KeyBanc published a report of the mattress industry that I thought was very interesting so I wanted to share a few of their insights with you. This research was based on extensive in depth interviews with industry veterans as well as a deep dive on internet trends and company financials where available.
- Let’s give credit where credit is due and remember that Tempur-Pedic and Select Comfort were some of the first to attack the direct to consumer channel in the mattress industry and as a result of their success they ended up pursuing traditional brick and mortar retail. Select Comfort abandoned that strategy, and Tempur-Pedic continued on to bring them to where they are today. Both have been very successful.
- In 2016 the reports shows a projection of $755 million for the e-commerce channel which would equate to a 4.6% market share vs. a 1.8% market share in 2015. That is serious growth.
- Over 50-100 new players have launched new direct to consumer brands so far this year so the growth is going to continue.
- If these numbers are right, then the industry will grow by about $800 million in 2016, half of which is e-commerce business.
- When you look at who is navigating the digital space the best, the e-commerce guys are winning the battle. When it comes to organic search Casper hits the first page, hats off to the Andrew Gross and the Serta team for showing up on page two, Tuft and Needle hits page 3, and Tempur-Pedic shows up on page 12. If you believe that reviews are important to ringing the register, Casper is winning there as well with almost 5,000 consumer reviews vs. 3,849 for Tuft and Needle, 1283 for Select Comfort and 787 for Tempur-Pedic.
KeyBanc summarizes this report by saying, “we are incrementally concerned about a meaningful impact on earnings for the traditional players in the year ahead.” Will the e-commerce guys continue to grow? I think so. Will they take market share? Likely. Will it change how bedding brands and retailers look at their own business and strategy? ABSOLUTELY.
I know that this kind of thing is disruptive but I really believe that it makes us better. If we have all of this attention on our consumer product segment I think the category wins. The question to each of you reading this is how are you going to react? Will you be able to think creatively and capitalize on the new opportunities or will it toss you into turmoil? Beware of the ostrich that doesn’t want to believe that this is going to have a significant impact on how we do business because it will. It is. Maybe you can find a new spot for them in the local buggy whip and typewriter shop down the street.