Q&A: Succeeding In A Changing Economy
Nothing lasts forever—and for the mattress industry, that includes record-breaking consumer spending. While the mattress and home furnishings categories saw unprecedented demand throughout the height of the pandemic, new metrics indicate that sky-high levels of spending are starting to cool. Many mattress retailers are now tasked with re-evaluating their strategies as consumers shift their buying habits to accommodate more outside-the-home expenses and services.
What can retailers do to protect their margins and re-engage consumers?
President & CEO | Bedding Industries of America
In order to keep customers engaged and margins high, retailers will need to return to basics more creatively, focus on omni-channel marketing and add healthier, sustainable mattress choices to their floors for the next 12 to 18 months. That is why BIA is offering more all-natural products and stressing the importance of sustainability. If the consumer doesn’t have to pay more and can buy a product that is constructed of natural, healthier materials, that is fast becoming their preference. When I say getting back to basics, we’re going to be a holiday- and event-driven industry again. You need to embrace the internet as a major form of advertising; if not, you’re doing yourself a disservice. Today, if a consumer is looking for a mattress, they’re picking up their cellphone, going to Google and are going to be drawn to the closest retailer. The world now shops online. Having a strong website presence is essential, as well as the message you tell on your website. Social media is also a requirement today. These are the things that retailers are doing to make sure to attract consumers to their stores. They must fight for every foot in the door right now. Moderate and luxury products will also continue to sell well. The shoppers interested in these products are not as affected by the current economic decline, so retailers need to put more higher-end items on their floor. With new advancements and updated collections, we’re able to capture an interest of both the regional brick-and-mortar retailers and internet players.
CEO | King Koil
The historic issue at retail has always been making sure the floor had the right assortment of product to meet the needs of the store’s customer base, while also making sure there was ample margin opportunity on that floor as well. One of the strategies we embarked on several years ago was a focus on luxury because we saw a spiraling of margin at the low-end of the business. We didn’t want to compete at that level. So, while I would never tell a retailer what they must do—they know their market and customers better than me—I would certainly encourage them to follow the trend of consumers spending more for a better night’s sleep and put more luxury models on their floors. This will increase AUSP for them and satisfy the customer’s desire to spend more to get more. Likewise, in product development, we’re focusing on issues like sustainability, which consumers are demonstrating is important to them. Like incorporating the use of technology, sustainability provides retailers with new messages to tout that will set them apart in their markets. This is always important, but absolutely vital now, because engaging consumers when pent-up demand dissipates means that everyone has to step up their advertising and outreach. We need to give consumers new and distinct reasons to purchase beyond price, and people who don’t focus on that will likely lose market share to those that do.
President & CEO | Kingsdown
The simple answer is “make every square foot of your retail space produce.” The key for retailers to remain competitive is to partner with brands that can help them arrange a profitable and differentiated floor that maximizes margin at every price point. There is no room for SKU laggards on today’s floor—every slot needs to be filled with something that is contributing to the bottom line and that can differentiate the shopping experience. We know consumers are still looking for superior quality, performance and value. Further, as inflationary challenges mount, consumers will likely be more judicious with their discretionary spending. Standing out to a more discriminating customer by out-marketing and out-positioning the competition is critical. It is imperative to stand out in the marketplace and in the eyes of the consumer with unique brands, innovative products and appealing styles. At Kingsdown, our historical focus has been to deliver superior performance for the consumer and higher margins for the retailer. In terms of customer experience, we recommend focusing on helping the shopper solve the “chronic sleep problem.” At Kingsdown we have a long history of basing our product designs on the science of sleep and the benefits of incorporating technology in our product designs, all to engage and assure the consumer. We created the patented, brand-agnostic bedMATCH system to take the guess work out of the shopping process and give consumers confidence that they are making the right choice.
President | Spring Air
When sales start to soften, successful legacy brands should not panic and alter their fundamental proposition or positioning. For example, retailers catering to the middle- or upper-income consumer segment may be tempted to move down-market to capture more business at the lower-end—yet doing so will confuse and alienate loyal customers. It may also be met with stiff resistance from competitors geared to low-cost products, who have intimate knowledge of cost-conscious consumers. Retailers that drift away from their established base may attract some new customers in the near term but will find themselves in a weaker position when the slowdown ends. The best course now is to stabilize the brand by committing a substantial portion of marketing resources to reinforcing the core brand proposition. Reminding consumers of how the brand matters will expand the cushion provided by previous investments in building the brand and customer satisfaction. In slow-downs, companies must stay flexible, adjusting their strategies and tactics—and on the flip side, be nimble enough to respond quickly when the upturn comes. Spring Air’s objective is to have a pipeline of innovations ready to roll out on short notice, because most consumers will be ready to try a variety of new products once the economy improves. I am certain that companies that wait until the economy is in full recovery to ramp up will be at the mercy of better-prepared competitors. Even during a slow-down, new products play a key role, and it is our job as marketers to figure out where they fit best.
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