Utility Bedding Steady; Braces for Consumer Reaction to Pricing

Jill Rowen, May 10, 2011

NEW YORK - Despite the problems of rising raw material prices (and rising everything else), retail sales in the utility bedding category held steady year to year. The utility bedding category ended 2010 at $1.995 billion dollars, up .08% from $1.980 billion in 2009.
     Now, everyone is holding their collective breath as goods with higher retails - and in many cases, lower specs - begin to hit store shelves.
     For vendors, the typical business buzz words of value, performance and specs are weighing more heavily on the industry.
     "We are constantly challenged to design and build products with the most ‘value,' said Chad Altbaier, vp sales and marketing, Downlite. "Although retailers have taken cost and price increases for fall 2011 and spring 2012, in many instances this is also being done in tandem with product and/or packaging changes in order to maintain costing.
     "Specification tweaks are conversations that we have regularly with our retail partners in attempt to maintain costing without degrading the product. The key is to offer the consumer a true solution at whatever price point is on the floor," he added.
     According to Altbaier, growth in its department store and catalog business remained primarily in the private label area, while brands continued to drive growth with wholesale club, box and off-price accounts.
     "The price increases have definitely caused us to re-examine our value proposition at each key price point," said Scott Maddalene, senior vp, sales, Berkshire Blanket, Inc. "We always have paid a lot of attention to marketing in the form of packaging and presentation at point of sale but that effort is being intensified as we explore new price points."
     According to the numbers, within the utility bedding category, pillows, blankets and throws showed small increases, while mattress pad sales continued to be flat. At retail, the direct to consumer sector made the most strides, up 5.6% from the previous year. These results point to the growing power of internet retailers as well as the trend toward choosing the online option even for the existing brick-and-mortar stores. Not surprisingly, discounters, off-prices and close-out stores marked small increases in a still difficult economy.
     In the pillow category particularly, the plethora of performance products bring a new level of challenge to vendors in developing product as they work to differentiate themselves.
     "The performance consumer will always pay a little more to get what they need; the price-sensitive consumer may be a little more cautious," said Steven Romero, vp, marketing, Sinomax. "We have had to look at how to re-spec product, especially in the opening price points: developing new foam with lower density, for instance, but delivering the same performance and quality."
     Romero noted that Simonax has been careful in keeping increases no higher than 10% to avoid giving consumers sticker shock.
     Dan Schecter, vp, sales and marketing, Carpenter, noted that performance and function continue to be the cornerstone of its approach.
     "Our value-add business was not impacted severely, and our high-end and value-add branded Sleep Better products sold and sold well. The mid-priced product struggled. Products that do ‘things' for people did well, i.e., IsoCool, Isotonic and Perfect Harmony," he said.
     At Hudson Industries, utility bedding is therapeutically influenced, "which I am happy to report has witnessed a nice resurgence in the last year and year to date," said Lonnie Scheps, svp. He added: "Branding, we believe, runs a distant second to performance and efficacy, and the customer is definitely voting that way."
     More and more are voting that way through online choices. According to Scheps " In our arena of therapeutics, the sector getting the most attention is, of course, the Internet as many, many consumers are researching their purchase prior to shopping at the brickand- mortar location. And if they are pleased, they may even see it and then go back to their PC to click away."
     In addition, the Internet is becoming a great motivator.
     "Seeing other consumer comments, comparing prices, comparing shipping charges comparing products and attributes - all these advantages and total transparency make the ‘net' nothing less than enormously influential in many buying decisions," said Scheps.
     Whether in-store or online, vendors all await the reactions of consumers as they see rising retail prices. They are also working on getting their marketing message out more forcefully to capture that consumer.
     "I think the days of a consumer buying on impulse will be gone for a while," noted Joe Mauer, vp sales, M & Z Marketing. According to Mauer, "pillows with a purpose" - everything from helping with sleep apnea, snoring and back pain - is key to finding consumers in untapped markets.
     "Our goal is always to create value in our product, but to also speak plainly on our packaging and as graphically as possible," noted Chris Ernst, vp, Sleep Studio. "We are really making an effort to tell consumers not only what we are doing, but also telling them clearly why it can help them."
     "Consumer reaction to hikes when they see them everywhere tends to reduce their negative influence. Like gas at the pumps, we still will pay the going price, but perhaps do more comparing and sometimes maybe drive less or buy somewhat less. We are still finding the jury out on this issue," said Scheps.
     "Just like you and me they are buying what they need and only when they need it. The biggest change I see is that the consumer is not augmenting their incomes with credit so a major purchase is just that, said Schecter.
     "Marketing is very important but more important that catchy words and colorful packaging is meeting and exceeding consumer expectation. If they buy something that disappoints it goes right back to the store," he added. "We have to make products that do what they say they will do. If not - not only do you lose a sale but you lose a customer."

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