Batting the blahs out of basics

Michele SanFilippo, December 1, 2003

New York — With the price of cotton rising up to 20 percent, and the cost of down and polyester rising 25 to 30 percent, basics and sleep product manufacturers are stressing value and technological advances in better quality goods. If the products are merchandised on their merits, they reason, consumers will pay more for quality and innovation — and suppliers will better cover their escalating costs.

"The combination of manufacturers and retailers who figure out how to merchandise the product based on its merits will be the real winners in this category," said Leo Hollander, president of the American Down Association and chairman, ceo of Hollander Home Fashions. He added, "It's time for retailers to own up to the fact that prices have to go up now due to global factors out of anyone's control such as the dramatic decrease in the supply of down, cotton and polyester worldwide."

Hollander added that the demand for fowl has declined significantly in Europe, where fewer farmers are raising ducks and geese. In China, he sees the costs of down, polyester and cotton consistently going higher as Chinese demand for the materials increases domestically, thereby lowering the country's supply to the rest of the world.

"Price points will go up without question," said Bob Hickman, vp sales and marketing at United Feather & Down. "In one way or another prices have to get passed along or there won't be an industry left. The pipeline got empty and now it's time to deal with reality. People can't book future business on a loss."

He added that the industry is beginning to understand the importance of better constructions, better quality goods and more fashionable looks. "Retailers are beginning to appreciate vendors who can bring them unique product benefits, features and a service by helping them sell the products," he said.

The tide is starting to turn toward better quality, more fashionable products in basic bedding, according to Randy Spence, president of basic bedding at Springs. "All channels have recognized this category as important because it is profitable and an area that turns. When retailers are looking for balance sheet performance, they know this category can produce," he said.

Spence still sees an aversion to risk-taking, but said retailers are cautiously trying new things to diversify assortments and introduce unique items. As for price points, Spence hopes they've reached bottom. "Raw material increases have made it impossible to drop prices any lower. It becomes a very difficult balancing act for all of us to try to keep dropping prices and attract more consumers to make up the difference in volume when store traffic is down."

According to Dan Schecter, vp sales and marketing at Carpenter, more technology-driven products that actually do something to enhance comfort and reduce stress will be the market leaders for the foreseeable future. He said these products usually cost more, but sales continue to increase each quarter.

Schecter added that specialty stores are quickly embracing sleep products. "Sleep products give the retailer something they can speak about directly to the consumer with higher prices and quality transactions. Basic bedding drives consumers to the department, but sleep products drive profitability and differentiation if merchandised correctly," he explained.

Schecter believes retailers that do a good job of selling better sleep are realizing higher price points and more repeat sales. "As long as innovative products backed by true science are in a retailer's assortment, I think the retail community has not yet hit the ceiling in terms of price," he said, adding that merchandise is trading up in both the ready-to-wear and bedding worlds.

Perfect Fit's Allen Robinson, director of marketing, added, "One of the keys is to better distinguish their brand portfolio, avoiding the obvious price discrepancy of carrying brands that are distributed throughout all channels, including discounters."

Lonnie Scheps, vp sales and marketing at Hudson Industries, added that Bed Bath & Beyond and Linens 'n Things remain the headquarters for these types of products in consumers' minds. "However, the mail order businesses are probably doing the most interesting job of merchandising and explaining the products and their retail prices are aggressively high because they don't have a lot of competition," he said. Scheps feels catalogers are really coming on strong with their online booking engines that are seeing really good sales.

Robinson sees the fastest growing products as feather and fiber beds – items that have enjoyed popularity in Europe for years, but whose demand is rising in the U.S. due to awareness. He said he has also seen an increase in interest in some of the company's boxed sets, but they are still largely promotional due in part to shelf space constraints.

"Value has been the constant message that consumers are sending regarding basic bedding. They are willing to pay a bit more if the quality and value are there," said Beth Mack, svp-basic bedding at Hollander. "Better goods, quilted pillows, overfilled and gusseted products have continued to be the shinning stars in the pillow department. In the past, basic bedding took a back seat to other home areas. Now, due to strong sales, high turn and higher margins, management is realizing its importance in the retail landscape."

Pacific Coast Feather's Fritz Kruger, vp marketing, sees black and white results for retailers that concentrate on the category. "If you get behind the products in this category, they really take off because there's a latent demand for items that enhance sleep," said Kruger. "It's an uphill battle for all of us to recognize and consistently seek new ways of merchandising and promoting these products to really capture the public's attention. We need to champion product performance and make sleep more important."

Eileen Berner, director of sales at PrimaLoft echoed Kruger's sentiments. "We as an industry need to be doing a better job of educating consumers and retailers, because this is an overall problem," she said. "Consumers want to know what they're buying, what it's made of and why one product is better than another."

Retailers are still paying more attention to the basics side of bedding, according to Mike Pirkle, vp sales at Down Lite International. "It is still being considered white goods." He thinks that in a couple of years the industry will see a change in that dynamic. "Once customers realize that they can take a fashion look and integrate it with the utility side of bedding, we will see different buying patterns," he added.

Louisville Bedding Co.'s David Roshberg, national merchandise manager-bedding, said that the company has seen growth in the following categories: foam pillows and pads, and promotional bed pillows. He said that synthetic pillows in the moderate to upper moderate tiers have struggled, while foam pillows and pads and solution-type products (waterproof and Teflon) are getting a lot of attention from retailers. "Solution-type products, luxury and foam are standing out," said Roshberg, adding that boxes are hot as a packaging medium and that Louisville is getting more and more requests for sets.

According to many suppliers, including Latex Foam Products' Kevin Stein, director of marketing, Tempur-Pedic has really helped create foam acceptance as a superior sleep and higher-end product. "It's really becoming a well-accepted and appreciated product, and foam in general is getting more shelf space, attention and acceptance," said Stein, adding that there are more choices and buyers are looking for more return on their investment. Stein believes 2004 will offer even more in terms of technology and innovation in the area of foam. "You are seeing a rise in memory foam because it brings a unique and compelling story to consumers and represents higher margins and price points," he added.

David Fuchs, svp sales at Sleep Innovations, added that the mattress topper portion of the business has been garnering a lot of attention from retailers because it is fairly new and has recognized value from consumers. "We're starting to see an abundance of choices available at retail," said Fuchs.

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