Tempur-Pedic opening its own stores

ssloan@herald-leader.comOctober 14, 2012 

Tempur-Pedic now has a bricks-and-mortar store outside Boston; a second one will open in Cincinnati's Kenwood Towne Center on Nov. 1, and a third is planned for the Chicago area next year.

PHOTO COURTESY TEMPUR-PEDIC

Lexington-based Tempur-Pedic International relied for years on selling directly to customers, but it's now embracing the idea of retailers selling its product. In fact, it's becoming a bricks-and-mortar retailer itself.

The mattress and pillow maker recently opened a store in a high-end mall outside of Boston and will open a second in Cincinnati's Kenwood Towne Center on Nov. 1.

"The purpose of them really is to very much create the ultimate brand experience," said Patrice Varni, who oversees direct-to-consumer operations. "Being in these premium malls gets us to the consumers who aren't really looking for a bed but are just out in the mall, have heard about Tempur-Pedic and are curious."

Varni equated it to the concept called "showrooming," in which consumers try out a product in stores and then buy it elsewhere.

"We're very open to that," Varni said. "Whether they buy it from us or one of our many retailers in the market, or they buy it a year later, we don't really care. It lets the consumer sample our brand."

She said the company does not think the stores will have a detrimental effect on other area retailers selling Tempur-Pedic products.

The early evidence shows that sales rise for both the company-owned stores and others around them because of the increased awareness.

Tempur-Pedic has had a rocky year. When executives warned in June that increased competition would lower its 2012 sales projections, the company's stock lost half its value in one day. The stock has been on an upward trend since, closing in the $30 range last week. The company also announced in September that it would buy rival Sealy in a deal valued at $1.3 billion.

Opening branded stores is essentially Tempur-Pedic's first foray into U.S. retail. The company opened a store in The Mall at Lexington Green in the 1990s, shortly after its founding, but that was immediately turned over to retailer Healthy Back, which continues to operate it on the company's behalf, Varni said.

"We've only had retailers for six or seven years," she said. "We started going direct to consumers through old-school long infomercials, and all of our print advertising and TV advertising had an 800 number. We also sent catalogs to people, which we still do today."

With that history, Varni said, the company intends to expand its new venture slowly. A third store is expected to open in the Chicago area sometime in May.

"We want to understand what works well, what kind of mall, what kind of real estate," she said. "Then we do have plans to open more, but the number will be dictated by what we learn and the availability of real estate."

The idea for the retail launch is based on success the company has had overseas with a similar concept, CEO Mark Sarvary told analysts during the company's most recent quarterly earnings conference call.

"What we think it'll do is, a bit like the Nike store or Apple store, it builds awareness of the brand," Sarvary said.

Scott Sloan: (859) 231-1447. Twitter: @HeraldLeaderBiz

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