Sleep Retailer eNews | April 18, 2019

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High Point Market & The Bedding Sector: What’s Going On?

HP Market Welcome

Gaining prominence in the furniture manufacturing industry as early as the 1920’s, High Point Market has always, first and foremost, been a furniture market. Its positioning and popularity among bedding and mattress industry professionals has been in flux for years. With some bedding manufacturers pulling out of the market, others investing in new spaces and some simply altering their strategies, we couldn’t help but wonder: what’s going on with High Point market today? And, what relevance does it have for bedding and mattress manufacturers and retailers? 

Our recent visit to the spring High Point Market revealed some emerging themes but also brought about more questions. What type of buyer attends this market? What do they gain that they can’t get at the Las Vegas Market?

While we weren’t quite able to access the data needed to answer some of our most burning questions, here are some of the available numbers and facts:

Comprised of 180 buildings with 12 million square feet of showspace, the High Point Furniture Market presently hosts the likes of Serta Simmons Bedding, Tempur-Sealy, Kingsdown, Shifman Mattress, BEDGEAR, Malouf and many other prominent sleep product exhibitors. According to the High Point Market Authority, approximately 75,000 people attend each market from all over the country and all over the world—but they did not reveal how many of those attendees make the trip strictly to visit bedding and mattress exhibitors.

INSIGHTS

That said, we did gain some insights when engaging with exhibitors at the show. Many have long touted the High Point Market as a place to slow down and have the more meaningful types of conversations they don’t have time for amidst the chaos and excitement of the Las Vegas markets. This held true during our recent visit. While most exhibitors had time to chat with us, nearly all of them reported general busy-ness and emphasized that this market allowed them to enjoy more in-depth conversations and provide a more personalized experience for retailers visiting their showrooms. Many also noted that most meetings were pre-planned—and that the High Point show, as of late, yields less drop-ins and on-the-fly visitors.

While we have seen a number of brands pulling out of High Point, others like Eclipse International have relocated, expanded and re-vamped the feel of their showrooms. Companies like Eclipse are aiming to make their showrooms a “destination space.” By moving away from the now sleepy bedding floors and taking over a more prominent, stand-alone location, the company has given attendees a reason to prioritize the visit to its showroom. And according to the brand’s representatives—it worked. The expanded showroom and new location likely piqued the interest of buyers, making them curious about the brand and its offerings.

In addition to attracting more foot traffic, this type of investment in market presentation also reflects a greater commitment to developing more innovative retail experiences. Over the past few seasons, there has been a distinct push to do things differently than what’s been done before. Sound familiar?  This commitment to differentiation at market also carries on into the retail world, as retailers seek to do the same adding value to customized build-outs offered by select manufacturers .

These “destination spaces” also help facilitate many of the benefits we’ve continued to hear about the spring and fall shows. While traffic may be slower and major product introductions at a minimum, High Point serves as an opportunity to check in on the products and collections that debuted at the winter Las Vegas Market. It’s a time when everyone can take the temperature of the market and see which programs are gaining traction and starting to make an impact on retail floors.

Cross-Merchandising

One key theme we saw throughout this market was a larger focus on cross-merchandising, which corresponded with the growing decentralization of bedding and mattress exhibit spaces. By choosing to occupy stand-alone showrooms and showrooms in the thick of the furniture floors and buildings, manufacturers like Malouf, Classic Brands, BEDGEAR and others are looking to attract and support more than just bedding and mattress retailers with their diverse product offerings.  They are also looking to encourage traditionally furniture focused retailers to consider the advantages of sleep products in their stores, especially items like bed frames and adjustable bases that bridge the gap between the furniture and sleep categories. This approach is strategic in that it ultimately makes the probability of driving new types of traffic to each showroom higher.

What’s Next

Although the past few years have resulted in a quieter High Point Market for the sleep industry, we also see the market’s role in the industry as varying and constantly shifting as new markets emerge, grow and change. The quieter spring and fall markets are also inspiring those brands that have stayed or return to innovate and really consider how the enliven their spaces.

While we don’t know what the future holds for High Point or its long-term role in the bedding and mattress sector, we are interested in continuing to witness its evolution and the evolving approach of exhibitors as they work to create engaging attendee experiences in their showrooms.

Read more here, here and here.


With Store Closures Expected To Rise, What Can Retailers Do To Prepare For The Future?

Facade of a bankrupt store in Augusta, Maine

Despite a brief reprieve in 2018, it looks like the retail industry still has a tough road ahead of it. A new report from UBS Investment Bank is predicting that the downsizing of the industry will be ongoing over the next few years—with an estimated 75,000 stores closing by 2026. This means that almost 11,000 stores are expected to be shuttered on an annual basis, nearly double the rate of recent store closures. While these numbers may seem grave, this report is hardly the death knell for the industry at large—but rather it serves as further proof that both brick-and-mortar and online retail are evolving. In order to stay ahead of the curve and remain competitive, it’s imperative that retailers reevaluate old strategies and make room for new ideas.

Referred to in the report as “store rationalization,” these estimations are based on UBS’ analysis that “with each 1% increase in online penetration, some 8,000 to 8,500 stores will need to close.” Currently, online retail accounts for 16% of the total market share—but that number is expected to jump to 25% by 2026. Unsurprisingly, this increase is being led by Amazon, which USB analysts predict will commander nearly half of all e-commerce sales by 2026. According to the report, the biggest victim of this downsizing will be clothing retailers, which are expected to lose roughly 25% of their stores. But the home furnishings category is also in danger, with 8,000 stores (more than 30% of its current slate) predicted to shutter.

While the past decade has seen a steady decrease in physical retail stores, it’s true that the industry did experience a brief reprieve last year. In-store tickets actually increased in 2018—but that trend was short-lived. Analysts attribute the boost, in part, to last year’s tax cuts, which did not carry over to this year. Similarly, a number of malls were able to boost their consumer traffic in 2018—but that was mainly thanks to steep promotions, which are unsustainable in the long-term. “This pace of store productivity improvement is unlikely to be sustained in 2019 as the boost from fiscal stimulus fades,” UBS analysts Jay Sole and Michael Lasser wrote in a note to clients. “This will likely lead to an acceleration in physical store closures in the upcoming year.”

We’re already starting to see this uptick in physical retail closures. Only four months into 2019, and already the industry has seen more store closures than the entirety of 2018. So far this year, US retailers have announced the closing of nearly 6,000 stores—with only 2,641 planned to be opened, according to real estate tracking done by Coresight Research.

“I expect store closures to accelerate in 2019, hitting some 12,000 by year end,” Deborah Weinswig, founder and CEO of Coresight, told CNBC. “The slowdown we saw in 2018 seems to have been a brief respite in what’s a steady, long-term trend.”

While many retailers are fully shutting their doors, others are simply restructuring—eliminating “less productive” stores in order to focus more on higher performing locations. For example, J.C. Penney will close another 18 department stores and Macy’s will close eight. CreditRiskMonitor, a financial risk analysis and news service, expects that even more retailers will soon face bankruptcies due to “excess capacity and heavy debt burdens.” With more closures on the horizon, this will inevitably trigger something of a ripple effect on shopping centers. According to Cushman and Wakefield, the number of malls in the US is expected to decrease from 1,150 today to about 850 in the years ahead.

While this news may seem dire, some analysts are considering this to be a positive shift for an industry in flux. The US has long had too many retail stores, says financial services firm Cowen—with an estimated 23.5 square feet of retail for every American, compared to just 16.4 in Canada, 4.6 in the UK and 3.8 in France. According to Green Street, a real estate research firm, the number of department stores still open in the US could fill 350 average-sized malls.

“This is a healthy cleansing for the retail industry,” John D. Morris, senior brand apparel analyst for financial services firm D.A. Davidson, told the Washington Post. “We’re in the middle of a multiyear retail purge. Companies are finding that when it comes to stores, less is more.”

Cowen has come to similar conclusions, with its analysts noting that current data “suggests that the sector remains in the early innings of reduction in unproductive physical retail.” The key word there is “unproductive.” Despite the staggering number of retail closures, we are also seeing an increased investment in brick-and-mortar from select brands. Retail vacancies are being snapped up by digitally native companies like Casper, Wayfair and Warby Parker that are focused on creating more unique shopping environments. "The retail apocalypse has gotten a lot of attention,” explained Matthew Kennedy, senior IPO market strategist at Renaissance Capital. “These are the replacements.”

With all of these changes afoot, what can retailers do to keep up?

Stay Informed On Major Industry Moves

In order to effectively plan for the future, it’s essential for retailers to stay on top of all of the latest industry shake-ups. In the bedding sphere, we’ve noted two major news items that are likely to have a big impact throughout the category: first, the recent resignations of both Mattress Firm and Serta Simmons’ CEOs; and, second, Casper’s purported IPO plans.

Just last week, it was announced that Steve Stagner would be stepping down as Mattress Firm CEO and Executive Chairman—just shortly after it was announced that Michael Traub will also be leaving his post as CEO of Serta Simmons Bedding. This news had many analysts speculating that a reunion between Mattress Firm and Serta Simmons rival Tempur Sealy may be in the works. In a research note to clients, Piper Jaffray analyst Peter Keith described the abrupt termination of the Mattress Firm/Tempur Sealy partnership “an irrational and emotionally charged fallout because it made no economic sense for either party,” and noted that Stagner’s resignation was likely a necessary step towards rebuilding the “trust and durability” of the relationship. He went on to claim that a reunion between the two brands is 90% probable, and both parties are "highly motivated" to renew the deal. This speculation was further fueled by current Tempur Sealy CEO Scott Thompson, who told investors in February that his company has had “constructive” talks with Mattress Firm and noted that their relationship is “trending well.” This news, along with the resignation of Stagner, has also led analysts to suspect that Mattress Firm’s relationship with Serta Simmons may be on the rocks—especially as financial estimates have speculated that this partnership has been “much less lucrative than [Serta Simmons] originally hoped.”

On the e-commerce front, Casper is continuing to expand both its business and retail distribution—and talks of a future IPO have begun to circulate. In addition to its online sales, Casper mattresses are now sold at 20 branded brick-and-mortar stores and more than 1,000 Target and Hudson’s Bay locations throughout North America. With 200 more US stores slated to open up in the coming years, the brand is also looking to expand its distribution to Europe and Asia. 

While Casper hit $400 million in sales last year, The Information is reporting that the brand still lost money last year. Coupled with the added pressure of an increasing saturated online mattress market, the company is looking for new ways to differentiate itself through new product categories. As such, Casper recently introduced its smart “glow light” lamp—and CEO Philip Krim says that more tech-driven sleep products are in the pipeline.

More than just industry gossip, these news stories underscore the fact that mattress and bedding retail remains as volatile as ever. Today’s retailers cannot afford to get too comfortable with the status quo.

Stop Playing Catch-Up—Make Bold Plans For The Future

If we’ve learned anything from the changing retail tides, it’s that playing catch-up is no longer a viable option. “Industry dynamics will inevitably favor those who are thinking long-term,” writes Natalie Kotlyar, BDO Unibank’s partner and retail and consumer products practice leader. “What worked to keep businesses afloat in 2018 may not be enough once that correction hits and retailers that are just surviving today could find themselves in trouble.”

Retailers are putting themselves at risk by operating in a “wait-and-see mode,” she explains. Instead of making bold investments in their future, they are slow to implement technology and limiting their planning to the next few quarters. Conversely, the retailers that are setting themselves up for success are those that are focusing on developing new e-commerce strategies and figuring out how to anticipate consumers’ changing needs.

“The majority of retailers are stuck in survival mode,” Kotlyar goes on to say. “Playing catch up in perpetuity is preventing retailers from seizing new opportunities and leapfrogging the competition. It’s time for retailers to get rational: Scale with stability. Focus with foresight. Invest with intention.” Or, as the full market analysis report from BDO implores, retailers need to “make the hard choices before they’re made for you.”

Invest In Omni-Channel Strategies

Not only do today’s new retail spaces look different than traditional stores, they are also serving a different purpose. Many of them function more like product showrooms that direct consumers online to make their final purchases. “The trend is toward more streamlined stores: Less chaos, less inventory, less choice,” said Morris, senior brand apparel analyst for D.A. Davidson. “If a customer wants something in a different color or size, they can find that online.”

While this approach appears to come naturally to many of the smaller online upstarts, it’s not impossible for larger big box chains to replicate it. When Target chief executive Brian Cornell promised to invest $7 billion to remodel hundreds of stores and introduce a wide range of new private-label brands, he was met with skepticism. But two years later, this bold revamp has proven to be a success. Last year, the retailer clocked its best retail sales since 2005—with comparable sales in 2018 growing by 5%. Far from slowing down, the brand plans to remodel 1,000 more stores by the end of 2020.

Beyond just renovating its stores and introducing new brands, Target has also expanded its fulfillment options—further integrating its online and physical stores. Online buyers now have the option to select curb-side pick-up at more than 1,000 Target locations—while in-store shoppers at 1,500 location can opt to have their items delivered directly to their homes, same day, through the brand’s Shipt delivery service. This has been a clear success for the chain. Target’s digital sales jumped 36% in 2018—and in the fourth quarter, three out of four of the retailer’s digital sales were fulfilled by physical stores. In addition to offering added convenience for consumers—giving them more options for how they want to shop—these new fulfillment services are actually saving Target money too. On average, order pickup and drive-up cost 90% less than shipping an item from a distribution warehouse.

Rethink Retail “Experiences”

While a more curated, omni-channel brick-and-mortar environment has proven to be effective, it turns out that the primarily “experience-based” retail model has been less successful than anticipated. That’s according to Thasos, an artificial intelligence platform that analyzes real-time location data from mobile phones. The company found that malls with “experiential” tenants—stores like Apple or Tesla that are not primarily focused on selling products—did not see increased year-over-year foot traffic when compared to malls without such retail spaces.

As such, some malls and stand-alone chain stores are shifting gears to focus on integrating non-retail companies to attract more foot traffic—adding hotels, apartment complexes and gyms. That includes offering more short-term leases to allow burgeoning brands to cycle through more frequently (gaining access to more foot traffic and shopping pattern data). In fact, Kohl’s recently announced a new partnership with Planet Fitness, with plans to downsize 10 of its stores in order to lease the extra space to the gym. 

So what comes next?

While the UBS report makes it seem like a wave of mass store closures is inevitable, these projections do not have to signal the end of retail success as we know it. With thoughtful investments and strategic planning, bedding retailers still have a chance to weather the tough road ahead and create more sustainable opportunities for growth.

Read more here, here, here, here, here and here.


Natural Remedies For Better Sleep

Young woman sleeping in bed.

Brought To You By Signature Sleep

Are human beings creatures of habit? From sports to morning routines, people tend to agree that we develop a certain way of doing things over time that works best for our bodies and lifestyles. So why not do the same thing when it comes to sleep? By establishing a routine that you will do every night, you’ll let your body know that it is time to relax, let go of stress and crowding thoughts and get ready for a night of peaceful sleep.

Your ritual could include anything, but the important part is that it has to be realistic enough for you to be able to do it consistently overtime. Here are a few ideas of natural remedies to incorporate into your nightly schedule:

Use Lavender Scents To Soothe Your Body

Lavender body lotion. Lavender spray. Lavender-filled pillows. Dried lavender flowers. Lavender oils. You name it, it exists.

Using lavender aromatherapy to fall asleep is a long-standing folk remedy to soothe the body. Whether you choose to put a lavender sachet under your pillow or drop some lavender oil in your bath, one thing is guaranteed—you are sure to smell good and feel good. Other aromatherapy oils that are believed to help improve sleep are chamomile and ylang-ylang.

Find An Activity That Relaxes You

Cropped shot of a woman meditating at homeIs your mind overactive at night? Making to-do lists for the next day, or worrying about things that happened at work? Our best suggestion is to incorporate yoga and meditation in your nighttime ritual. Here are a few techniques that could work for you:

  • Guided meditation through an app,
  • Yoga and simple meditation where you focus only on your breath, a sound or a word,
  • Visualization where you try recreating your “happy place” in your mind by involving all your senses.

Other people find that lighting a candle and pulling out a good book is the ultimate way to reduce stress. Limit yourself to one chapter or two, so you don’t read until the early hours of the night. You can also combine two relaxing activities and take a warm bath while reading or listening to music.

Exercise

ExerciseExercise is a great way to not only manage stress but also help maintain a healthy lifestyle. It releases the tension and the stress that builds in your muscles during the day to help promote deeper sleep. Be careful not to perform intense exercise too close to your bedtime because you’ll risk increasing your adrenaline levels, which can lead to restless sleep.

Our recommendation: exercise in the morning to help keep your energy levels high during the day. Then perform low-intensity exercises, such as yoga or Tai Chi, at night to get your body and mind ready for bed.

Consider Investing In A Natural Mattress

DHP Signature Sleep Honest

Is your mattress making you physically uncomfortable? Are you waking up with aches and pains all over your body? It might be a sign that it is time to change your mattress. While you’re at it, why not opt for a mattress made with natural materials that could help enhance your sleep?

The Signature Sleep Honest Elements Natural Mattress brings you back to nature with ethically sourced organic materials that include USDA certified organic cotton and OEKO-TEX certified chemical free natural wool.

  • The natural wool creates an inhospitable environment for dust mites thanks to its temperature regulating properties. In fact, both natural wool and organic cotton are known to have moisture wicking properties that will help keep you warm in the winter and cool in the summer.
  • The independently encased micro coils help provide additional support and help eliminate motion transfer.
  • The two-sided reversible construction that extends the life of each sleep by optimizing comfort and support.
  • It also comes with a mattress pad with Aloe Vera treatment that is washer and drier friendly. The mattress cover is made with Aloe Vera fibers that help add moisture to all layers of your skin and help speed up the regeneration of the skin’s healing process.

What’s more, by treating yourself, you are also treating the environment thanks to Signature Sleep’s partnership with One Tree Planted. For every Signature Sleep Honest Mattress sold, one tree will be planted to make a small but significant impact on our environment.

This is where good sleep comes from:

What’s next? Try a couple of the ideas suggested above and see what works for you. Stick to it for at least for one month and see if it helps. If there are things you think you should add or remove from your routine, do it but be mindful of the impact any changes you make may have on your sleep cycle. Happy sleeping!

Visit signaturesleep.com


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