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 COMFORPEDIC® AND SIMMONS®

 DYNAMICUNION

 Creates Expanding Specialty Sleep Division

                   to Meet the Needs of Retailers and Consumers Alike

The mattress/bedding industry is undergoing a major change (think FR compliance; think cost of petroleum, steel and fuel; think a market-wide "green", sustainable or renewable movement; think new technologies and the growth of specialty sleep, or think health, comfort or luxury as the instigators or catalysts of this industry evolution). Recent brand initiatives, product developments, organizational and management expansion, as well as new marketing direction show that Simmons Bedding Company is very much in the forefront of this change. This should not be surprising given the fact that Simmons Chairman and CEO, Charlie Eitel, has openly spelled out a goal for the company to offer a "finest quality within the category and excellent value" mattress/bedding product at every price point. Simmons has purposely structured both the company and its product offering to provide a line of Simmons branded products at virtually any price range to meet the broad spectrum of demand in today’s mattress market place.

 

Increasingly in the past year specialty sleep products have played a key factor in Simmons’ plans to cover the market and achieve profitable growth and increased market share. Seven months ago with the acquisition of the ComforPedic® from ComforProducts, Inc. of Fife, Washington, Simmons embarked upon a commitment to deliver "best-in-class" products in the specialty field including latex and memory foam while adhering to the company’s quality and marketing excellence. At the time Simmons stated that their specialty offerings, "represent a new approach to the bedding products market—the ability to provide every type of product to every type of consumer, thus becoming the provider of choice for every sleep experience." The company summarized the union of the ComforPedic brand with Simmons as "seamlessly merging the next generation of memory foam with the strength of the Simmons brand and distribution resources to give consumers and retailers a superior product from a brand they know and trust."

 

Recognizing the massive market shifts and emerging market potential foam-based specialty sleep products (latex, memory foam, gel-foam, and other new materials) offer, especially with the market-share shifts brought on by the emerging space-age direct sellers of foam bedding, many traditional or conventional innerspring companies entered the visco or memory foam market.

 

Both large national brands as well as second-tier brands, regional companies and of course specialty sleep companies added visco-elastic or memory foam products to their line during the late ‘90’s and the early 2000’s. Some companies developed proprietary foam sources; some branded the products separately from their innerspring lines; some negotiated licenses with specialty companies and foam companies; some used domestic products and others imported visco-elastic temperature responsive foams from Spain, Italy, France and China. Some companies have been fairly successful introducing these memory foam lines, while others, frankly, have already closed down, pared back or shifted their focus to mainstream or other bedding technologies. The quality of the product offered to the American marketplace has varied depending upon the supplier and the manufacturer. As with any expanding product/market there were really good visco-elastic programs and some that were not so good. One lesson that nearly every manufacturer has since discovered is that developing and managing a foam bedding line is not something to be taken lightly. It requires knowledge, experience and a commitment to excellence.

 

Last July in a major press conference announcing the acquisition of the ComforPedic line, and the team that created it, Simmons senior management, including Chairman and CEO Charlie Eitel, then Executive Vice President of Sales (now President and COO) Steve Fendrich, and Executive Vice President of Marketing Tim Oakhill were refreshingly candid in saying that Simmons has a clear goal, and to achieve the goal they would need help from "experts," from a team that knows what it is doing in the specialty/foam bedding field. They admitted that their leading innerspring company that has brought the "best-of-class" Beautyrest® to the market for years, needed to do something more than merely add a new visco line to the existing company structure and product line.

 

With this in mind along with the Simmons’ goals to offer a quality, branded product to meet every need, Simmons decided to make a major change in how they approached the specialty sleep categories, and especially how they developed and marketed the memory and latex foam marketplaces. As we commented last summer in BEDROOM Magazine at the time of the acquisition announcement, Simmons went from "more or less simply sticking the company toe" into the specialty/ foam mattress water to taking "a full plunge into the specialty sleep waters with a new swimming coach; a partner whose experience, technology and innovations in foam bedding will allow Simmons to embark on its commitment to deliver best-in-class products in the full range of categories . . ."

 

Specialty sleep would not be treated as an after-thought or a few added-on SKU’s to the flagship Beautyrest and value-priced Deep Sleep lines. ComforPedic’s top ownership and management would become Simmons employees. Scott Smalling, founder and CEO of ComforProducts would become the President of the Simmons’ Specialty Division, spearheading the entire specialty sleep initiative and reporting directly to Simmons President and COO Steve Fendrich (see sidebar story). Jack Squires, the former President of ComforProducts would become Executive Vice President of the Specialty Division and focus on market development both with past ComforPedic retailers as well as the existing key Simmons retail accounts.

 

Butch Webster, formerly Executive Vice President at ComforProducts has worked closely with the Simmons operations/plant management to make the changes and transitions so that today five of the plants, are manufacturing the five bed ComforPedic by Simmons line and all seventeen of the Simmons plants are stocking the line within their market areas to better serve retailers. Simmons’ Janesville, Wisconsin plant is known for producing more units than any other mattress factory in the US. Chuck Waldhart, who is the operations manager at the Simmons’ Janesville plant tells BEDROOM Magazine that, "Manufacturing foam mattresses is definitely new territory for our facility; however, our employees adapted to ComforPedic’s materials and machines very quickly. We held an extensive training program to transition select associates from our innerspring divisions to the new foam line, and I’m proud to say that we successfully integrated ComforPedic’s manufacturing processes without any interruptions to our normal innerspring mattress production."

 

ComforPedic’s top three area sales and service executives also joined the Simmons team. Al Bromberg is Vice President of the East Region, Jim Lambert is Vice President of the Central Region and Rick VanderWoude is Vice President of the Western regional. Each of these regional sales and service executives brings many years of experience in the specialty sleep field to Simmons and each played a critical role in the nationwide expansion of the Tempur-Pedic® brand during the 2000 to 2002 time period.

 

Seven months after the acquisition announcement and five months into operations, these six executives representing the top tier of the former ComforProducts management, marketing, sales and operations are now the key players in the Simmons’ Specialty Division. Company president Steve Fendrich tells BEDROOM Magazine, "We needed to go outside to be successful. We saw this as more than a product strategy or simply acquiring a line and then having the current Simmons team launch and manage the line. We did not see that as a formula for success. We wanted to do this right for ourselves, for our dealers and for the consumer. . . . and that meant being helped by others in the business. So we acquired a company that understands specialty sleep. We acquired the entire group."

 

Steve Fendrich informs this reporter that Simmons wants to keep the entrepreneurial spirit that characterized ComforPedic while also taking advantage of the marketing, branding and distribution channels offered by Simmons. "It is most important that we educate our own (Simmons) people about the innovative and unique aspects of the specialty products. As we develop our marketing and product strategies it is critical for us to work with people who bring many years of operational and retail experience in the memory foam and latex areas. Jack, Scott and Butch have been traveling with our people in the field." Scott Smalling, President of the Simmons Specialty Division re-inforces Fendrich’s comments noting that Jack Squires has been on the road quite a bit over the last six months working with the field sales/service force and Simmons retailers to create an effective specialty program for each type of dealer. The specialty division is educating the Simmons team and they are now reaching out to the stores. Almost two hundred trained sales people are now in the field. Simmons is currently focusing on targeted accounts. Key people are being educated not only on the various attributes of the product, but they are learning about the fast growing specialty sleep category.

 

"Our retailers require additional education over and above the Simmons’ brand product and sales training. We want to help them clearly understand the unique differences behind each product," says Smalling. "This task requires flexibility, a new approach that reflects an understanding of the historical ComforPedic/specialty dealer and the long-standing key Simmons dealers." Smalling states that the team has been working the US East, Central and West, and that as the company has placed business with a large account all hands are on deck from both the ComforPedic and the Simmons team. "We are implementing a collective strategy drawing upon the strengths of both organizations just as we planned it," says Smalling.

 

"So far we’ve had excellent success with the specialty sleep program. Working with the Simmons dealers, we are bringing a breath of fresh air and fun products that allow the retailer to offer the customer a broader choice, allow the dealer to raise the average unit selling price (ASUP) in their stores, and with the increase in price points, give the dealer greater profits," says Smalling.

 

The specialty sleep program has reached across a broad range of retailers. Three retails stores that come immediately to mind are: Steinhafels, Bedmart and Boulevard Home Furnishings. Mike Bain of Boulevard informs BEDROOM magazine that they have two stores, one a large 100,000 square foot store in Saint George, Utah and a second smaller 15,000 square foot store in Mesquite, Nevada. Bain notes that over 10% of the sales of these furniture stores are in the bedding area obviously contributing significantly to the margins of the overall business. "We were both a ComforPedic and Simmons customer, and we see the union as being fantastic," says Bain. Our biggest advantage now is that we can really market the Simmons brand with the ComforPedic products. We use the Simmons marketing materials. It really works out; the product comes on one truck, we see one representative instead of two. It helps us integrate our product line and our offering, as well as our message. These products are a perfect mix for what we’ve got going in our stores. Out of 40 SKU’s we have 12 Beautyrest and 3 of the ComforPedic by Simmons. We also expect that we will be carrying the ComforPedic pillows pretty soon." Bain sums up his satisfaction by stating, "We have an opportunity to give our customer more choices. The specialty bedding category is growing. Having a good selection backed by the Simmons name with the ComforPedic products is a our biggest advantage."

 

Duke Pollock, who is the Director of Sales and Marketing for Bedmart a 27 store sleep shop business in Arizona, says that they were a Simmons dealer but did not carry ComforPedic prior to the union. "We have 27 sleep shops throughout Arizona," says Pollock, "and we carry six well known bedding brands including top name traditional and specialty brands. We average about 65 SKU’s of in-line product on each floor. We’ve also been in the specialty foam bedding business longer than any one in AZ. We’ve carried latex beds for 20 and visco-elastic or memory foam beds for 15 years.

 

"We were a Simmons dealer, but last summer we became one of the first ComforPedic by Simmons dealers in the US," states Pollock. "We found we had a distinct advantage with the ComforPedic line. These offer us further options, further choices for our customers. Our customers like the quick response or recovery features and the temperature sensitivity is well received by customers looking to purchase a memory foam mattress. We believe that our customers really do see a difference with the ComforPedic by Simmons. These beds give our customers another avenue to take beyond what we already have on the floor. The Comfor-Pedic by Simmons fits right in with our normal business plan." Pollock says that Bedmart carries three of the ComforPedic SKU’s on nearly every sales floor and the Nuovo adjustable bed has been added to select locations.

 

Pollock reports that sales are doing very well. "All our sales people are well versed on memory foam. The specialty sleep team at Simmons brought in six people to several roll-out meetings. They went to each store to train our sales people one-on-one or in small groups. The support they’ve given is as good as I’ve seen on any product."

 

Kathy Luling who serves as the manager of the bedding department at Steinhafel’s six-store, family-owned third generation furniture store in Southeastern Wisconsin, tells BEDROOM Magazine that Steinhafel’s is very pleased with the ComforPedic by Simmons addition to the store’s Simmons line. "We’ve carried Simmons for a long time. I’ve been with the company 28 years, Simmons has been here as long as I have."

 

Luling says that Steinhafel’s has six stores ranging in size from 65,000 to 140,000 square feet averaging a total of 42 bedding SKU’s per store. She acknowledges that the furniture stores have carried the leading brand name in temperature sensitive foam, as well as the specialty products of another "S" brand. However the specialty category is growing for Steinhafel’s, and out of 42 total SKU’s 18 represent one specialty type bed or another. At present specialty sales represent between 35% and 37% of over all sales and a higher percentage of margin dollars for the furniture stores.

 

"We introduced three ComforPedic by Simmons beds on our store floors in October, and they’re doing very well. We attribute the success to our customer-needs-focused sales associates who go above and beyond. They can point customers to the ComforPedic by Simmons which has a unique feel." Luling notes that "Simmons has been very responsive to our needs as a dealer. They offer on time delivery. There are no delays; the ComforPedic comes in with regular Simmons merchandise." Luling echoes the experience of other retailers: "the ComforPedic/specialty sleep team offered comprehensive training with a big kickoff event, and they even went out to the more remote stores and offered training and direction to the sales associates at these stores."

 

According to Scott Smalling, mattress retailers come to understand very clearly the distinct advantages the ComforPedic by Simmons products offer them. According to Smalling ComforPedic by Simmons features the next generation of memory foam offering the perfect combination of soft comfort and firm support conforming to the sleeper’s body. With exlcusive rights to patented technology the ComforPedic line addresses issues that have been traditionally associated with memory foam, such as the fact that it does not dissipate heat and leaves customers too hot, or that it feels too hard in a cool room and too soft in a warm room.

 

Smalling lists five distinct benefits that Simmons is now marketing as critical points of differentiation from the traditional competitive memory foam in the market.

 

The ComforPedic by Simmons line:

• Dissipates heat: Next-generation memory foam dissipates heat to help keep you at your ideal sleeping temperature.

 

• Quicker recovery: Patented foam technology responds quickly to move with your body’s contours as you sleep, preventing that quicksand feeling.

 

• Consistent comfort: Creates a custom fit to your body from the moment it arrives to help eliminate any break-in period and changes in feel due to temperature fluctuations.

 

• Patented Edge® support on select models: Provides strong support so you can sit on the edge of the bed without it collapsing.

 

• A 25 year warranty.

 

If the ComforPedic side of the team brings superior performing product to the table, then the Simmons team from the brand and marketing side of things is really running with the ball. Anne Kozel, Simmons brand director, specialty sleep, states: "Our research shows that the specialty sleep market is more of an even playing field among male and female consumers than the traditional bedding market. Given this information, we designed our new ComforPedic marketing materials with both of these audiences in mind. We really concentrated on explaining how our NxG Advanced Memory Foam is different from other memory foams, and that’s why all of the point-of-sale materials highlight ComforPedic’s three main benefits: ‘dissipates heat, quicker recovery and consistent comfort’.

 

We found that the image of a woman looking out across water serves as an emotional trigger for consumers. The photography is aspirational because it evokes feelings of restoration and relaxation, which is exactly what consumers are looking for in higher priced bedding products like ComforPedic by Simmons We also included the image of a hand pressing on the foam since many consumers associate that image with memory foam technology. Consumers see that image and immediately understand that ComforPedic is a memory foam mattress—then they read about ComforPedic’s benefits and realize that we’re the next-generation of memory foam mattresses."

 

During the course of the discussion with Steve Fendrich and Scott Smalling these two executives stress that they hope retailers will really understand that the company’s Specialty Division is more than than the ComforPedic memory foam products. Simmons has embarked upon a total specialty sleep program to enhance the products selection, sales and profits for dealers who offer the right mix and premium priced specialty lines to their customers At present the Simmons Specialty Division is focusing primarily on foam beds including Simmon’s Natural Care™ latex line which is built around cores of naturally derived Talalay latex with a wood fiber fabric cover designed for exceptional breathability and comfort. Smalling summarizes the benefits of the "natural latex" Natural Care™ mattresses with features such as a soft supportive latex surface that provides lift in all the right places; contouring comfort that can eliminate pressure points across the entire body; and a naturally derived product made form biodegradable material that is extremely resilient and performs beautifully for years. "We are pleased to offer our dealers the Natural Care™ line of latex mattresses as part of Simmons’ unique suite of specialty sleep products," says Smalling.

 

Smalling tells this editor that as the CEO of an innovative and entrepreneurial company he had no idea at the time of the acquisition announcement what would happen over the next six months. "Our companies were certainly different in terms of size and scale, but our cultures were similar. We are casual, but we also work hard, we’re very dedicated and we’re serious about what we are doing to meet the needs of both ComforPedic and Simmons retailers and consumers. Fendrich and Smalling both agree that the entrepreneurial spirit is still very much alive within the overall corporate context of the Simmons Bedding Company.

 

Fendrich and Smalling are enthusiastic about the various product offerings Simmons will make at the Las Vegas market in winter 2008. "When it comes to selling to people with particular sleep needs, Simmons will have our retailers covered," says Fendrich. "We offer a complete line-up of innovative mattresses including the Beautyrest®, ComforPedic by Simmons™ and Natural Care™ collections. Our retailers will have something to offer any customer who walks through the door."

 

Mattress/bedding retailers interested in the ComforPedic® by Simmons® or any of the other Simmons lines are invited to the Simmons Show Room at the Las Vegas World Market Center, Building 1 Showroom A525

 

For more information call 1(770) 512-7700

or visit www.comforpedic.com or
www.simmons.com

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