This is the first part in a series that looks at how retailers can sell more higher-end bedding. In this issue, we define the luxury bedding category, present information on customer demographics and start to look at what experts say about best sales practices.
View all articles by Russell Bienenstock
Part 1: How High Should You Go?
by Russell Bienenstock
This is the first part in a series of articles that will explain how furniture and bedding retailers can sell more higher-end bedding. In this issue, Furniture World defines the luxury bedding category, presents information on customer demographics and starts to look at what experts say about best sales practices. Subsequent installments will go into additional depth, and provide practical tips to assist readers on topics that include:
- Consumer motivations, wants and needs.
- Practical sales approaches that work for bedding salespeople.
- Merchandise mix and display adjustments that influence average sale.
- Advertising to bring in and set expectations for the luxury bedding customer
- Ways to build sales by presenting top-of-bed products, adjustable bed mechanisms and massage features.
- Best and worst bedding sales practices.
Whether you sell mattresses in a full line home furnishings retail store or are a sleep specialist, the name of the game is to generate higher average-sales numbers and better closing percentages while concurrently enhancing customer satisfaction and loyalty. For many retailers, doing a good job of presenting higher end bedding can be helpful in achieving these goals.
Luxury Bedding Defined
“Luxury is different for every person,” says Pam Danziger, President of Unity Marketing, a research company that surveys 1,200 plus affluent consumers. “We survey affluent consumers defined as the top 20 percent of households in terms of income which today starts at about $100,000. It seems like a fairly low number, people say, but they are in the top 20 percent, so we call them pretty affluent.
“These consumers,” continues Danziger, “reported purchasing one or more luxury goods or services in the quarter. We have 22 major categories of goods and services in our study and within them are many different products. That’s 200 products and services and bedding is one of them. We ask customers about their high end or luxury purchases. It is self selected, self reported data. The average amount reported being spent on a mattresses in our survey is about $3,000 dollars.”
Although higher end mattresses can sell for $20,000, $50,000 or more, there is some agreement on where, in terms of price point, the better bedding category begins.
Cory Ludens, Director of Learning and Development for the retailer Mattress Firm confirms Ms. Danziger’s observations. “We look at luxury bedding internally for a king at $2,000 and up and queen at $1,600 and up,” he observed. “We try to look at it from our customers’ perspective.
“As a retailer, we are educated about the total gamut of products, so we know that we can go out and find a Hastens Mattress for $60,000, but most of our consumers don’t know that. Our average consumer’s expectation is that anything about the $1,500 - $1600 level is luxury. But my opinion as Director of Education and Learning is that anything above the $2,500 range is a luxury purchase. At Mattress Firm, we do some testing of products that may go above the $10,000 mark but generally we top out at $10,000.”
“To the customer who can only afford a $599 queen set, $999 is upper end,” notes Ira Fishman a former buyer at Sleepy’s and now executive vice president of sales for Anatomic Global.
Beyond what some or even most consumers consider “upper end”, there is a lot of upside in quality and price. for companies that produce or sell at much higher price points than $999, the definition of luxury and quality shifts quite a bit.
Earl Kluft, President of E.S. Kluft provides his perspective. “We purposely believe that most people can afford a luxury product,” he says. “In the same way BMW makes an entry level 330 series yet goes up to a 750, we too have exceptional product at $2,000 all the way up to $60,000. A good RSA quickly determines the profile of the consumer they are working with and will find the right product that suits his or her needs.”
Andrea Mugnai, General Manager, Magniflex USA takes the luxury car analogy one step further by saying, “Most consumers would define a luxury mattress probably above $3,000. But we offer some models, made with silver, gold and even platinum tickings that can run as high as $75,000. Look, a Honda is a great automobile, but a Lamborghini is a bit more exciting. The Honda has four wheels and will get you where you want to go, just like the Lamborghini. Yet people dream about wanting a Lamborghini, which is really what luxury bedding is all about. Anyone can have a bed, but not everyone can have a feature laden mattress full of excitement and performance features.”
Mr Mugnai’s comments point to a major truth and also a difficulty retailers face when trying to sell better bedding. That truth is, that if bedding retailers can get customers as excited about purchasing their ‘dream’ mattress as they do about a ‘dream’ car, those retailers will be much more successful. The challenge retailers face is how to do this.
Before looking at specific steps bedding retailers can take, let’s consider for a moment the comparative of purchasing a luxury car versus a higher-end mattress.
The luxury car offers the promise of elegant transportation and the opportunity to own something that is beautifully designed and engineered with the best materials available. Expensive cars provide a feeling of power, entitlement, and excitement. They can also send a message to the outside world and confirm to a purchaser who sees his or her status in objects, that he or she is financially successful, has style and class.
The owners of better bedding on the other hand, do not often have the opportunity to impress friends with their purchase, get an adrenalin rush or admire the classic lines of a recently purchased mattress. Better bedding is similar to a luxury car in that the best materials and engineering are incorporated into its design, but these materials are hidden in a bedroom, under the sheets.
We asked Bill Hammer, President of Shifman Mattress Company about how bedding being placed in non-public areas of the home affects the way that consumers view its purchase. He responded that, “Unfortunately, mattresses as a category are considered a commodity until the consumer is educated. The fact that a mattress is a hidden luxury, covered and tucked away in a distant bedroom, only adds to that challenge. Status is no longer a purchasing consideration.” According to Hammer, “Education is key. Corporate/institutional advertising reinforces the brand image and luxury positioning. Promotional price and sale advertising builds traffic. Once a consumer hits the store, it is the RSA’s opportunity to educate and point out the luxury features and benefits to upsell the customer. A good mattress is an investment in one’s well-being. Luxury consumers can afford to invest in the ultimate sleep experience.”
Even though consumers rarely take the opportunity to buy a new mattress so they can show it off, when an old mattress fails, or lifestyle circumstances change, the shopping process cannot be further delayed. At that point, most consumers, many of the experts say, are brought into stores by price advertising. Since these potential buyers have only a vague appreciation of the relationship between mattress price, product features and benefits, they have no option other than to start shopping for a good deal based on price.
Income, Demographics and Mattress Sales
“As we look inside the category,” continues Pam Danziger, “If you look at who is buying these mattresses, it tends to skew to younger affluent consumers. They tend to buy at life stages where they are buying luxury goods anyway, so these are people under 44 who are affluent.
“In the next ten years we will see a shift in the age demographics of luxury consumers. There are going to be fewer young affluents, who are the most promising luxury consumers, by 2019. That is the most important demographic shift. So retailers will need to work harder to keep luxury sales up.
“More broadly, there is a window of affluence from 35-54 years old. That is the sweet spot for luxury goods including bedding. People from 55-64 do not have as much income, but it is still at a fairly high level.
“Luxury consumers overall have really been hit by a value shift… a shift in how they perceive value. Now value is not about the price. It is about the meaning. And when I look across the landscape of mattress retailers, one of the things that is a real challenge for the mattress industry is that everywhere I look there seems to be a mattress retailer sitting on one corner of the street or another. I don’t understand how there can be so many stores, and how they can all keep the lights on, all looking the same and screaming discounts to draw people in. Inside, most of these stores provide a totally uninspiring experience in merchandising and display. They sell similar looking white boxes. The stores have white walls and the only hook is the discount. It’s an unfortunate situation and it doesn’t help a retailer who needs to sell at higher margins. If you are only competing on discounts, somebody somewhere is going to sell it cheaper than you.”
Ms. Danziger makes the point that if bedding retailers don’t put forth a compelling and obvious value proposition that infuses meaning into the bedding purchase experience, they will have an increasingly hard time selling to the new luxury bedding consumer.
“Luxury consumers today,” she notes, “are smart, have money to spend and are willing to spend it if the value is there. Tempur-Pedic is a good example of a brand that has put forward a new sales approach and positioning, providing information to the consumer that is meaningful and helps them to make smart decisions. If you, as a retailer, can provide your customers with information that helps them to become smarter shoppers and helps them to understand your value proposition in a clear and convincing way, then they will be willing to spend more.”
“Yes, consumers are more savvy today than they were ten years ago,” echoes Matthew Connolly, President of Eclipse International, a division of Bedding Industries of America, manufacturer of the Eclipse, Hemmingway, Therapedic, Eastman House and Playboy brands. “Consumers from the ages of 28 to 45 are the target demographic for luxury bedding today. Today’s luxury buyers tend to be younger professional people. They don’t have time to shop a product by going into stores, so they go online and find out what the materials are. They learn, for example, the benefits latex provides or visco foams. They do their homework to put together what is best for them, and then shop the item fast and furious. And even more so by telephone. These people are comfortable with information they are seeing on the internet and they are making the right decision based on the homework they’ve done. And more people are buying better bedding because of that. It hasn’t discouraged people or confused them. For retailers and manufacturers, the stronger your information on the internet, the better your opportunity to sell luxury bedding and separate yourself from everybody else who is just selling a commodity.
Identifying the Luxury walk-in Consumer
There will always be smartly dressed, high income consumers who walk into a store and want to buy the very best, but since the recent “great recession” this has become less common.
“There are people who walk into Bloomingdales and say ‘what’s the most expensive mattress you have? Give me two,’” says Earl Kluft.
“We have several luxury categories from $4,000-50,000 and the demographics are different for each. A person who buys a $33,000 bed has two homes, maybe more, could have a private jet, drive expensive cars, eat in nice restaurants and live well.”
He says that consumers who buy his most expensive mattresses are the same people who understand luxury, who buy a Mercedes instead of a Lexus or a Viking Range instead of an “over the top” appliance at Sears. “The real luxury consumer who buys a Viking Range,” notes Kluft, “feels pride of ownership, knows that it looks great in the kitchen, that it holds the temperature a bit better than the Sears appliance. The person who buys the Sears appliance, who is more practical will feel that each appliance will cook a turkey. The same is true for bedding.
“For a store like Bloomingdales, customers won’t be shopping there unless they want to buy a luxury product.” It is, therefore, safe to say that sales associates at Bloomingdales can assume that everyone that walks through the door is a luxury customer. But what about stores that have a more eclectic or less luxury-focused clientele? Consensus among the experts interviewed for this article is that even in stores that have a broad selection of products including promotional sets, salespeople should make an effort to start the sales process by showing the very best. They may not buy the most expensive mattress on the floor, but they certainly deserve to have the experience.
We will discuss some common bedding sales mistakes and, their causes and remedies later in this series, but “one of the worst mistakes,” says Peter Marino, author of ‘The Golden Rules of Selling Bedding’ and ‘Don’t Lose Those Bedding Sales’, “is that salespeople assume to know how much their customers can afford to spend. They generally make such assumptions based on how well their customers are dressed or on what kind of car they’ve parked in the store’s parking lot, or based on their own experience that most of their customers don’t seem willing to invest in their most expensive sleepsets. Second, they assume to know how much their customers want to spend. Assumptions have a strange way of being both cause and effect.
“Salespeople who mainly sell their mid-range sleepsets get to believe that’s the only range most customers want to purchase; salespeople who believe that customers only want to purchase their mid-range sets reinforce their tendency to sell mid-range sets.”
This self reinforcing tendency is what FURNITURE WORLD Magazine’s contributing editor Joe Capillo refers to as “nothing fails like success.” In a June 2010 article he noted that, “nothing fails like success because some shoppers respond to these methods, and some shoppers buy something and become customers, so you think you’ve got the right approach.” The fact is that even some of the best bedding salespeople are underselling customers, giving them less than what they really deserve in terms of quality.
“This same mindset,” continues Marino, “goes on to affect how they conduct the technique called comfort selling, the technique by which they have the customer get on two mattresses which differ greatly from one another in the way each feels. The objective of comfort selling is to help customers find their comfort level.
The mindset that most customers won’t invest in a store’s more expensive sets gets these salespeople to have the customer lie on two mid-range sets. Doing that tends to increase the likelihood that the customer will not purchase anything above a mid-range set.
“While we are discussing this mindset, let’s also discuss how sales managers often contribute to it by establishing quotas that are based on volume alone. As a result, the salespeople who hardly ever sell their more expensive sleepsets can still consistently make quota. In that way while salespeople still make quota, the company fails to sell enough of its finer premium bedding where its greatest profitability lies. Meanwhile, a large number of customers end up on mattress sets that simply cannot meet their full requirements for a good night’s sleep.
Commissioned salespeople end up losing too, because in the same amount of time it takes to sell a medium priced sleepset, they could be selling a higher priced one that would benefit the customer, the salesperson, and the company.”
Cory Ludens at Mattress Firm, agrees that the luxury consumer can be anyone that walks into his stores, “ Most people who come in have come in off of an invitation generally in the form of an advertisement, and in those ads we may invite them in on a $399 product or a $699 product or a $99 product,” he says.
“And that sets their expectation as far as price. What we are trying to do by starting them higher is to level-set their expectation.” We typically do not start asking a customer if there is a price range they are interested in early on. We make the assumption that they are in to see the full range of our products and we start at the higher end. If we get an indication from the customer that isn’t what they want to do, we certainly are equipped to show them anything they want to look at.
The final word on prejudging customers comes from Eclipse’s Matthew Connolly. “We were all taught not to prejudge customers,” he says, “but that doesn’t mean that we shouldn’t be aware of our surroundings. Longs Bedding in Manhattan is going to have a different clientele than a sleep shop on Steinway. If you have access to a higher income consumer who lives, for example, in a high income community such as Great Neck, NY or Manhattan or Chattham, NJ, then definitely don’t pre-judge them. Some customers come in wearing jeans and a tee shirt, and others have on a mink, or an Armani suit and a ten thousand dollar Rolex. As an experienced salesperson you should kind of know where you are going to steer this kind of customer. The reality is that a school teacher will probably not spend $10,000 on a mattress, but they may spend $4,000, which would be $3,000 more than the average person.
Avi Barssessat, the chief executive officer of Hollandia, a luxury manufacturer specializing in “luxurious, restorative and advanced sleep systems” adds. “Our experience around the world is that the definition of the luxury consumer can be quite broad. It is someone who wants a great experience in bed. It is not defined by economic status necessarily. Therefore, stop thinking about the sales process in terms of how much money they have to spend, but rather what their requirements are. We have sold premium sleep systems to school teachers as well as Wall Street executives.”
A $50,000 mattress on your floor?
Hollandia’s Avi Barssessat, says, “Yes, I think it is imperative that all bedding retailers participate in the luxury segment. Candidly, they need the margins luxury products can deliver to supplement the lack of profit they are making from carrying promotional bedding. The specific steps you need to take is better training of RSA’s. You can’t sell on price like you do with promotional bedding. Also, like any luxury item, the consumer is going to have questions and the RSA needs to be informed to handle these in the proper manner.”
Pam Danziger, believes that having luxury mattresses represented on furniture and specialty retailers’ sales floors is important. “Across all categories, she explained to FURNITURE WORLD, “When we ask consumers if they are more likely when confronting the purchase decision to go for the good, the better, the best or the best of the best, the greatest percentage of the people choose the better category. The best of the best is chosen by about 15 percent, good is chosen by 20 percent and the bulk of the people say they purchase the better category. That’s where people believe they are maximizing their value. There is a lesson here for how retailers can position bedding products. Most consumers don’t purchase the best of the best, but are drawn to a product with a better position. Retailers need to include options that include good, better and best. Now is a good time for bedding retailers to reposition their better products by bringing in a higher priced best product.
“Fashion designers have known the value of this strategy for years. They don’t make money on their couture lines. These are their loss leaders. They put out couture dresses and clothes to position their ready to wear lines more successfully. Their couture line repositions what comes underneath. So if your store is selling more thousand dollar than three thousand dollar mattresses, and the top of the line in your store is $5,000, maybe it is time to bring in a couple of ten thousand dollar models. So instead of a ‘how low can you go’ focus, you’ve made the 3-5 thousand dollar range look much better.
“It’s all about changing the meaning proposition. It’s a mistake to focus on money when serving the affluent market. Instead focus on meaning.”
Dr. Robert Oexman, Vice President of the Sleep to Live Institute, explains that, “A lot of retailers will put an $8,000 mattress on the floor that is a showpiece and start the sales process there. Obviously customers are going to love the mattress, but it may be more than they can afford to spend. From there the retailer can show and sell a $5,000 model and that might be $2,000 to $3,000 more than they originally intended to spend.”
Bill Hammer, President of Shifman Mattress Company, agrees. “I always recommend starting with the top-of-the-line mattress. This accomplishes several things. First, it establishes a benchmark of quality and comfort and reinforces the brand’s interpretation of extreme luxury. This measure serves to gauge the comfort and performance of each level of bedding that falls beneath it. Are they as comfortable as the superior model? Probably not, which further supports upsell potential. Second, establishing this top-down procedure prevents the store from underestimating a consumer. Luxury consumers have the means to invest in a great night’s sleep.”
Hammer is quick to point out that many consumers equate value with price alone. There is much more to value than price. A high- end mattress is crafted from premium materials with performance standards built in. The comfort, quality and corresponding life of a mattress is important to value considerations. This is yet another opportunity to upsell the consumer.
In part 2 in this Furniture World series we will look at practical ways that retailers can shift the emphasis on price to value through advertising, display and sales approach. Success depends on moving consumers away from looking at bedding as a commodity and helping them to see that our higher end mattress and add-on products can offer something precious; the dream of a better night’s sleep.
In wrapping up this installment, let’s ask a final question. What if you could lead your customers to experience a bed that is so comfortable, so supportive and so inviting that they find themselves smiling and at ease. And what if while doing this, they envision, without much of a sales pitch, the possibility of falling asleep quickly and effortlessly every night and waking up refreshed.
This is not the promise, nor the experience of a mere luxury item like a car or dining table. It can be a glimpse of how much better their lives could be. And once people get the taste of such a powerful image or feeling, a standard is set that is hard to shake off. Their expectations are reset. Stay tuned.
Russell Bienenstock is Editor-in-Chief of Furniture World Magazine, founded 1870. Comments can be directed to him at firstname.lastname@example.org.
View all articles by Russell Bienenstock