BY JULIE A. PALM
International Sleep Products Association’s industrywide statistical products help bedding manufacturers make projections, track trends and evaluate performance.
You can’t run your mattress company without knowing the numbers—how many units you’re producing each shift, what the newest cutting machine is going to run you, how much your costs for employee health insurance will rise next year.
You use numbers to see where your company has been, where it is and where it might go. Your own results, combined with projections from your retailers and your company’s past experiences, can tell you a lot, but you need industrywide data for comparison and context.
Throughout the year, the International Sleep Products Association provides an array of statistical products that enable mattress manufacturers like you to track the bedding industry’s overall performance, compare themselves to industry averages, project industry trends and shape production, employment, sales and marketing strategies going forward.
“I think every company in the industry is faced with a number of strategic decisions they have to make about what products they are going to manufacture or not manufacture, how they are going to market their products, etc.,” says Ken Morgan, a member of the ISPA Statistics Committee and director of consumer insights for Atlanta-based Serta Simmons Bedding LLC. “Without good statistics, you can’t evaluate strategic options. It’s an important thing ISPA provides to the industry—statistics that ground decision-makers in reality. Without that information, it’s reduced to a guessing game.”
ISPA’s statistics program is such a valuable part of its service to the industry, it is one of the five planks of a strategic plan adopted by ISPA’s membership in 2016. Goal 1 of the plan is “Data and Knowledge: ISPA will provide the intelligence essential to industry success.”
“ISPA statistics are the only place mattress manufacturers can go to benchmark how they are doing against their competitors,” says Leigh Salyer, chair of the Statistics Committee and group vice president of bedding components for Carthage, Missouri-based Leggett & Platt Inc. “Where else are you going to get detailed, industrywide information about things like average unit price and adjustable base sales? ISPA provides a wealth of information that I hope manufacturers are using to make business decisions. No one else compiles anything to this extent.”
The association’s statistics program is shepherded by the 12-member Statistics Committee, which also serves as the ISPA Forecast Panel. The committee itself is a diverse group, representing a cross-section of the industry—large, medium and small mattress manufacturers; suppliers; and analysts. Its work is aided by outside research and analysis firms, which process data, provide guidance and produce reports. These firms, all on retainer, work closely with ISPA and have had long relationships with the association. They include Ambler Consulting in Bloomington, Indiana; Association Research Inc. in Gaithersburg, Maryland; and Industry Insights Inc. in Dublin, Ohio.
“One of the Statistics Committee’s main roles is to ensure our statistics are as accurate and complete as they can possibly be and to make sure we’re keeping up with what the industry needs and wants in terms of the statistics that are useful in running their companies,” Morgan says.
To Morgan’s point: ISPA’s statistical reports aren’t static. To provide the best year-over-year comparisons, ISPA strives to maintain a certain consistency within each report in terms of methodologies and data measured, but changes regularly are made to enhance the quality and accuracy of the information.
For instance, John Davis, a member of the Statistics Committee and vice president of finance for Tempur Sealy International Inc., which has headquarters in Lexington, Kentucky, notes that several years ago, ISPA observed a rise in the adjustable base category. In response, ISPA began collecting that segment’s sales and is continuing to refine it further with the addition in 2017 of import data for adjustables.
More recently, ISPA persuaded the federal government to change how it collects import/export data for mattresses—numbers that in the past were distorted because they included large quantities of beds made for pets. Beginning with 2016, ISPA now can report imports and exports for “human-size” mattresses only. ISPA also has helped establish a new import/export category for adjustable foundations that will enable it to report more accurate data for that product category in next year’s annual report.
Much of the industry-specific data used in reports comes from surveys submitted by companies themselves that is then aggregated by the outside firms on retainer and then returned to the Statistics Committee for review.
“The committee is responsible for looking at the industry aggregate data, questioning that data and making sure the consultants have done an adequate job vetting the information. We may notice that something this year doesn’t jive with something reported last year. Occasionally, we have to make corrections,” Salyer says.
Davis explains it this way: “First, we evaluate the data in terms of trends. We provide the insights behind the raw numbers. A second thing that has been taking up quite a bit of our time over recent years has been looking at what is going on with the industry and the transitions we’re undergoing and asking, ‘Are we properly capturing data related to those transitions?’ ”
Challenges of looking ahead
One of the most complex jobs of the Statistics Committee is preparing an industry forecast, which typically is released twice a year.
Here’s how the process works: It starts with an econometric model that links the mattress industry with the larger home furnishings market and the national economy based on data such as housing starts, consumer confidence and unemployment rates. That model then generates a baseline industry forecast based on the current outlook for the national economy, which comes from the University of Michigan.
Jerry Epperson, a member of the Statistics Committee and a founder of Mann, Armistead & Epperson Ltd., an investment banking and research firm based in Richmond, Virginia, says the University of Michigan model, also known simply as “The Michigan Model,” is well-suited to mattress forecasting.
“It was created for consumer durables, so it’s good for the mattress industry and it’s been consistent overall,” Epperson says. “Every three or four years, we go out to see if we can find a better model and come back to them for their credibility. They’ve been doing it for decades, not just for us but for other leading consumer organizations.”
That information is given separately to each committee member, who evaluates it and then submits his or her own forecast for key national and industry economic indicators for the current and coming year.
“Using our own knowledge of the business and what’s going on in the industry, we individually and anonymously submit our best estimates,” Salyer says. “Association Research tabulates those estimates for us, then we get together to create a consensus on the forecast.”
As they form that consensus, “we have a lot of discussion around bedding and bring insights we might have about why we think a certain number should be higher or lower,” Davis says. “I think we’ve gotten to the point where we can be fairly accurate for the current year forecast, in particular.”
The quest for flawless figures
No forecast is 100% accurate and no statistical data are without their flaws, but ISPA strives to present the most precise, comprehensive information it can.
Epperson, who has worked on ISPA statistics for nearly four decades, says a number of factors add to the validity of ISPA statistics, including the timeliness of the information (“though everyone always wants numbers immediately”) and sample sizes.
“We’ve got good cooperation among participating companies—all the majors and a significant number of second-tier and smaller players,” Epperson says. “These are probably as good of numbers as we’ve ever had. The furniture guys would love to have statistics like these (available to them.)”
And Morgan reminds ISPA member companies that one way to continue to maintain the integrity of industry statistics is to participate in surveys—and be willing to join the Statistics Committee if asked.
“If you’re using the information and find it valuable, we want your input,” he says. “The more participation we get, the better our numbers are.”
Makers shipped more than 41 million units in 2016
The mattress industry continued a pattern of healthy growth in 2016, posting gains in three key measurements, according to the ISPA Mattress Industry Trends Report released in June by the International Sleep Products Association.
U.S. mattress manufacturers shipped more than 41 million mattress and foundation units in 2016, an increase of 3.1% over 2015—and the seventh consecutive yearly increase in units shipped since 2010.
The value of those shipments increased 3.4%, also marking the seventh consecutive yearly increase. The value of shipments in 2016 is the industry’s highest value recorded to date, the report says. Unit shipments in 2016 set a new post-Great Recession high but still are 5.8% below the 2005 level, the industry’s highest point for units shipped historically.
In 2016, the average unit price increased 0.3% when compared with 2015. Regionally, the largest gains in AUP, at 2.4% each, were in the North Central and West regions, according to the report.
When to expect the numbers
Here’s a summary of the statistical reports available from the International Sleep Products Association and a release schedule for each:
This sales trend report focuses on total U.S. mattress and foundation sales, wholesale dollar values of those units and average unit prices. Based on self-reports from 12 mattress manufacturers, representing 76.3% of wholesale mattress dollars and 65.5% of units shipped. Published following the end of each fiscal quarter.
Mattress Industry Trends Report
More commonly referred to as the Annual Report, this tallies yearly results for U.S. mattress and foundation sales, wholesale dollar values, AUPs, mattress imports, adjustable base sales and more. Also includes a picture of the overall U.S. economy; commentary by Jerry Epperson of Richmond, Virginia-based firm Mann, Armistead & Epperson Ltd.; and a summary of the CSIL World Mattress Industry Report. Released annually. Most recent report: June 2017. (See story on page 21.)
Mattress Industry Forecast
A consensus forecast projecting unit shipments, wholesale dollar values and AUPs. Also includes an outlook for the overall U.S. economy. Published twice a year unless market conditions necessitate an update. Most recent report: June 2017. (See related story on page 23.)
Mattress Industry Annual Cost Survey for All Member Producers
Typically referred to as the Cost Survey, this report focuses on mattress manufacturers’ operating costs and financial results. Published annually. Most recent report: June 2017.
More commonly called the Wage Survey, this report includes information about employee salaries and benefits packages. Published biennially. Next report to be published in spring 2018. (More about the cost and wage surveys)
These products are available online and most are free to ISPA members. Questions? Contact Jane Oseth, ISPA member services manager, at 703-683-8371 or [email protected]
Mattress sales to continue gains in 2017, 2018
U.S. mattress sales are expected to grow a bit more robustly in 2017 and 2018 than they did in 2016—itself a rather solid year, according to the latest ISPA Mattress Industry Forecast.
Released in June, the forecast for 2017 from the International Sleep Products Association calls for a 3.5% increase in the number of mattresses and foundations shipped and a 4.5% gain in the wholesale dollar value of those units when compared with 2016 numbers. The average unit price is expected to grow by 1%.
In 2018, ISPA forecasts a 4% gain in the number of units shipped and a 5.5% increase in the value of those shipments. Notably, the forecasted units to be shipped in 2018 would exceed 2005 levels, the highest number of units shipped historically. The AUP is expected to rise 1.5% that year.
Fueling the expected growth in the U.S. mattress industry are gains in real disposable income, a continued recovery in the housing sector and an increased demand for furniture, according to the report.