HIGH POINT — Like other categories in the home furnishings space, the cost of making a mattress continues to soar. Pricing on nearly every component that goes into making mattresses and foundations has increased, and when combined with climbing labor and freight costs, retailers are facing additional increases from manufacturers.
Price hikes on components like foam, steel, nonwovens, wood and cotton started in May 2020 with a continual drip through the end of the year, continuing into 2021. Additional increases are on the horizon, and mattress manufacturers that have not yet passed along increases to retailers say they can no longer absorb the cost. Others that have already shared increases are considering additional bumps.
Historically, price increases have always been a touchy subject, and despite today’s climate where few if any manufacturers are holding the line, companies are remain leery of sharing details. However, those executives who opted not to speak on the record, all mentioned impending increases for their partners.
Those increases mean retailers will likely need to pass those increases onto consumers.
Some key executives in the bedding segment say that this inflationary period ranks up there with the 1970s when the U.S. was hit with the oil embargo by OPEC countries.
“This is a very severe problem,” said Robert Naboicheck, president and CEO of Gold Bond Mattress. “We’ve seen non-stop price increases since September, and another one is on its way. The whole supply side of our business is upside down.”
Naboicheck said the shortage of materials, coupled with the labor crunch and high consumer demand for home furnishings and mattresses, has created a perfect storm that has mattress producers scrambling to maintain forecasts and critical budgeting.
The cost of foam is up 50% since the summer, and foam producers cite price increases for chemicals needed to make the foam.
Container costs have skyrocketed from $3,400 to upward of $10,000, adding to the cost of imported mattresses.
The cost of cotton has climbed from 51 cents per pound in March to 82 cents per pound now.
While no one enjoys price increases, the reality is that more are on the horizon, and the pass through to retailers is on its way for mattresses.
“We just got another increase on top of ones from September and December, and another one is coming in March,” said Gerry Borreggine, president and CEO of Therapedic. “It’s hard for us to raise prices for retailers, but everyone has to make a profit. We’re not Casper. The rest of us in the category have to make a profit.”
Overall, Borreggine said, raw materials have climbed at least 15% in the past six months.
“The supply chain is so volatile right now that it’s making planning very challenging,” he said. “The increases are coming at a rate that we have never seen before. It’s not capricious or arbitrary; they are propelled by the world economy. It’s not only a problem for our industry, but for all industries.”
Like others, Therapedic is eyeing increases for its retailers in the single-digit range next month. “For the most part, we have held pricing,” Borreggine said, adding that the near-continuous increase in material costs is making it impossible to hold pricing.
Materials hit hard
Eclipse International has passed along two increases since the fall and is looking to increase the price of its foundations soon, said Stuart Carlitz, president and CEO.
“We have to pass along the increases,” he said, adding that the company is looking to design some new beds that will address key price points retailers want. “The price of our existing models is going to go up. Right now, consumers will pay more for a mattress.”
Materials’ shortages — a key driver in price increases — have pushed manufacturers to get creative in their sourcing for components. Whereas prior to increased consumer demand, backlogs and the components crunch, many domestic bedding producers procured materials from a limited number of domestic suppliers, now, they have had to widen the net.
Eclipse International and King Koil have both teamed with their global licensees to procure needed springs, foam and other materials to fill the gap.
“We plan to continue with our hybrid procurement strategy that we put into place last summer when some of the raw material allocations began,” said David Binke, CEO of King Koil. “This involves partnering with some of our licensing partners from around the world to supplement our domestically sourced materials to keep up with demand. Our ability to tap into the resources of our global licensees, yet manufacture domestically, is something that makes us unique.”
The story is the same for Symbol Mattress where pricing for materials continues to climb.
President Mike McQuiston points to the tight labor market as a leading factor. The company made some bold moves last year regarding its employee compensation and paid its hourly workers $3 an hour more and covered the cost of health insurance premiums for 2021 as a retention strategy.
“Labor, transportation and raw materials have all combined for this perfect storm. No one could have seen this coming,” McQuiston said. “We have raised prices, and if the market requires us to do it again, we will.”
The big unknown for the category — and industry as a whole — is when pricing will level out. Currently, manufacturers are being notified every two to four weeks of additional increases.
“We always keep a careful eye on pricing and try to be very prudent when it comes to increasing them for our customers,” said King Koil’s Binke. “That said, our retailers understand that raw material shortages and price increases are having a dramatic impact on the industry right now. They know we will do our best to avoid passing along any additional burdens to them.”