BY DOROTHY WHITCOMB
Fueled by a passion for their products and propelled by a young, committed workforce, executives at Malouf are focused on managing the company’s dramatic growth, while laying the groundwork for planned future expansions. The award-winning, Logan, Utah-based company is building a new state-of-the art headquarters, adding warehouse space and rapidly hiring additional staff. They are doing all of this while challenging themselves to never lose sight of their core values and commitment to product individualization.
The company, which supplies premium bed linens, pillows and sleep accessories, was founded in 2003 by Sam and Kacie Malouf, who were newly wed at the time and looking for a path forward. Theirs is the classic American story of building a business from scratch in the garage. In their case, however, the garage was a two-bedroom apartment.
From shopping trip to growing business
He was in graduate school, while she was looking for something to take her mind off the frustrations of a post-college job search. A sheet-shopping expedition set the stage for founding the kind of business neither of them imagined possible at the time.
“We were appalled at the price of sheets and thought there had to be a better way,” Sam Malouf says. “We began by sourcing overstocks and overruns of European bed linens through a textile brokerage. We bought sheets at lower-than-wholesale prices and then resold them.”
Their timing was impeccable. High thread-count sheets were just becoming the rage, and, within six months, the pair began producing 600-thread-count, dobby-striped sheets in Egypt.
“We were making it up as we went along and all of the chips were on the table all of the time,” Malouf remembers.
Today, he is the chief executive officer of a company that has grown exponentially over the past four years, while Kacie Malouf, with five young children at home, has moved into a consulting role.
In 2011, Malouf still only had two employees. Today, it has 120 and is recruiting more. The company’s account roster has grown by 400% over that same period, fueling revenue growth of about 1,000%.
“A few things contributed to our dollar growth,” Malouf says. “We broadened and deepened our product mix and began selling more product to our existing customer base. We also began hiring help. About three years ago, we did our first tradeshow and have since expanded to a total of four permanent showrooms. Our Las Vegas showroom is said to be the busiest space in the entire market.”
Meeting challenges and making a difference
Rapid growth is, in fact, the biggest challenge the company faces. “We’re a young, inexperienced company with a different approach. We’re not industry veterans, but homebred, scrappy newcomers trying to make a difference,” Malouf says. “How do you go from 10 to 20 key accounts to hundreds? How do you service that many customers on a just-in-time basis? As we grow, things change, but how do you adapt to that effectively?”
Jake Neeley, director of marketing communications, believes that the youthfulness of the company’s workforce is an advantage. “We’re breaking the norm on the millennial worker,” he says. “The average age here is mid-20s, but people are self-motivated and work hard. We have a fresh mindset and it’s a huge advantage.”
“The great thing is that all of the challenges that we’re having—sustaining growth, developing great new products, expanding our distribution capacity—are the ones we want to have,” adds Mike Douglas, vice president of sales.
All three point to the company’s culture as a key component of Malouf’s business plan and the lynchpin that holds its rapidly growing team together.
“Our goal is to provide individualized sleep solutions to everybody. We’re not a one-size-fits-all kind of company,” Malouf says. “We want to make products for all income levels, material preferences and sleep preferences.”
Encouraging employees and philanthropy
The company’s culture, which also focuses on employees as individuals, grew organically from the way it was founded. It’s a culture that promotes “healthy living, great food, having fun and giving back to the community,” its website says.
“I have no experience being a business owner,” Malouf says. “This is it. A lot of things we do were born and bred out of being small, working closely with friends and then transitioning them into a larger company.”
Employees play on company teams and celebrate holidays and birthdays together. Because healthy food is important to everyone, a company chef prepares lunch for the Logan-based staff. “About 80 of us eat together every day,” Malouf says. “It brings people together on a social level and allows for communication and collaboration.”
Philanthropy also plays an important role in the culture. The company regularly donates products and employees to help raise funds for nonprofit organizations, including those that support abused and neglected children, children in foster care, men’s health issues, lung disease and the environment.
Creating Comfort Kits for breast cancer patients is the company’s most recent initiative. Launched by Neeley in 2014, the kits, which contain a Malouf pillow, socks, pajamas, a meal, lavender oil and a handwritten note of encouragement, were initially sent to 100 women.
In 2015, the company turned creating the kits into a community event where Malouf employees and community members worked together to create 1,500 kits, enough for every newly diagnosed breast cancer patient in Utah that year. The company’s goal for 2016 is expanding the program to other states by drawing on its network of furniture and mattress retailers.
Meeting all sleepers’ needs
What’s good for employees and the community, Sam Malouf believes, is also good for business. “Our culture is one of the most talked about and lucrative in the industry,” he says. “People knock on our door because they want to work here. From an efficiency and long-term productivity perspective, we don’t want to lose employees. There are benefits to be gained from mutual commitment.”
When Malouf opens its new headquarters in spring 2016, those benefits may shine even brighter.
The company manufactures its products in China, Egypt, France, Italy, India, Portugal and the United States. It currently offers bed linens, pillows, toppers, protectors, bed sets and frames. “Unit-wise, protectors are our best-sellers, but dollar-wise, sales are pretty evenly split across categories,” Malouf says.
Ten collections of sheets in 13 sizes and multiple colors range in price from $69 to $499 for a four-piece queen-size set. Fabric choices include Tencel, brushed microfiber, cotton percale, vintage wash French linen, Portuguese flannel, rayon from bamboo, Egyptian cotton and Italian cotton.
All cotton sheets are woven from extra long staple Egyptian cotton and available in thread counts ranging from 200 to 600. The Italian cotton collection is guaranteed for 10 years. Guarantees on other collections range from three to five years.
“Our fitted sheets have deep or really deep pockets with thick elastic, and flat sheets are oversized,” Douglas says. “All fit adjustable beds, split kings and split California kings.”
The extensive pillow line reflects the company’s commitment to meet each individual sleeper’s needs. A latex collection offers seven distinct constructions that range in price from $39 to $129. There are nine pillow constructions in the filled and down collection, which sell for $24 to $119.
A memory foam collection offers seven pillows ranging from $29 to $139, while a gel memory foam collection includes 11 distinct pillows priced from $34 to $159. A travel collection includes 12-inch by 16-inch pillows and neck rolls that echo the most popular constructions in the full-size collections. These range in price from $14 to $49.
Pregnancy and body pillows are Malouf’s newest offerings. This four-pillow collection sells for $39 to $119.
Malouf offers four varieties of latex and memory foam toppers. Prices for these range from $99 to $399. Comforters made from down-blend, down-alternative or down-alternative with a microfiber cover are also available and priced from $49 to $179.
Two bed-in-a-bag offerings, which include a comforter, two pillows and a sheet set, are priced from $99 to $199. Other products offered by Malouf include matelassé bed skirts, bed frames and frame accessories, bed bases and lavender aromatherapy spray.
Developing new products is an ongoing effort. “We have a research and development team that focuses on identifying product opportunities, factory expertise, formulations and pricing economies,” Malouf says. “They work closely with our teams in China and India. A natural direction for us is to get into more top-of-bed and fashion bedding.”
Malouf’s customer base includes independent sleep shops, small sleep chains and furniture stores. The company also sells direct to consumers on its website. “We have some big-box customers, but it’s not substantial,” Malouf says. “All in all, we have about 2,000 accounts.”
The company distributes its products throughout the United States and has made inroads into Canada and Mexico. Plans to expand Canadian sales, Malouf says, are in the works.
Private-label sales for retailers and mattress manufacturers, which currently are about 20% of total annual sales, are another segment he hopes to grow substantially.
Douglas heads the internal sales team, which includes seven sales managers. They, in turn, supervise 60 independent sales representatives. These reps play a key role in “educating our customers that there is a better way to sell and there really are products out there that fit their customers better than one-size-fits-all options,” he says.
The reps work consultatively with retailers to evaluate their customer base, mattress lineup and the effectiveness of their program. “We help them see how our products can be an important add-on that can produce as much profit as they earn on mattresses, while making the overall experience better for the end consumer,” Douglas says.
The company prides itself on creating point-of-purchase materials and displays that help customers select products that are right for them. “We are known as having the best packaging and display and merchandising ability in the industry,” Malouf says. “We have a team of six graphic artists who manage our display and packaging needs, and we’ve won three awards this year. It’s a high investment, but it’s worth it.”
A robust Facebook page and a sleek, easy-to-use website that reflects the company’s youthful energy currently form the core of outreach efforts. “We mostly connect with retailers at trade shows. We have hundreds of people in our showrooms at any one time,” Neeley says. “We took 34 people to the last Las Vegas Market and we were busy the entire time.” The company has permanent showrooms in Las Vegas; High Point, North Carolina; New York; and Tupelo, Mississippi. It also has temporary showrooms at the Orlando Furniture Market and the Minneapolis Furniture Market.
In order to reach millennials, Neeley plans to “double down on social media.” By reaching more deeply into that market, he is confident that within 10 years Malouf will have become a nationally recognized brand.
Douglas shares that confidence. “In five years, we’ll be on the national radar for end consumers,” he says. “In 10 years, we’ll be a nationally recognized brand and known for our charitable efforts.”
Amenities abound at Malouf’s new headquarters
Scheduled to open in spring 2016, Malouf’s new headquarters in Logan, Utah, is by any measure a stunning accomplishment. Its design and function speak not only to the dramatic growth the company has experienced over the past four years, but to the value-driven culture that company officials believe helped to foster that growth.
The 220,000-square-foot facility will consolidate all of the company’s administrative functions, which are currently spread through three buildings totaling 65,000 square feet. “The new building is constructed almost entirely of glass and designed to foster collaboration,” says Sam Malouf, chief executive officer. “It is the crescendo of our culture.”
Although all employees will have their own work area, the building’s open space floor plan means that 90% of them will not be in separate offices. Ten small offices and eight conference rooms are available when privacy is required.
Malouf has put its commitment to environmental stewardship front and center at its new headquarters. A 972-panel rooftop solar array will generate 314 kilowatts annually, enough power to meet about 80% of the company’s energy needs. Eight electric vehicle-charging stations also will be available to employees.
“Our team has fostered a culture of progressive thinking and cares about making a positive impact on the community,” Jake Neeley, director of marketing communications, says. “Using solar energy to power the building is the equivalent of offsetting annual greenhouse gas emissions by taking 67.7 cars off the road.”
Amenities abound at the new headquarters. The company chef will soon cook a daily lunch for all employees in a full commercial kitchen instead of making do, as he currently does, in a repurposed office. The dining room has walls of glass framing views of snowcapped mountains so that everyone can enjoy lunch together.
Other amenities include a training room with a 160-inch TV and a two-level gym that includes a full-size basketball court and locker rooms. In good weather, employees can take advantage of trails that run through the 30-acre campus or cast a line from the dock on a fish-stocked pond.
When the headquarters is completed, previous administrative buildings will be used for warehouses, supplementing the company’s current West Coast warehouse space in Tremonton, Utah. Warehouse and distribution facilities servicing the eastern United States are located in Lenoir, North Carolina. There Malouf operates three buildings that total 485,000 square feet.
“We have over 1.5 million square feet of warehouse space,” says, Mike Douglas, vice president of sales. “We make sure that we own it, control it and have everything ready to go so that we can have any product to the consumer in three days or less.”