoothly, he believes that its future is very bright. “The company is stronger than ever,” he says. “It has withstood litigation and the Great Recession of 2008 and is now in a major growth stage.”
A number of factors have contributed to BIA’s current climb. The company’s roster of domestic and international licensees continues to grow, and sales in both arenas have been robust.
Sales have also been strong for brands that BIA sells directly, Carlitz says. He expects that the Eclipse line, the company’s fastest-growing segment, will post sales volume gains of about 20% this year over last.
Price points for everyone
The 105-year-old Eclipse brand, which includes three hybrid collections, ranges in price at retail from $399 to $1,999 for queen size. The three-model Perfection Rest collection features a five-zone innerspring system, while the four-model Conformatic collection features encased coils. Contour Care is a promotionally priced collection with a 416-Bonnell-coil innerspring system that is foam encased.
“We focus on all of our five patents,” says Matt Connolly, president of Eastman House and Eclipse International and executive vice president of BIA. “Spinal Zone (a patented feature of all Eclipse mattresses) truly does provide a support system that has been tested and documented,” he says. “That makes it easier for the retailer to show consumers something that they can understand and separate themselves from their competition.”
Prices for BIA’s venerable five number collection Eastman House start out at $799 for latex beds in both the Specialty and Eastman House Latex collections and top off at $4,999 for a one-sided hybrid with multiple comfort layers in the Traditions collection. Both the Heritage and English Hand Tufted collections have opening price points of $999. Two-sided hybrids in Heritage top out at $2,999, while one-side hybrids in English Hand Tufted, featuring latex, wool, silk and high-density memory foam, are $2,299.
With price points that start at $3,000 and finish at $10,000, Hemingway is BIA’s luxury line. It features “eight models of pocketed coil hybrids in (various) firmness choices,” Connolly says.
BIA manufactures its products in two facilities in North Brunswick that have a combined square footage of 116,000 square feet. Carlitz would like to expand existing manufacturing capacity of 1,200 pieces per shift and is looking for additional space.
The current facility produces about 300,000 pieces each year. A large part of that production services sales of Eclipse and Eastman House accounts, while the Therapedic and Hemingway brands continue to be an important part of the business focus.
Private-label manufacturing accounts for about 20% of production, but Carlitz projects that number will soon grow to 25%. Connolly thinks the number will grow even higher.
“Shopping brands drives down margins for retailers,” he says. “They need to have a brand that can’t be shopped.”
Saatva, the online mattress retailer, is a major contributor to the growth of BIA’s private-label sales. It is one of the New Jersey factory’s biggest customers, Carlitz says.
Carlitz designed and developed Saatva’s mattresses, all of which are manufactured in his factory or by his U.S. licensees and sub-licensees.
“We are their manufacturing partner,” he says. “All Saatva beds have our patented features, and I work closely with Saatva and all of our licensed partner factories.”
Growing business, supporting retailers
Carlitz is excited about the Saatva business and says the company’s current annual sales are healthy and growing. “The Internet has leveled the playing field. What used to be an ‘S’ brand-concentrated industry is changing rapidly, and Saatva is one of the companies leading the way.”
Furniture stores make up the majority of BIA’s 500 core accounts. The company also sells to sleep shop chains, big-box stores, hotels, universities and institutions.
The company makes every effort to help retailers boost sales. Its 10 sales reps “are out there all of the time interacting with retailers,” Connolly says. “You have to support the retailers. We do that with training and education. It’s easy for RSAs to take the path of least resistance and get stuck in the rut of price. They can forget the basics of qualifying the customer and showing them the difference among beds.”
BIA also supports retailers by collaborating with them on product development. The company has its own testing facility and places a premium on innovation, Connolly says.
“The dealers drive us to respond to their needs,” he says. “We’re always thinking about how to make that rectangle better and how to convey that to the retailer so that they can convey it to their customers.”
All about communication
Sometimes responding to retailers’ needs means taking a close look at your own operations. Mike Campbell, BIA’s vice president of operations, says that meeting the needs of retailers and licensees is “all about communication.”
Campbell, who was hired 15 years ago to “clean up our computer system,” introduced software to the company that tracks accounts payable and receivable, production and inventory.
By year’s end he expects to be able to track shipped pieces and generate invoices at the point of delivery. “We will also be able to track why a piece has been returned,” he says.
“Because of Mike’s work, we produce better and get the product to dealers correctly and more quickly,” Connolly says. “In a tough business climate, every sale counts for a retailer. Things have to happen really fast and technology makes that happen.”
Sharing technology with retailers
BIA plans to share its commitment to technology with its retailers. The company is reallocating marketing resources to digital media in order to “focus on helping our retailers get online,” Connolly says.
BIA has instituted a two-pronged approach to this effort. In addition to working with a company that will help retailers create their own Web programs, it is creating its own new website “that features our multiple brands and the dealers who sell those brands,” he adds. Google promotions in the retailers’ markets will be used to push business their way.
“The Internet will revolutionize our industry, and if we can leverage that we will expand far beyond our current level of growth,” Carlitz says.
Banner years not withstanding, Carlitz and Connolly understand that not all of their challenges are behind them. “The industry remains extremely competitive. Manufacturers are fighting to keep the factories at capacity. Many times the result is price drops from wholesale to retail. This remains our biggest challenge in brick-and-mortar stores. You can’t lose sight of your business plan and strategic direction,” Connolly says. “We want to take what has made us unique and continue to offer dealers products that will sell and make a higher margin for them. Nobody wins the price war.”
Roster of licensees continues to grow
Licensing, it could be said, is deeply imprinted upon Bedding Industries of America’s corporate DNA.
The company traces its history back to the founding of Therapedic by Jerry Gershaw in 1957. Gershaw quickly began licensing the brand, ultimately establishing a separate company, Therapedic International, and signing a licensing agreement with himself for the North Brunswick, New Jersey, facility that now houses BIA.
While BIA remains a Therapedic licensee, the company has charted its own vibrant course as licensor. Today, BIA, through its sister company Mattress Development Co., has 15 licensees, some of which are sub-licensees in the United States. Internationally, its reach is even longer. The company has licensing agreements with 40 factories that serve 55 countries.
The real news, however, is that the roster continues to grow. Stuart Carlitz, chief executive officer of BIA, expects to add two more U.S. companies and two more international companies to the list by year’s end.
“We are in a major growth phase right now. Nationally, 2014 sales from licensed factories producing our Eclipse and Eastman House brands were about $59 million,” he says. “In addition, the sales volume of (internationally licensed products) has grown by 20% annually for the last five years.”
BIA began international licensing with its Eclipse brand in 1999. Since then, it has created licensing programs for both its Eastman House and Hemingway brands.
Four years ago, demand for BIA licenses in Southeast Asia was so strong that the company created a new eponymous brand to meet the need. Called BIA, it is, Carlitz says, “a strong, mid-price point line without the Eclipse patented features, but (with the marketing) appeal of an American brand.”
The majority of BIA’s licensees are clustered in Asia and the Middle East. Carlitz is intent on expanding the company’s reach, however.
“In the last two years Eastman House opened up Central and South America and our next focus is Africa and Europe,” he says.
“International licensing was not in my business plan by design,” he says, “but the yearning of overseas markets for more American brands showed us the opportunity. Our brands have blossomed in the USA and overseas. Between the chiropractic tie-in and the history of the brands, we have had great success.”
BIA ‘honored’ to be part of Pope Francis’ visit
When Stuart Carlitz was contacted by the World Meeting of Families, the group that organized Pope Francis’ recent visit to the United States, about the possibility of providing mattresses for the Holy Father’s time in Philadelphia, he didn’t hesitate. “As a native Philadelphian, I really felt honored to be a part of this historic event,” says Carlitz, chief executive officer of Bedding Industries of America.
After inquiring about the pope’s comfort needs and preferences, Carlitz recommended the “relaxed firm” version of Saatva’s Loom & Leaf eco-luxury memory foam bed. BIA, which is based in North Brunswick, New Jersey, is the exclusive supplier for Saatva, an online mattress retailer headquartered in Westport, Connecticut.
In addition, BIA donated 30 of its own Eclipse Perfection Rest mattresses and 30 of its Eastman House Hospitality mattresses to the St. Charles Borromeo Seminary for the comfort of members of the pope’s entourage during their stay. The beds, Carlitz says, were then made a permanent gift to the seminary at the conclusion of the pope’s visit.
Carlitz, who admits to becoming “a little emotional” about his company’s role in the Holy Father’s visit, was truly stunned, he says, when he discovered that news of the donation had gone up in lights on Broadway in New York.
“I almost fell over when I saw the bed that I make on Times Square,” he says.
Two weeks later another pleasant papal surprise came Carlitz’s way. On Sept. 18, The Washington Post ran a front-page article titled “Sleep Pros Get the Pope’s Back.” The article described Carlitz as “the official mattress supplier for Pope Francis’s Philly sleepover” and detailed the donations that both BIA and Saatva had made.
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