Rising Prices Loom Large in Utility Bedding Recovery

Jill Rowen, Staff Staff, May 10, 2010

Utility bedding, traditionally one of the strongest of the bedding categories, declined about 4.6% overall last year, despite a “comeback” fourth quarter in late 2009. Most vendors are optimistic going forward, expecting a boost in year-to-year comparisons — admittedly, not too difficult a thing considering the recent economic rollercoaster.

Blankets and sleep pillows, while down overall, fared better than other categories. The blanket high season came when the economy was just turning, which helped. Pillows, because of the industry-wide marketing push for better sleep, also did better.

More pressing issues abound, however, including product pricing and the skyrocketing cost of raw materials. The rising cost of both cotton and down – due to shortages and other issues — are especially a question mark on pillows and mattress pads within the basics category, as well as comforters.

“Things are clearly better than last year,” noted Brandon Palmer, executive vp, United Feather & Down. “Our sales have picked up and retailers are telling us that people are showing up in their stores. So, psychologically things are improved.” According to Palmer, the focus on home and the idea of sleep as a health benefit is also helping.

According to Chad Altbaier, vp sales and marketing, Downlite, “Brands, relevant and understandable performance features, new and unique fabrications and new packaging concepts,” are continuing to be the tipping points for most consumers.

Palmer noted that from raw materials to transportation costs, every aspect of business has been impacted by rising costs. Like other vendors, Palmer expects the costs to reach consumers starting in the fall, the very beginning of the big bedding season. “Better down products were traditionally low for the last couple of years,” he noted. “There was a lot of $59 comforter product. I think you'll see more middle ground from around $149 to $399, for instance.”

John Crippen, vp, Blue Ridge Home Fashions, agrees that consumers will see prices up in the fall. But he sees other changes in construction and manufacturing also in play to offset rising costs. “You're going to see more reverse down blends and alternative down products where it makes sense and more feathers than down.”

Other vendors also report shifting to more duck than goose feathers and replacing 100% cotton shells with polyester/cotton blends in ticking and other products.

“The cost increases affect everything from base material — i.e. polyester, foam, fabric but also poly bags, corrugate, paper, ink — everything. We are not doing anything different nor are we taking short cuts in production. But with the industry suffering from deflation at retail, something has to give,” reported Dan Schecter, vp sales and marketing, Carpenter. “I have no doubt that there will be and are price increases. The retailer has no choice but to accept the increases and try to pass them on to the consumer.”

“There's no secret to building a sustainable business at retail,” noted Guy Eckert, evp, business development, Outlast Technologies. “You need to execute on the four 'P's' … you've got to have the right product, at the right price, in the right place (distribution) and with the right promotion. However, there's a 5th 'P' that no one talks about and that's 'partner.' No doubt the cost of raw materials will play a role in the future, but if you've structured your supply chain with raw material suppliers that are true partners, then working together you can minimize the impact at the retail level.”

According to Beth Mack, Hollander Home Fashions, vendors also have to be wise in their product development efforts. “We don't want to do development for development's sake,” she noted. “Our product development hits the market that we're playing in.” Mack reported that Hollander is working on a series of new fabrications and finishings, some of which are designed to maintain the thread counts consumers are used to but in blends, for instance, to offset some rising material costs.

“Pillows did better than most categories,” said Donna Kelloway, North American business manager, Invista. “They are a relatively low-price purchase compared to others.”

According to Kelloway, consumers will spend more for the right product in this category, but retailers still have to be convinced of it. Invista is working on new fiber fills that will maintain loft and performance, and again, perhaps offset some price issues.

Expectedly, utility bedding retailers saw declines and some shifts in 2009, with more changes coming in this category. Single unit stores showed the largest decline, down 15.8%; with variety and closeout chains right behind at 14.5%. The largest gain was seen at off-price chains, which took advantage of excess inventory and showcased a lot of bedding.

That, however, may soon change. Palmer noted that as manufacturers continue to tighten their belts, lower inventories mean less opportunistic buys for both off-price chains and discounters.

According to Crippen, retailers such as Big Lots, Home Goods and TJ Maxx , not traditionally in down products, took advantage of the overstocks and low prices and got into the act, but may not have the same opportunity again.

“We felt the slowdown like everybody else in both our retail and hospitality channels, and with retailers reducing inventory levels, this reduced our selling opportunities as well. Promotional business, outside of the retailers 'core' assortment became much more important in making up dollar volume,” said Altbaier.

“Products that feature some form of technology generally did better than plain commodity product,” noted Schecter. “I suspect that will continue to be the case for some time to come. If [the consumer] is going to spend money then she is looking for value — but the new consumer translates value to benefit at an affordable price or as some say a fair price. So we finally have a direct correlation between price and benefit. This is an opportunity to increase the quality of transaction at point of sale.”

How will consumers react to paying more? Vendors all tout value as the key ingredient. Carol Haslach, marketing communications manager, Invista, notes that in this category, consumers may be willing to pay more for comfort. “Consumers are willing to pay a bit more, but they are still sometimes confused. They still want to know how to buy a pillow that they like and are comfortable with.”

“Our largest hurdle is conveying that a mattress pad purchase isn't made solely to protect your mattress purchase. It can enhance comfort in a variety of ways and temperature regulation is one of them,” said Eckert.

Mack noted that Hollander has made a concerted effort to ramp up graphics and images to get the message across to consumers and will continue to work to “simplify” its solutions-based messaging.

The focus on restful and healthful sleep and product benefits, then, may be the thing that keeps consumers looking for the perfect bedding, despite any price increases.

Utility Bedding
Distribution Channels ($millions)
2009 total retail sales: $1.98 billion down 4.6% from $2.075 billion in 2008

2009 2008 % change
* Other includes home improvement centers, military exchanges and gift/home accent stores.
Discount department stores $1,170.2 $1,211.80 -3.4%
Home textiles specialty chains 388.1 415.00 -6.5%
Mid-price chains 164.3 174.30 -5.7%
Department stores 85.1 93.38 -8.8%
Direct-to-consumer 41.6 41.50 0.2%
Warehouse clubs 37.6 41.50 -9.3%
Single-unit home textiles specialty stores 29.7 35.28 -15.8%
Off-price chains 21.8 20.75 5.0%
Variety/closeout 23.8 20.75 14.5%
Other* 17.8 20.75 -14.1%
Total $1,980.0 2,075.00 -4.6%

Merchandise Mix

2009 2008 % change
Sleep Pillows $730.6 $763.6 -4.3%
Blankets 491.0 512.5 -4.2%
Throws 390.1 410.9 -5.1%
Mattress pads 368.3 388.0 -5.1%

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