I keep reading trade articles referring to the current business environment, and the answers that many manufacturers are offering as a solution. The only problem with most of these articles is they are not addressing the actual dilemma.
They speak about new products with great margins to help boost closing rates, price point focus to help boost sales in an ever-challenging environment, and the need to align your floor with traditional strategically placed products but none of them address the actual challenge: traffic.
Without customers, we all fail.
Although all the previously above-mentioned solutions are valid; without customers, it’s a moot point.
Today’s bedding landscape is not what it was four-plus years ago!
The days of relying on traditional brands to drive traffic into your stores is long gone, with a partial exception being Tempur-Pedic. Sure, these brands are still highly recognizable and hold value on your floor but how much real estate should you be dedicating to them?
Here are some interesting facts regarding the paradigm shift in today’s consumers and their mattress shopping experience.
- Over 90% of consumers start their mattress shopping experience online. When a customer searches for the word ‘mattress,’ they will most likely see Tempur-Pedic, Mattress Firm or Amazon, and then comes a barrage of mattress review sites. (Google it for yourself and see.) Most review sites are primarily reviewing online brands.
- DTC brands spent over half a billion dollars advertising in 2021 and as a result, DTC brands did roughly one-third of all bedding unit sales in the U.S., either by selling direct online or being bought from a brick-and-mortar retailer representing the brand. By the way, that’s roughly $5 billion to $6 billion.
- Over 95% of consumers start their search for products online.
- Over 52% of consumers, when surveyed, said they would never buy a mattress online.
- Millions of consumers left DTC sites last year through dealer locators in search of a place to try the products.
With that knowledge under your belt, here are three questions that every retail store owner should be asking themselves.
1. Does your floor represent or mirror the consumer’s online shopping experience?
2. Are you offering your customers the ability to try and buy these brands?
3. If not, why not?
I would bet everything I have that 98% of retailers would answer no to the second question. Why? Because most of us have been doing this for a very long time and traditional brands are what we know and what we are comfortable with.
However, just because we know them and are comfortable with them does not mean that they are what the consumer is reading and hearing about today.
It’s all about the ad spend to drive traffic!
Let me be clear before the traditional brands overreact: I am not advocating for the removal of these brands from your mix, but rather a realignment of the amount of space dedicated to them. The cost of driving a traditional brand customer into your store is solely on you for the most part.
Sure, you get co-op from these brands, but I can personally vouch that these co-op dollars are your dollars to begin with. They are built into the price of the goods and then redistributed back to you once you match the spend on qualifying ads. In other words, you do most of the advertising for the traditional brands, not them.
Your spend/co-op dollars are factored into annual ad dollar spends when they report to you how much they are “spending.”
On the flip side of traditional brands, you have an exorbitant amount of ad dollars being spent by DTC companies. I would venture to say that the total DTC ad spend in 2021 was somewhere between $500 million and $1 billion. I know of one company that spent over $250 million alone. The average cost of acquisition for these brands to realize the sale of just one mattress is somewhere between $200 and $300.
Ironically, these same brands are not able to completely stop spending on ads, regardless of recession or inflation, because that’s what their business model depends on.
If they are not driving customers to their site, they go out of business quickly. Almost all these brands’ annual sales are heavily weighted toward their sites as opposed to their brick-and-mortar sales, and thus it’s at the core of what they focus on.
What does this mean for you?
It means that even during trying times these brands must advertise. This means that the retailer gets the benefit of traffic being driven into their store as a result of the dealer locators.
As a retailer who floors highly advertised DTC brands, the average cost to drive these same customers into their showroom is zero. The power of the ad dollars being spent by DTC brands is something worth tapping into.
Below is a list of some of the most heavily advertised DTC brands:
- Nectar – available to retailers
- DreamCloud – available to retailers
- Puffy – available to retailers
- GhostBed – available to retailers
- Helix – available to retailers
- Purple – restricted, no distribution to mid- to small-size retailers at this time.
- Casper – restricted, no distribution to mid- to small-size retailers at this time.
- Leesa – limited retail distribution (Pottery Barn, Macy’s and West Elm)
- Saatva – rot available to retailers at this moment
- Nolah – not available to retailers
- Tempur-Pedic – not a traditional DTC brand but very similar in their original marketing approach and still heavily advertised today. I think it’s safe to classify them as a hybrid DTC brand and quite possibly one of the first prior to the online explosion of today’s “disrupters.”
To summarize, it’s time to start remerchandising our floors. Get rid of the dead slots and replace them with ones that will drive presold new customers to your stores.
If you play Fantasy Football, you are constantly tweaking and adjusting your roster in an effort to get the best results for that week. If you can dedicate that type of focus to a game, you can certainly start treating your business the same way. The ones who never adjust their rosters are always in last place at the end of the year.