NEW BEDFELLOWS

Mattress stores, once confined to warehouses, are cozying up to malls

By Maura K. Ammenheuser

Add this to the plethora of goods and services you can find in a mall: a good night’s sleep.

Dormia, a Fishkill, N.Y.-based mattress manufacturer, operates 21 stores in upscale malls. And it’s not alone. In the past, strip centers and warehouses have been the preferred habitat for mattress stores, but in recent years they have been migrating to both malls and lifestyle centers.

Dormia, launched in 1991 as a seller of water beds (now there is something still unlikely to turn up in a posh mall), knew by the mid-1990s that water beds were on the way out. The company shifted gears to embrace “memory foam” (also called visco-elastic foam), something NASA created to absorb the gravity-related pressures astronauts experience during takeoff and re-entry. Dormia builds its mattresses using this temperature- and weight-sensitive stuff rather than steel inner springs.

Dormia plans to open between 12 and 20 new stores this year, says David Spittal, the company’s president, and about 30 next year. Of these, the majority will go into malls, though the company has not said exactly how many. The company seeks affluent metro markets, Spittal says, but they need not be the likes of New York City, Chicago or Los Angeles. The ‘B’ markets are easier, he says, because advertising is cheaper. Recently, Dormia opened stores in Cary, N.C. (near Raleigh-Durham), and Atlanta, and the company says it will be seeking to expand in both areas.

Such plans give evidence of the growing popularity of high-end bedding. The company’s prices range from about $500 for a basic twin-size mattress to nearly $7,000 for its largest, most luxurious product.

Mattress retail (especially the high end), once relegated to toll-free phone orders, discount emporiums and bedding warehouses, has come to the mall.

“People thought they had to ... go into one of these vanilla-box stores to buy a mattress,” Spittal said. “We’re hoping to change that norm.”

Mattress manufacturers are heading to high-end centers because that is where the customers are, says Michael Cox, senior research analyst at Minneapolis-based Piper Jaffray. Cox would not comment specifically on Dormia, because it is private, but he covers publicly held Select Comfort, Minneapolis, which also sells almost exclusively in malls. Select Comfort mattresses use an air-chamber technology to provide support. The company heavily markets its mattresses’ “sleep numbers,” which refer to firmness levels, from zero to 100. Users control the firmness level of the mattress with a device that adjusts the amounts of air in the chambers.

Spittal says a Dormia mattress conforms to the curves of the body, remolding itself as the sleeper changes position. This relieves pressure along the body and reduces tossing and turning, he says, which in turn minimizes the amount of movement a sleeper’s partner feels, ensuring a better rest for both.

Select Comfort had 394 stores as of mid-November, with plans to open two more the following month, according to Keith Spurgeon, senior vice president of sales. The company has begun venturing outside malls into lifestyle centers. Of the stores it opened last year, 27 were in malls and 13 in nonmall settings. Sales reached $557.6 million in 2004, up from $458.4 million the year before, according to Select Comfort’s annual report.

Dormia is smaller than Select Comfort but is following a similar evolution: Of Dormia’s 21 stores, 18 are in malls, though in mid-November the company was looking at several lifestyle center sites in Florida.

Landlords are no longer surprised when bedding merchants come calling. In the late 1990s, Spittal recalls, “developers looked at me like I had two heads, selling mattresses in malls.” But rival Select Comfort has done well in malls, he points out. Indeed, Select Comfort’s sales are $1,000 per square foot, according to Cox.

Dormia, too, is thriving in the mall environment, says Christy Alphin, general manager of Cary (N.C.) Towne Center, where at press time Dormia was occupying a temporary site while its permanent, 1,800-square-foot store was preparing for an opening this spring. “We’re very pleased with them,” she said. The center also houses a Select Comfort.

The Raleigh-Durham-Chapel Hill area, which includes Cary, is a very tech- and Internet-savvy area, and Dormia had a large Internet presence before opening its temporary spot in September, Alphin says. The physical store, she says, “wraps it up into one nice, neat package” for shoppers. “People seem to know the product.”

Having the store in the center affords customers the chance to see it in a convenient place after they have researched the mattresses online, she says.

“People’s time being as limited as it is, it might not strike them as unconventional. They’re here anyway,” said Vizma Drukovskis, marketing director of Palisades Center, in West Nyack, N.Y., where Dormia opened in November 1999.

Matt Ehrie, senior general manager of Westfield Group’s Garden State Plaza, where Dormia opened last year, says bedding stores do well there (the center also has a Select Comfort) because they are part of the trend among Americans investing in their homes and “nesting.”

Buying a mattress from an upscale shop means you get good service, he says, but Dormia brings in many types of customers beyond just the affluent ones.

Dormia is one of a few manufacturers that not only sell in their own stores but also provide as cozy an environment as possible to shoppers seeking just the right place to lay their heads. The stores provide luxuriously furnished, pleasantly lit, homelike surroundings.

Bedding companies now realize that women in particular are turned off by the ambience, or lack thereof, in conventional mattress stores, says Cox. “It’s not unlike buying a used car,” he said. “It’s not a comfortable shopping experience.” Not only must customers deal with ugly settings, Cox says, but “slimy” sales tactics as well. But it is no longer unusual for a shopper to drop a couple of thousand on a mattress, Cox says, and such a person wants a pleasant experience doing it.

Dormia and others are benefiting from that trend toward pricey bedding. Dormia’s projection for 2005 revenue is about $40 million, and the company anticipates upwards of $50 million for this year, according to Spittal. The company will strive for annual sales gains of between 30 percent and 50 percent from 2007 on, depending on the strength of Dormia’s wholesale business, which generated about $15 million of 2005 revenue, he says.

More $$$ for your zzz
The top 20 percent of the mattress-buying market today spends more than $1,000, though five years ago no one paid more than that, says Dale Read, publisher and editor in chief of Bedroom Magazine, an 18,000-circulation trade journal for bedding and furniture merchants. The top 5 percent of the market, meanwhile, spends between $2,400 and $3,000, he says, and there are mattresses available for well over $6,000.

Spittal attributes the trend to aging boomers, that notoriously health-conscious and self-absorbed group now facing a variety of aches, pains and other sleeping woes as it nears 60.

“The American people are getting more and more used to the idea of fitness and health,” says Spurgeon. Part of that, he says, is their awareness of the importance of sleep. Bedding executives inevitably note that people spend a third of their life sleeping, or ought to, so consumers are increasingly willing to spend extra for a comfortable mattress that offers the best rest possible.

Dormia and Select Comfort, which, according to Spittal, have a “very friendly competitive relationship,” share the alternative-mattress business with several other companies, though the traditional inner-spring mattresses still make up the bulk of the industry, Cox says.

Duxiana, a private company based in Sweden, operates stores in 18 countries, including 32 units in the U.S. Information about how many of those might be in malls is very hard to come by, but the company’s “Dux” beds, made with densely packed inner springs, are marketed through hotels.

Then there’s Tempur-Pedic International, based in Lexington, Ky., which, like Dormia, makes visco-elastic foam mattresses. But Tempur-Pedic markets its wares primarily through department and other retail stores rather than a large chain of its own boutiques. The company operates in 60 countries. Tempur-Pedic’s sales have grown dramatically, from $298 million in 2002 to $684.9 million in 2004, according to its annual report.

Specialty bedding stores have taken market share from department and furniture stores, says Cox. Citing Furniture Today, a trade magazine, Cox says these specialty stores’ share of mattress sales has grown from 32 percent of the market to 36 percent between 2000 and 2004.

Conventional mattress makers have also created higher-quality mattresses at prices steeper than in the past, Spittal says. But these, such as Sealy’s, are not Dormia’s competitors, and they do not typically sell in malls.

“We’re not terribly concerned with traditional inner-spring sellers, where mattresses are more of a commodity,” said Spittal. Dormia customers want better sleep, not bargain bedding, he says. And Spurgeon notes that the inner-spring companies generally stick to strip centers rather than upscale malls.

So with Dormia and Select Comfort enthused about mall space, leasing executives for upscale centers can expect to get a piece of the better-bedding pie.

That should help them sleep easy.