Mattress industry making a slow recovery

Feb 2, 2016

FROM THE HGO MERCHANDISER

For the past decade, and perhaps even longer, mattresses have accounted for 21% of the typical Canadian furniture retailer’s annual sales. Most observers believe mattresses produce the highest and most sustainable gross margins, even though there is actually little in the way of hard evidence to support the supposition. In fact, when it comes to mattress manufacturing in Canada, it’s surprising how little is really known about the depth and breadth of the industry.

Here’s one good example. No one really knows how many mattresses manufacturers are actually operating in Canada – that is, companies shipping product that falls under the North American Industrial Classification System (NAICS) code 337910. We also don’t know how many other mattress resources, mainly importers, competing in the market. We certainly don’t know how many people they employ or what their total added-value is to either the overall furniture industry or the economy as a whole.

According to latest update Industry Canada’s database says there are about 40 companies making mattresses across the country. A closer review of the list unveils a majority of these manufacturers who appear to be strictly focused on serving the regional markets in which they live.

SleepMaker is part of the Premier collection from Marshall Mattress, one of the few thoroughly Canadian high-end mattress makers left in the country. This pillow-top, two-sided sleep set can be found at retailers such as Hudson’s Bay and James Reid Furniture in Kingston, Ontario.

A case in point would be North Star Bedding, which bills itself as the largest manufacturer of mattresses in Northern Ontario. From its home base in Sudbury, this independent producer manufactures custom-made mattresses for individual customers but also has a thriving business serving the hospitality industry. In many ways, North Star seems to operate as both a manufacturer and a retailer.

Another of these manufacturer/retailers is Matelas Dauphin, which has been making its own product assortment for at least 40 years and currently has its own 15-store network throughout Quebec. Like North Star, it has an active commercial division, supplying hotels and others in the hospitality sector but unlike most of these small bedding enterprises, Dauphin is also an authorised Tempur-Pedic retailer.

A third example would be The Foam Shop, which is headquartered in Surrey, British Columbia. In addition to its nine-store network, this company also has a commercial division and also produces foam for a variety of applications, including custom upholstery.

While companies such as these three make up about half of Industry Canada’s list, it should also be noted they aren’t industry powerhouses by any means. According to Industry Canada, the largest of them has annual revenues of $5 million or less. Indeed, these 20 or so independent businesses probably have average annual sales around the $3 million mark.

The major playersCanada’s mattress marketplace is dominated by just two U.S. corporations, each of which controls two distinct brands. Not so long ago, each of these brands was truly independent of each other. But as economic conditions evolved – driven largely by the 2008 financial meltdown – consolidation became the operating reality as these companies looked for greater efficiencies and higher profits. These changes put an effective end to what industry insiders had always called, with some degree of affection, ‘The Three S’s’ – the brands most commonly known as Sealy, Simmons and Serta.

Only one of the two corporate entities is publicly owned – Tempur Sealy International, the Lexington, Kentucky-based owners of the Sealy and Tempur-Pedic labels. The other is privately held. As its name, Serta Simmons Bedding LLC implies, it owns and operates Serta and Simmons, from their head offices in Chicago and Atlanta, respectively.

In Canada, the former is known as Tempur Sealy Canada (TSC) and the latter is SSH Bedding Canada (SSH).

These two corporations produce today’s four best known and most in-demand brands not just in Canada but in the United States as well. TSC produces the Sealy and Tempur-Pedic lines while SSH makes Serta and Simmons.

To read the rest of Michael’s report, click here to download the latest edition of the HGO Merchandiser. It begins on page 27.

Tempur Sealy Canada has been focusing considerable effort in recent years to the revitalisation of its Stearns & Foster brand collection of high-end mattresses, such as the model seen here.