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What's Next For Tempur Sealy and Mattress Firm?
Following the news of their shocking split, Tempur Sealy and Mattress Firm are already looking to move on from the seemingly bad break-up. As the orders will officially come to a halt this month, both companies are reassuring customers and investors that the future is still bright. For Tempur Sealy, that means shifting its focus towards its other retail partners—unveiling a major national advertising campaign to help drive more traffic to the more than 12,000 stores that will still carry the brands. Mattress Firm is also looking to invest in new marketing efforts, tapping Sicily Dickenson to lead its customer experience strategy as the new Chief Marketing Officer. Despite the reassurances, some financial analysts still fear that the break-up will have larger ramifications on the industry as a whole.
The split had immediate effects on Tempur Sealy’s stock—with investors dropping one-third of its mark value on the day it was announced. Despite a strong fourth-quarter with profits hitting $63.4 million, the company’s overall shares have fallen 16% in the last 12 months. As Mattress Firm made up more than 20% of Tempur-Sealy’s consolidated net sales for 2016, the split is poised to have an effect on the brand itself. Scott Thompson, chairman and CEO of Tempur Sealy, acknowledged that the second quarter is expected to be challenging this year, but he’s confident the company will begin to bounce back as the year continues—calling this transitional period a “short-term disruption.”
With placements in more than 12,000 doors, Tempur Sealy branded products are still available across a wide retail network—and the dissolution of the Mattress Firm partnership has created new opportunities for many of these smaller stores. To better support these existing partnerships, the company will “focus on retail partners who have the greatest commitment to promoting our premier branded products.”
While some analysts feared the split would result in a scaling down of both company’s promotional efforts, Tempur announced this week that it will be investing “record level of advertising” to support its new “Tempur-Pedic Sleep is Power” campaign. With a mix of national TV, digital, radio and social creating, the newly unveiled campaign is designed to boost overall brand awareness—and deliver “ready-made customers” to the company’s retail partners.
As for Mattress Firm, the retail chain is focused on creating new ways to drive traffic to its 3,600 retail stores. With Dickenson at the helm, the retailer is first putting its efforts into more in-depth research. With the ongoing growth of the ecommerce and direct-to-consumer markets, Mattress Firm is smartly investigating all of the various barriers keep consumers from even stepping into physical sleep shops.
While the buzz around bed-in-a-box has been hard to ignore, Dickenson understands that this category is far from novel. Rather, the new disruptors have been more successful in making the mattress selection process “super easy to figure out” for the average consumer. Looking ahead, she’s focusing Mattress Firm’s efforts on figuring out how to more effectively communicate with customers. This includes better understanding of what today’s consumers are looking for, what’s driving the negative perception around mattress shopping—and eventually building a better in-store environment. Dickenson also hinted that the company would soon be announcing a new branding agency partner to help boost the Mattress Firm in-store experience.
Despite these new initiatives, some financial analysts are still wary of how the split will affect the industry as a whole—especially considering the size, scale and success of both companies. As clear leaders of the mattress manufacturing and retailing markets, the break-up of Tempur Sealy and Mattress Firm will inevitably shift the overall dynamics of the marketplace. Whether it will pressure average selling prices for the premium segment or boost the sales for other mattress brands and retail spaces, we’ll have to wait and see how widespread the ripple-effect will go.
The Future of Drop-Shipping
A long-time practice of many mattress brands, drop-shipping is becoming increasingly popular among the general retail industry. With products delivered directly to the customer from the suppliers’ warehouses, drop-shipping can be a valuable solution for many retailers looking to update their stocking and delivery processes. As consumers continue to shop more online than in-store, some analysts are predicting that drop-shipping will soon become a standard option for most retailers in the not-so-distant future.
With stores like Macy’s serving as early-adopters of the drop-ship trend, both retailers and manufacturers are looking to take advantage of the process. According to supply-chain software vendor SPS Commerce Inc, retailers are increasingly expecting drop-shipping capabilities. In a retail industry survey, 40% of respondents said they anticipate more drop-ship vendors in 2017.
Drop-shipping is especially beneficial for retailers looking to sell bulkier furniture items like mattresses and bed bases, which can take up a lot of space on showroom floors and in store warehouses. It allows smaller retailers to offer more product variation without bogging down their physical inventory—and makes it easy to provide more personalized service for their customers.
While the benefits are clear, there are also some risks retailers should consider before committing to this type of partnership. In particular, it requires them to cede control of certain parts of their supply chains—including inventory management, shipping and returns. It requires a proven track record from the vendors, including strong customer service and logistics experience. If done successfully, though, the growth of drop-shipping could be a game-changer for the mattress retail market.
The Risks and Rewards of Sleep Tracking Devices
While sleep experts and retailers alike have cheered the growing popularity of sleep tracking, a new report from the Rush University Medical Center has revealed some unintended consequences of meticulously monitoring sleep habits. While trackers can provide consumers with valuable insights about how to get a better night sleep, there is a risk of becoming overly fixated on the data — which can actually hurt their chances of getting the shut-eye they need. As more and more consumers are considering buying sleep tracking devices, they present an exciting new sales opportunity for retailers—but it’s important to fully understand both their capabilities and risks before jumping on the bandwagon.
Whether stand-alone devices or app-based products, sleep trackers can provide users with a wealth of previously unknowable information. The popularity of these products reflects a growing consumer interest in sleep health, which is good for the industry as a whole—but there’s a chance that they can also have a negative effect on sleep for particular people. In a report for Sleep Medicine journal, researcher Kelly Glazer Baron coined the term “orthosomnia” to refer to people who become overly obsessed with tracking their sleep - often to the detriment of sleep quality. In addition to causing increased stress, this obsession is especially dangerous when the data isn’t fully accurate. When users fixate on potentially incorrect information, these products can actually have the opposite effect of their intended purpose.
As an add-on product, sleep trackers can be beneficial for retailers. In addition to increasing the average sales ticket, they can also help increase customers’ post-purchase satisfaction by quantifying how much better they’re sleeping on their new mattress. But in order to make the most out of this new sales opportunity, retailers should not only invest in the most accurate devices - but take care not to oversell their capabilities as well. Trackers can be a helpful tool for some customers, but only when they understand that they’re just one piece of the overall sleep puzzle. Make sure the product you’re offering doesn’t just deliver raw sleep data, but provides the necessary context and insight to truly help the customer create a more restful sleep environment.
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