by With the industry buzzing about Ashley Furniture’s recent acquisition of Resident Home, we checked in with a few seasoned industry veterans to see how they look at the transaction and its future effects on the mattress category.
To get one thing straight: Few people believe this was a reaction to the potential TSI/Mattress Firm deal. As David Binke, CEO of King Koil, explains to Bedding News Now, Ashley didn’t get to where they are today by reacting. They act strategically.
The more we look into this acquisition — which Ashley paid nearly $1 billion for — the more possibilities will seem endless, which is one reason Bob Muenkel, owner of consulting group UncleMuekel LLC — who worked for Resident between 2019 and 2022 — says that one plus one equals three.
“In my professional experience, Resident was just so far ahead of the industry in the digital marketing space,” Muenkel explains. “Their lead acquisition, customer acquisition and curating customers in the digital space is second to none. And you can see it in the success of their business that led to this transaction. They have succeeded where other monsters in that space have not.”
While Ashley is the biggest furniture manufacturer in the U.S. and has tremendous manufacturing and logistical abilities, it still has much to gain from Resident in terms of digital marketing and online sales.
“With the manufacturing prowess that Ashley has, both here and abroad, I think it will greatly enhance Resident’s capability to develop and deploy products into the marketplace, whether it’s through their own stores or other retailers,” Muenkel says. “So Resident gains the scale of a class A logistics and manufacturing company, plus access to retail stores, and Ashley gains the digital marketing expertise of Resident.”
Resident has always struggled on the supply chain side, he says, so over time the manufacturing footprint will become more focused, controlled and consistent, which is a huge win for the company and retailers that carry them.
“When you combine these capabilities, it puts companies like Wayfair on notice,” he adds. “Resident will apply its expertise to the furniture category and will greatly enhance the accessibility and the sell-through of Ashley products directly to consumers.”
So will this change the industry or will it continue to be business as usual?
“I don’t think there is such a thing as business as usual anymore,” says Binke. “Ashley is an enormous retailer in addition to a manufacturer, but bedding has always been kind of a secondary category to them behind furniture. So now bedding will be more in the forefront within the company, and I think they’re going to get more aggressive. My belief is they could look to acquire other people, too.”
Ashley has its own bedding line, but if it wasn’t getting the results it wanted, it makes more sense for them to acquire a company that can fill that void.
Jeff Giagnocavo, owner of Gardner’s Mattress & More, says that while Resident succeeded digitally, they have always struggled to understand what retail partners need.
“Ashley is the inverse of that,” he explains. “I heard a good quote recently: ‘Like a circle, we always come around on the other side.’ It’s when we don’t acknowledge it as a circle that we get surprised. So this is things coming around full circle. Resident is going to learn a lot about retail now because they have expert retailers involved now.”
He doesn’t think independent mattress retailers need to fear Resident pulling products from their stores, as Ashley is going to get their return on investment through Ashley Homestores. However, Ashley carrying Resident products will increase competition with local retailers.
Muenkel sees two conflicting possibilities. First, the profile of those brands will be raised because there will be more money invested in that. However, there could be “store door dilution.”
“The increase in consumer awareness is a positive, but if they’re distributed throughout the Ashley network of retail stores there are now more store doors where a customer can go in and buy them,” he says. “This could potentially dilute the customer flow to other stores.”
Overall, Binke says this acquisition is a sign of the times and a larger trend of consolidation within the mattress industry.
“We’re in challenging times right now, which makes it a good time for mergers and acquisitions,” Binke says. “If you look at as an example, B IA merging with sattva. This one, the TSI mat firm looming, you know, second half of the year. “Saatva and BIA merged, and then there’s the pending TSI/Mattress Firm deal. My guess is there will be a couple more. It’s a force that’s going to continue for the foreseeable future — although maybe not at the magnitude of the Ashley/Resident deal.”
One thing most people agree on is that this deal makes sense for both companies and will benefit each in unique ways. But only time will tell if this acquisition ultimately benefits or challenges independent retailers.
