Navigating Uncharted Territory

Jerry Epperson

ISPA recently had the opportunity to talk with industry veteran Jerry Epperson, managing director of Mann, Armistead & Epperson, a Richmond, Virginia-based investment banking and research firm that specializes in the furnishings sector, about how inflation, inventory buildups and other economic factors are affecting the mattress manufacturing and retail sectors.


Since the High Point Market in early April, we have been watching as one of the most dramatic shifts has occurred in furniture and mattress sales at the wholesale/shipment level. Historically, the mattress industry has NOT been subject to the heavy to light inventory swings typical with retailers dealing in furniture. This has been because of the decades-old strategy among domestic mattress manufacturers that offered very rapid store delivery eliminating the need for American mattress retailers to carry deep inventories of the complex mix of the mattress industry. While a retailer might offer 24 to 36 units on its floor representing different brands, constructions, models, features and price points, the actual potential inventory was much larger because of the necessary mattress sizes — full, twin, queen, king and the many variations (extra-longs, California king, etc.). In fact, NOT having to carry inventories is one reason mattress retailers are historically so profitable. Other benefits of this model are minimal shrinkage, no losses on annual model changes, and less age damage.

The rapid increase in mattress imports since 2017 when offshore mattresses exploded in importance – 2016 mattress imports, $670 million; 2017, $1.010 billion; 2021, $1.331 billion after peaking at $1.478 billion in 2020 – created the first potential for container load inventory imbalances, but only for our largest retailers.

ISPA: Throughout much of 2020 and 2021, demand for mattresses and furniture was strong but supplies were chronically tight. As interest rates today rise, consumer spending appears to be slowing. U.S. GDP shrank by 1.4% during the first quarter of 2022, and ISPA’s wholesale mattress sales for the same period were also disappointing. What is happening at retail now?


The cause? Beginning in 2022, retail sales and traffic began to weaken for home furnishings, and it became well recognized by the early April High Point Market. Even so, most furniture retailers continued to struggle to find the correct mix of merchandise, with some begging for almost anything. Since the pandemic began, importers were fighting to get products made due to Covid-related worker difficulties, national shutdowns, container shortages and port/ship availability, and then problems in the U.S. ports, plus transport issues with both truck and rail challenges. And this was occurring with hard-to-fathom price increases at every step along the line: $4,000 shipping costs became $20,000+. In my opinion, these price charges, combined with Asian and North American port complications, may reduce the competitive attractiveness of Asian sourcing, something unthinkable in home furnishings over the last three decades.

Even with these issues, consumer demand soared during the March-April 2020 national shutdown and continued through 2021. The demand exceeded our ability to fulfill the need.

ISPA: How long do you expect this situation to last? Will it be “transitory” as the Fed liked to say about inflation a few months back, or do you expect it will persist?


If the surprising 1.4% decline in GDP in the first quarter is followed by what feels like a soft second quarter, we may already be in a recession by the historic definition.

With this near record level of inflation, every consumer is being robbed of spending power and just continuing to pay for necessities like energy, food and medicines is becoming more difficult for many if not most households. This is harming durables and postponable purchases obviously.

In my opinion, interest rates will be rising for at least the coming 18 months, fighting the ongoing inflation, and this will keep pressure on consumer spending. Other concerns that weigh on the current outlook include ongoing new Covid variants that create economic uncertainty around the world, the war in the Ukraine along with other tensions among nations, and logistical troubles that have appeared in the recent year that have made international commerce more complicated, less efficient, and much more expensive in both currency and time and overall less desirable.

In my opinion, the overall home furnishings industry has just enjoyed the Covid-created 18 months of solid retail business in which much of the demand could not be met because of labor and materials shortages and import complications. Now, I believe we face up to another year of consumer anxiety because of this unchecked inflation, port and transportation difficulties, ongoing worries about the war in the Ukraine, and other areas of uncertainty.

We are not aware of any pending governmental actions to address the current mess other than the Federal Reserve’s announced interest rate increases and some lip service from politicians.

Is another round of consumer spending incentives likely? We have not heard of any …. yet.

We are in uncharted economic territory.

ISPA: Mattresses and furniture traditionally are heavily advertised product categories. Can retailers advertise their way out of this oversupply situation? Or do you think their costs to carry the excess inventory will cause them to limit their TV and radio budgets?


Ideas about getting out of this confusing series of circumstances? I have a few observations:

  • A while back, I looked in Ad Age and it appeared consumer advertising through all combined media in 2021 had dropped by over a third from the dollar spend in 2019. Makes some sense. If consumers are buying briskly and inventories are low and slow, maybe some felt it was misleading to aggressively advertise. This is no longer the case! We need to spend to once again get the consumers’ attention.
  • Yes, we had solid demand for furniture and mattresses, but actual traffic never was back to good levels. Instead, those shopping knew what they needed and bought it giving furniture stores historically high close rates for about 18 months. To me, this says a lot of potential furnishings buyers are still around, but they may need some reminders from our ads.
  • Try to avoid expensive promotions near elections when media costs are higher.
  • Granted, TV is just one of our media choices, but home furnishings ads are getting harder to find! Want to sell your house directly to a buyer? Lots of ads now. Got a treatable disease? There are lots of ads for almost every illness, especially if you are old, fat and having trouble breathing. Sadly, the ads often list side effects that are more threatening than the medical problem. Need to sign up for retirement benefits? The ads are frequent, redundant and starring has-beens. I miss fun and uplifting soft drink ads, fun car ads and movie promotions, which may be limited today by Covid-19 concerns.
  • Please do NOT forget to put all your contact information in every ad! A large portion of our buying traffic is often newcomers to the community, young people who are new to buying furniture and, of course, first-time homeowners. I don’t care if your store name is 200 years old. Not everyone recognizes it, know what you sell and where you are!
  • Consumers do not know what you sell if you don’t promote it, show it in the media and on your website, and have your salespeople aware. Sophisticated massage chairs, adjustable beds, upholstered headboards and metal fashion beds shouldn’t be overlooked.
  • Don’t forget to promote your consumer financing options. Over 50% of large furniture and mattress purchases require some form of credit.
  • Inventory management IS cash management. Just like a farmer with lots of valuable acreage may be “land poor,” both a retailer and a manufacturer/vendor can be “inventory poor.” Got too much? Sell it, liquidate it, or whatever, to keep your focus on the good stuff! You can have too much of anything no matter how good a deal it was when you bought it.
  • Finally, be important to fewer vendors and not unimportant to many.

ISPA: Inflation has hit all sectors hard, including mattresses and interior furnishings. This is especially true for goods arriving from overseas, given that ocean freight is hitting historic highs. Ordinarily, retailers carry little or no mattress inventory, but they do hold relatively more upholstered furniture inventory. As consumer demand softens, what kinds of financial pressures are retailers facing as they sell down their high-priced furniture inventories? Will some retailers be distressed to the point that their furniture oversupply problems endanger their ability to distribute mattresses too?


Inflation is a curse for us all on almost every cost you face. Being cheap isn’t necessarily being efficient with your monies. This is a good time to shop for all your services. Look at benefits and see if they are what your employees want. People who are nearing or past retirement can be great and grateful part-time employees. Hire the handicapped. My firm does.

A knee-jerk reaction in our industry when consumer sales slow is to:

  • Drop retail prices;
  • Shave margins; and
  • Promote massive and unrealistic reduced prices.

Here is a tip: Furniture and mattresses have little to NO price credibility with American consumers. Since we promote “price! Price!! PRICE!!!” all the time, customers are unlikely to believe this sale is better than your last 26 sales.


  • Have a sale that focuses on one product or brand. Your vendor might help underwrite a promotion that helps them.
  • Always communicate your best sales or deals to your best and most frequent customers FIRST. Everyone wants to feel special and appreciated. More retailers are using texts and all the other social media. Be selective with your communications, not overbearing.
  • Offer to meet your best customers at the store if they need you. In some situations, go to the customer’s home (probably not applicable to mattresses).
  • Actively seek and reward first-time shoppers to your store. Have special savings coupons just for them.
  • Be empathetic and extra helpful to your employees. First, most have other options today, and second, they see these are challenging times, too.

ISPA: What advice can you offer mattress manufacturers and retailers to help them manage their businesses through this difficult period?


These will be trying months ahead and we may not all survive. Just last weekend one of our large furniture carriers threw in the towel, causing problems for customers around the upper Midwest. Communicate with your employees, vendors and customers. Make sure all know you are operating full time and welcoming everyone. Covid or no Covid, you and your business is there to serve your community. Don’t be a “Whatever happened to . . ..”

Be aware of your credit rating and to help your vendors, be certain they can purchase credit insurance if they are required to.

As Paul Broyhill told me 50 years ago: “The demand for home furnishings doesn’t change; it is the consumers’ ability to buy that changes.”

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