This year, the International Sleep Products Association, which publishes Sleep Savvy, is celebrating its 100th anniversary The research team poring over old documents for a series of articles in our sister publication BedTimes has come across a trove of trivia and trends about mattress retailing that we know you’ll enjoy,…
Editor’s note: This insightful commentary from well-known industry analyst Jerry Epperson first appeared in the 2020-2022 forecast for the U.S. mattress industry, a comprehensive market and economic analysis published in November by the International Sleep Products Association’s Statistics Committee. The entire report is available (free to ISPA members) at SleepProducts.org/Resources/Statistics/Mattress-Industry-Forecast. For a brief synopsis, visit BedTimesMagazine.com/2020/11/ISPAs-Statistics-Committee-Releases-the-2020-Forecast. Epperson is founder and managing director of Mann, Armistead & Epperson based in Richmond, Virginia.
Are the delays in filling some mattress orders due to Christmas?
The mattress industry is oversold; too many wanting mattresses and too few able to supply them. A classic seller’s market, no doubt.
The short version: Just recovering from various tariff issues, the U.S. and the rest of the world are hit by a deadly virus, COVID-19. To stop its spread, the
U.S. government stops most international travel and closes non-essential businesses, making most Americans sequester themselves at home. American businesses shut down, retailers closed and cancelled orders to their vendors, and American consumers are suddenly thrust into an environment they have never experienced: THEY CANNOT SPEND! Oh, the horror.
Just in time, the Congress and IRS save the day with added unemployment benefits until the end of July and a $1,200 per person check to encourage Americans to spend and stay fiscally sound. Free money? A family of four gets almost $5,000? It is like winning a very cheap lottery only everybody wins.
Meanwhile back downtown, businesses are closing, instructing their employees to stay home, or some are furloughed. Expenses are cut, orders are cancelled just as incoming orders are non-existent. Only the essential continue to work, keeping hospitals and grocery stores open, along with some home furnishings stores in some states. After all, being kept at home they all need someplace to sit, dine and sleep! Once again, the Congress and IRS come to help in the form of some incentives and the much-discussed PPP plan.
By April, no one can see into the foggy future and 2020 appears to be as doomed as the easterner in a Western movie. Worse yet we cannot congregate to discuss these happenings and how to cope. Woe is us. Another recession appears here just like in 2009-2010, 2000-2001, 1990, 1980 and 1970.
But in May, our governmental bodies in their infinite wisdom began to allow some retailers and businesses to reopen slowly, bringing some joy to Americans who wanted to escape and get away from those they have been staying with for weeks. By our experience, home furnishings are not usually at the top of consumers’ priorities as we emerge from a recession or a recession-like environment. But by mid-May, some furniture retailers were reporting a strong sales rebound. Vendors reported a major rebound in orders. Factories and retailers alike were trying to reassemble their employees, but many had trouble since some workers were enjoying the higher unemployment benefits offered by the IRS.
Retailers reported that traffic was not overwhelming, but those coming to stores all were looking for a specific purchase and they were buyers, not shoppers. Meanwhile, ecommerce retailers continued to experience strong home related purchases including furniture and mattresses.
Stated simply, sales were off to a rapid start, not a slow gradual one. Why? Yes, housing turnover, consumer disposable income and confidence were rebounding, and many consumers had new money available to spend. In many cases, the consumer had delayed purchases for the home that they wanted to fill, and no doubt the home now had a higher priority to many as they were having to stay home.
But this time was different. Consumers have been precluded from making some expenditures by governmental dictate. In 2019, $130 billion was spent at retail on residential furniture and mattresses. Look at the 2019 expenditures made in sectors affected by the government COVID19 shut-down in 2020:
| Amusement parks, campgrounds | $ 69.9 billion |
| Motion picture theaters | 14.4 |
| Live entertainment, excluding sports | 37.1 |
| Spectator sports | 29.4 |
| Museums and libraries | 10.1 |
| Gambling | 146.8 |
| Purchased meals and beverages | 839.7 |
| Hotels and motels | 118.0 |
| Hairdressing, personal grooming | 83.4 |
| Foreign travel by U.S. residents | 198.9 |
This totals over $1.5 trillion consumers spent last year. If the home furnishings industry gained only 1% of this, it would add about 12% to its revenues in 2020.
Quantifying this is difficult but all of us recognize our lives have changed and we are spending differently. The demand for mattresses continues to grow although at a rate less than this past summer. Among our public mattress companies, for example, in the most recent September quarter, Tempur-Pedic revenues increased 37.9%, Sleep Number gained 11.9% and in the most recent quarter available, June, Purple had a revenue gain of 60.3%.
ISPA’s own third quarter survey showed total mattress shipments (domestic and imports) grew 13.8%, with domestic +9.1% and imports +66.6% while year to date total mattress shipments grew 0.9%, a reflection of the weak February through May period.
Imports
Just in recent weeks, the ITA has ruled that seven foreign nations (Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey and Vietnam) have been dumping mattresses into the U.S. This will no doubt shift production to some degree but mattress imports, in dollar terms, was already complex.
Mattress Furniture Imports by Significant Countries
USD $ (millions)
| Country | 1Q19 | 2Q19 | 3Q19 | 1Q20 | 2Q20 | 3Q20 | 1Q% | 2Q% | 3Q% |
|---|---|---|---|---|---|---|---|---|---|
| Vietnam | 10.0 | 25.0 | 48.7 | 72.7 | 43.6 | 83.9 | 629.9% | 74.0% | 72.1% |
| Malaysia | 0.4 | 3.7 | 10.2 | 41.3 | 13.7 | 44.0 | 11168.4% | 275.4% | 332.5% |
| Turkey | 0.0 | 3.0 | 7.1 | 29.3 | 23.9 | 29.3 | 131249.2% | 687.1% | 310.1% |
| Mexico | 19.3 | 26.0 | 26.0 | 17.1 | 5.3 | 22.7 | -11.5% | -79.7% | -12.5% |
| Thailand | 0.0 | 0.4 | 4.5 | 13.6 | 10.8 | 19.4 | N/M | 2329.9% | 335.0% |
| Indonesia | 0.0 | 9.7 | 43.7 | 63.1 | 44.2 | 15.3 | N/M | 354.2% | -65.0% |
| Cambodia | 0.7 | 6.2 | 15.0 | 11.6 | 13.7 | 15.2 | 1522.9% | 119.9% | 1.4% |
| Serbia | 0.0 | 2.4 | 8.5 | 13.9 | 17.4 | 12.5 | N/M | 626.8% | 47.8% |
| Taiwan | 0.2 | 2.5 | 2.0 | 3.1 | 6.2 | 5.9 | 1977.5% | 151.6% | 194.0% |
| Italy | 0.2 | 0.2 | 0.3 | 1.9 | 4.0 | 2.6 | 855.0% | 2343.0% | 928.4% |
| China | 137.0 | 25.6 | 1.7 | 1.5 | 0.5 | 0.9 | -98.9% | -98.0% | -47.4% |
| Canada | 0.9 | 1.0 | 0.8 | 0.3 | 0.1 | 0.6 | -63.7% | -89.7% | -24.8% |
Notice that most importers shipped less in the second quarter than in the first, largely due to the pending penalties on imported mattresses from the seven nations.
2020
When the pandemic restrictions were imposed, many retailers delayed or canceled their massive orders for this Christmas, only to reinstate them in the summer. In a sense, we are competing in the ports with Christmas this year!
Demand exceeds supply late in the year. Domestic manufacturers cannot get component parts, foam, textiles and labor. One manufacturer is running triple overtime for Sunday production. Price increases are almost everywhere.
The imports are being challenged by delays at our ports and added charges for both getting the containers to the U.S. and for trucking them inland. These are the highest surcharges in memory.
